Identifies common practices to be aware of when selling in this market, e.g., whether all sales material need to be in the local language.
Last Published: 7/12/2018

Development of Consumerism

Foreign brands have proliferated in Vietnam over the past decade and a half. This is a sign that urban incomes have risen and integration into the global economy has also increased. Rising incomes and sustained remittance inflows will bolster domestic demand, consequently driving increased consumer spending. The market for most imported consumer goods is concentrated in a handful of large cities where incomes are considerably higher than the national average, and in some parts of the Mekong Delta.
Market observers note that there is a lot of trial usage, little brand loyalty and huge price sensitivity for many consumer goods and household products. However, foreign products can and do compete in the local market, relying on marketing, branding and reputation for quality, safety, and reliability. Amongst foreign products, there is a general hierarchy of perceived quality, based on the country of origin. Recent international product recalls and high-profile safety issues from manufacturers in Asia have increased consumer awareness in Vietnam.
Awareness of brands comes from word of mouth, the internet, market promotions, and advertising. Consumers are remarkably familiar with leading foreign products, even those not generally available in Vietnam. One major reason for this is a high penetration of internet users; another key reason is contact with relatives abroad. A third factor is that in recent years, Vietnamese have begun to travel and study overseas in ever increasing numbers, thus bringing back both information and products widely available elsewhere.

Market Segmentation

Geography is a key factor in segmenting Vietnam’s market. This includes not only the regional segmentation of North-Central-South, but also urban versus rural areas. Vietnam is roughly separated into three economic regions surrounding core urban centers:  the South centered on Ho Chi Minh City, the North based in Hanoi, and the Center focused on Da Nang. The main distinctions among these regions are consumer purchasing ability, brand awareness, and recognition. For many consumer goods and retail-related companies, the first marketing goal tends to be to penetrate Ho Chi Minh City.

By contrast, companies that sell products related to Vietnam’s infrastructure development (energy, environment, aviation, telecommunications, etc.) frequently focus selling efforts in Hanoi, which is headquarters to most state-owned enterprises (SOEs), the multilateral development banks (Asian Development Bank and World Bank) and other development organizations offering official development assistance. Even with Vietnam’s rapid transition to a more consumer-based society, SOEs and their subsidiaries still control a large portion of the economy and account for a significant portion of overall imports on a total value basis.

Product Information

Foreign companies in Vietnam utilize trade fairs, product seminars, product demonstrations, and point-of-sales materials, as well as print and broadcast advertising. Successful brands typically must adapt to local tastes, particularly consumer goods. Detailed product information in the Vietnamese language should be provided to agents and distributors, and companies to establish websites in Vietnamese. It should be noted that public seminars, product promotions, workshops, and press conferences might require approval in advance by local authorities.

Practical Considerations

Hands-on involvement is required to achieve commercial success in Vietnam. U.S. firms should foster close relationships and maintain regular communication with Vietnamese representatives, agents, and/or distributors. Not only are many products competing for limited shelf, showroom, or warehouse space, but Vietnamese representatives also often handle multiple brands of the same product category. A close relationship allows the foreign supplier to keep abreast of the changes and developments in local market conditions and assess the competitiveness of its products. This approach ensures that the Vietnamese partner is updated on product information and motivated to market the product. Frequent training and support for marketing and after-service activities are also key elements to success.

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Vietnam Trade Development and Promotion