Exporting to Vietnam - Market OverviewVietnam - Market Overview
Doing Business in Vietnam
“Over the past two decades, our two nations have come together to find common purpose based on common interests. Mr. President, I applaud your efforts to implement economic reforms and increase Vietnam’s trade and investment in all directions. The United States is enthusiastic about reforms that promote economic prosperity for all Vietnamese citizens, as we look to your growing middle class as a key market for American goods and services. I am confident that American energy, agriculture, financial services, aviation, digital commerce, and defense products are able to meet all of your many commercial needs.”
President Donald J. Trump
November 11, 2017, Hanoi, Vietnam
Market OverviewThe U.S.-Vietnamese commercial relationship has grown since the United States lifted its trade embargo against Vietnam in 1994 and the two countries renewed diplomatic relations in 1995. The U.S. is now Vietnam’s largest export market and a major source of foreign direct investment, helping fuel Vietnam’s remarkable economic growth. The United States has also benefitted from stronger trade ties. Over the last 10 years, U.S. exports to Vietnam increased by 330%, the best performance from our top 50 export markets. This country of over 93 million consumers with a positive view towards the United States exhibits the demographics needed for continuous growth over the next twenty years, and it is a rising star among Asia’s bustling economies. Previously, U.S. firms were slow to take advantage of the growing opportunities that Vietnam presents; however, U.S. firms are increasingly looking towards this market as a key component to their growth strategies in Asia. This Country Commercial Guide is intended to introduce U.S. exporters to doing business in Vietnam and provide the foundation necessary for a firm to take the initial steps needed to pursue business here.
Top five reasons why U.S. companies should consider exporting to Vietnam:
- The fastest-growing middle and affluent class in the region, with young consumers who are among the most optimistic in the world providing the right demographics for growth and receptivity to U.S. products and services.
- Strong long-term growth in U.S. exports.
- Strong GDP growth expected to continue for medium term.
- Large population of over 93 million consumers.
- Political stability in a region known for its uncertainty.
This strong economic growth has resulted in a booming and optimistic middle class. In a report titled Vietnam and Myanmar: Southeast Asia’s New Growth Frontiers, the Boston Consulting Group states, “by 2020, Vietnam’s middle and affluent class (MAC) population will be two-thirds the size of Thailand’s MAC population.” Per Knight Frank’s the Wealth Report, “the dramatic growth of ultra-high net worth individuals in Asia is set to be reinforced by stellar growth rates in several countries, including Vietnam, which is expected to see its ultra-wealthy population rise by 170% to 540 over the next decade – the highest rate of growth in the world. Millionaire numbers are expected to jump from 14,300 to 38,600 over the same period.” This growth rate exceeds neighboring China and India. This may be why Bloomberg’s 2017 Global Misery Index ranked Vietnam as the 12th happiest economy.
The 2001 U.S.–Vietnam Bilateral Trade Agreement (BTA) transformed the bilateral commercial relationship between our two nations and accelerated Vietnam’s entry into the global economy, with Vietnam joining the WTO in January of 2007. Since the BTA, bilateral trade increased from $2.9 billion in 2002 to over $54.6 billion in 2017. Vietnam was a major beneficiary of enhanced trade ties; in 2017, Vietnam held a $38 billion trade surplus with the United States.
U.S. exports to Vietnam grew by 23.3% in 2015 and by 43.2% in 2016, resulting in a two-year increase of 77.1%. This was by far the largest increase out of our major trade partners, and not just in percentage terms. Over this period, U.S. exports to Vietnam increased by over $4.4 billion, more than twice that of second place Ireland. Despite these strong numbers, U.S. exports to Vietnam in 2017 experienced a decline. While there was a decline in exports, the overall trend over the last decade remains positive.
U.S. export of agricultural products account for almost half of total exports to Vietnam, and the country remains a top-ten market for U.S. food and agricultural products and it is the fastest growing market in the top ten. Industrial inputs continued to see steady growth as Vietnam continues to import machinery, chemicals, instruments, and software to support its growing industrial sector.
U.S. businesses are enthusiastic about Vietnam’s commercial opportunities. A 2017 survey of AmChams in the ASEAN region regarding the trade and investment outlook reveals:
- 54% of those working in Vietnam saw the overall investment environment to be improving (2nd only to Myanmar). Only 4% saw the investment environment to be deteriorating (last among the 10 ASEAN nations).
- 84% of respondents stated that they expected increased profits from Vietnam operations (2nd only to Philippines at 85%).
- 56% of surveyed executives pointed to Vietnam as the most attractive potential bilateral FTA partner for the U.S.
- With the U.S. withdrawal from TPP, only 32% of executives anticipated that bilateral ties between Vietnam and China will deepen, the lowest rate among the 10 ASEAN nations.
- 72% of respondents anticipated expanding their business in Vietnam, 2nd only to Indonesia (73%).