Vietnam Market Watch: Foreign Firms Join e-Commerce, Vietnam Ranks High as Expat Destination, and HCMC to Attract More FDI

January 11, 2017 Posted by Vietnam Briefing Reading Time: 5 minutes

Foreign firms join e-commerce bandwagon

Japanese retail company Aeon entered Vietnam’s e-commerce market through its website on January 1^st. The website named AeonEshop.com is designed as a business-to-consumer (B2C) platform with most of the products imported from Japan. The company started operations in Ho Chi Minh City and will later expand throughout the rest of country. An English version of the site is expected along with a mobile app version by mid-2017. Apart from its home country Japan, Aeon also has a presence in Malaysia.

Additionally, Lotte also recently launched its e-commerce website in Vietnam and plans to invest US$25 million per year; by 2020, it targets a 20 percent market share in the country. Similarly, Thai based Central Group has taken over e-commerce site Zalora, while Chinese based Alibaba has entered the market by taking a controlling stake in online retailer Lazada Group for US$1 billion. While several foreign retailers still operate through traditional brick and mortar stores, Vietnamese consumers increasingly prefer to shop at grocery stores to make orders and have it delivered to their homes, as this helps in saving time and eliminates the necessity to carry large packages themselves. Analysts have stated that businesses will have to pursue an omnichannel retailing experience, which combines online shopping with traditional stores.

Vietnam one of Asia’s top expat destinations

Vietnam has come on top for expat career opportunities in Asia, hereby surpassing several countries in the continent compared to last year’s figures. The results were released in HSBC’s Expat Explorer survey published on January 4^th. The report ranked Vietnam 28th globally in terms of career opportunities, overtaking Japan, South Korea, Thailand and Taiwan. Around four in five expats said their employment package comes with benefits. In relation to work-life balance, Vietnam ranked second in Asia only behind Thailand, with 57 percent of expats saying they enjoyed a great work-life balance.

The report also stated that expats in Vietnam are compensated well with higher salaries, around 50 times more than the average wage in their home countries. Employers also place a higher value on retaining foreign employees. The study was based on eight criteria: skill acquisition, career progression, job security, earnings, benefits packages, work-life balance, work culture, and fulfilment at work. The development bodes well for the country and this trend is likely to continue in the near future.

Ho Chi Minh City to attract higher FDI

Ho Chi Minh City’s Industrial Zones (IZ) will attract US$500 million (VND 10.9 trillion) of foreign direct investments in 2017, according to the HCM Export Processing and Industrial Zones Authority (HEPZA). HEPZA is planning to expand and develop the Le Minh Xuan IZ, Hiep Phuoc IZ and the Automotive-Mechanical IZs while focusing on four key industries, namely mechanical engineering, electronics and IT, chemicals and food processing, and supporting industries. FDI in 2016 reduced to US$255.61 million (VND 5.57 trillion) as more industries focused on high-tech industries rather than labor-intensive sectors like textiles and footwear. Even the domestic investments saw a 14 percent decline in 2016 to US$237.71 million (VND 5.2 trillion). IZs and Export Processing Zones (EPZs) exports stood at US$5.86 billion (VND 133.2 trillion). Currently operating in the IZs and EPZs are 1,382 projects worth US$9.22 billion (VND 209.6 trillion), which includes 535 FDI projects worth US$5.41 billion (VND 123 trillion). Employment stands at 285,700, including 2,346 foreign nationals.

Concurrently the city is also seeing a rise in demand for workers according to Ho Chi Minh City’s Center for Forecasting Manpower Needs and Labor Market Information (FALMI). The city will require 40,000 new workers in January and February, and the total amount of new vacancies is expected to reach 140,000 in 2017, indicating a rise of 7.7 percent compared to last year. Demand for sales and marketing professionals, food processing, domestic workers, security, ornamental plant takers, tour guides, and delivery services will see a rise in the first quarter. The city will also require skilled employees for the textile and garment, leather shoes making, food processing, and construction industries. Rate of workers changing jobs stands at 15 percent in the country, which reduces further after the Tet Holidays (Lunar New Year) as workers will have better job security and bonuses that encourage workers to stay.

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