Tuesday, January 29, 2008

Marketing in Vietnam

The Environment. As already noted, when preparing for my 2007 teaching visit to Vietnam I attempted to do typical due diligence about the marketing situation there, but I came up with an almost totally blank slate. I could find basic economic data, but marketing data was almost non-existent. Sure I was missing something, I contacted eMarketer and found someone who was kind enough to search their files. He came up with exactly three tables that included Vietnamese data, so I knew I hadn’t missed much.

Since it was opened up to Western investment in 2001, Vietnam has become one of the world’s fastest-growing economies, albeit on a small base. Here are some key statistics from their statistical bureau. A search for economic data turns up quite a few blog entries, but I’ve stuck to statistics from governments or major world economic organizations. Vietnam has a page on the UN website that has current news, statistics and links. It was admitted to the World Trade Organization in January 2007 and has a page that has news and trade links as well as a link to a page with trade stats.

The economic statistics paint a picture of rapid economic growth. However, when you consider the size of the base on which growth is calculated, it is evident that growth was slow for decades following the war. The exchange rate of roughly 15,000 dong to the dollar also suggests inflation, which the State Department (which has a page with good narrative) says was 300% in 1987, but which has been brought under control in preparation for entry into the WTO. In fact, the exchange rate did not change perceptibly between my trips in January 2007 and 2008. Since the dollar was declining against major world currencies in 2007 that would say something to an economist, I’m sure. To me as a marketer, it says that Vietnam remains a very affordable tourist destination.

Here are some other key facts, all drawn from the ranking page of the the CIA World Factbook, which also has detailed narrative on many political, social and economic characteristics of the country. Against all other countries for which data is available in 2006/2007 Vietnam ranks:

•15th in population
•13th in size of the labor force
•24th in rate of growth of real GNP
•168th in per capita GNP.

One of the first things a traveler notices is construction everywhere, in rural areas as well as urban. Motorbikes clog the streets in cities, and there are plenty of taxis but few private cars. In Saigon, public transportation takes the form of buses and they are much in evidence on the streets. Another sign of the level of economic development is the ubiquitous street vendors. Some are in native dress and appear to be selling produce directly from family farms. Others have thriving businesses in everything from t-shirts to paper products and there are many pushcarts that offer a wide array of Vietnamese food. Most of the retail shops are small, but there are shopping malls, department stores and supermarkets. I noticed a sign that said that the Co-Op Mart, the largest supermarket chain at least in Saigon, was opening convenience stores, so signs of an emerging consumer economy are all around. There are many KFC outlets and I was told that the first McDonald’s franchise has been awarded in Saigon but is not yet open.

The evidence of a rapidly-growing economy is clear. The state of marketing is not so obvious, but in the next installment I’ll piece together what I’ve been able to learn.
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