Vietnam Market Watch: Online Shopping Surging, Supporting Industries Increase Contributions, and 2017 Export Predictions

Online shopping to witness a surge

Vietnam’s rising internet population is predicted to boost online shopping in the near future, according to a new KPMG report. Currently 18 percent of consumers purchase goods from online retailers such as Amazon, Lazada, and Nhommua, with 10 percent preferring to buy from a retail shop’s website. Only three percent of buyers prefer a manufacturer or brand’s website. As per the report, the top reason for consumers to shop online is the convenience of shopping, followed closely by the ability to compare prices and availability of better deals. While considering a purchase, 9.9 percent of buyers refer to online reviews and feedback.

The report also highlights the significance of offline channels, with 11.5 percent of buyers seeking recommendations from friends and family before making a purchase, while online channels such as social media, online shops, and online reviews were preferred by 8.3 percent, 8.2 percent, and eight percent of buyers, respectively. In light of this, the report stresses the importance of companies providing privacy protection and better online security to gain consumer’s trust. In fact, one of the report’s findings indicates that 26.5 percent of buyers regard consumer information protection of utmost importance. To increase product awareness, sellers are also recommended to focus on social media channels and providing online reviews for their products. The research sample consisted of buyers aged 15 to 70 years, having made at least one purchase in the last 12 months, and within the top 65 percent of income earners in the country.

Supporting industry to provide 65 percent of domestic demand by 2025

A comprehensive program to develop Vietnam’s supporting industries was approved by the government recently, which will allow supporting industries to contribute to 45 percent of domestic production by 2020 and 65 percent by 2025. Supporting industries refer to those that produce materials, parts and components, accessories, and semi-products to supply to manufacturing or assembling industries producing final goods. The manufacturing industry is vital for Vietnam’s industrialization by 2020. Industries in focus are the textile-garment and footwear industry, hi-tech industry, and suppliers of components and spare parts.

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The proposed program primarily focuses on the production of metal, plastic, and rubber components along with electronic and electrical spare parts in an attempt to meet 55 percent of the domestic demand. Emphasis will also be placed on the production of materials for the garment-textile and footwear industry and the high-tech manufacturing sector responsible for specialized equipment, software, and services. Ultimately, the supporting industry program aims to promote domestic and foreign investments, increase exports, assist startups, and promote technology transfers.

Exports predicted to continue to  rise in 2017

The Mekong Delta region aims to generate US$15 billion (VND 336 trillion) from 2017 exports, an increase of 9.4 percent over the previous year’s exports of US$13.7 billion (VND 307.5 trillion). Major commodities exported last year include seafood, rice, processed food, garment and textile, footwear, and handicraft. The region is responsible for 60 percent of Vietnam’s seafood exports and more than 90 percent of its rice shipments. The Mekong Delta province aims to foster technical innovations to improve its production capacities and will focus on exports of high-value goods rather than low-value farm products. Seafood exports in 2017 are expected to rise by five percent to US$7.5 billion (VND 168 trillion) from US$7.05 billion (VND 152.8 trillion) in 2016, in spite of difficulties such as reduced output owing to climate change, increase in minimum wage, labor shortage, and competition from other exporters such as India, Thailand, and Indonesia.

In the manufacturing sector, Vietnam’s smartphone exports in 2016 were fueled by foreign investments and accounted for 27.1 percent of Vietnam’s total exports at a value of US$34.32 billion (VND 744 trillion). Smartphone exports are predicted to rise by 13.6 percent to US$39 billion (VND 845.4 trillion) in 2017. Samsung is a major manufacturer in the country, with investments totaling over US$15 billion (VND 336 trillion). Vietnam accounts for 35 percent of all Samsung phones assembled globally and the country is rapidly becoming a smartphone manufacturing hub.

Vietnam’s overall exports in 2016 rose by nine percent to US$176.6 billion (VND 3,955.84 trillion), while imports increased by 5.2 percent to US$174.11 billion (VND 3,774.25 trillion).

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