The Vietnamese Market Compared

Summary

Since the launch of the "Doi Moi" reforms in 1986 (designed to transform a centrally planned economy into a more market-oriented one), Vietnam's economy has performed remarkably well. Poverty has been reduced by over 50% and social indicators reflect improvements in the quality of human life. However, the pace of economic reform has slowed, and Vietnam remains among the poorest countries of the world (109th of 173 on the UN Human Development Index, with per capita GDP of approximately US$440. Vietnam is also a remarkably young country, with 60% of its population of 78 million under the age of 25.

Snapshot Comparison: Vietnam, Canada, United States

This chart brings out a number of stark realities when comparing North America and Vietnam. The first big difference that should be paramount in the minds of businesses looking to export from North America to Vietnam is that the median age in Vietnam is ten years younger than the median age in North America. This describes a younger country and product demand will differ from that of the North American countries.

The birth rate in Vietnam is also much higher than that of North America. Younger population and higher birth rate paint a picture of a young growing country.

The real growth rate of Vietnam is also more than double that of Canada and the United States. Again, this shows that the country's population and GDP are growing rapidly.

The sample industries shown for Vietnam also show where it has superiority – in developing products at lower wages. Food processing, garments, and shoes are all items that can be mass produced using low wages. Vietnam’s exports and imports are roughly equal at $17 billion while Canada has more exports and the United States has more imports. In the next few years Vietnam’s exports will likely exceed its imports as large retailers and manufacturers serving the larger markets in the world make use of Vietnam’s younger workforce, high unemployment, and low salary structure.

The communications (telephone lines and mobile phone accesses) shows how the country is evolving. Although the population of Vietnam is almost three times that of Canada, only three million of the 82 million inhabitants have telephone lines. Growth in this area is likely going to come in the form of wireless (cellular) phones. One of the major exports from Canada to Vietnam is telephone equipment so there is work underway to expand the infrastructure, which will make growth and doing business much easier.

Making Sense of it All

When considering products to export to Vietnam, consider the types of products that would sell well, the make-up of the population, and the amount of spending money the people have. Overall Vietnam is growing faster than some more developed countries, but it is still a rather poor country. The people don’t have a lot of money to spend on extravagant items, so the best items to export may be consumables that are inexpensive, but make the people’s lives easier.

Also take into consideration the target markets. You will likely be targeting cities like Hanoi and Ho Chi Minh City where more of the people with spending money live. If your targets are business or government you will be targeting the larger centres as well. Business and government would likely be interested in materials and products that help in development of infrastructure. This is likely why telephone equipment, newsprint, and wood are some of the fastest growing exports from Canada to Vietnam.