"Urban Vietnam has a middle class and, when a country has a middle class, it means it is able to sustain itself for the future," he added. Reporting from Ho Chi Minh City, William Horsley of BBC News wrote: "The slums are an ugly reminder of the legacy of the war. Stocked with puffy sofas and easy chairs, it is a couch potato's paradise. The Thi Nghe canal runs just a few blocks from the modern heart of the city. "Most of the young people in Vietnam are not like this,'' Nhu said. Indeed, high-net-worth individuals represent a minuscule minority of the mass affluent. They indulge their urge to splurge at Dolce and Gabbana, Burberry, Escada, Rolex, Clarins, Shiseido and the like. "When the World Bank re-engaged with Vietnam in 1993," it says, "income per capita was US$170. Beneath the club's flash veneer though lurks the slightly troubling question of how people in their 20s and early 30s can afford such extravagance in one of the world's poorest countries. "And a sign of this wealth is to go out to restaurants." Now the Vietnamese government intends keeping a steady hand on government spending, aiming to keep its national budget at around 22 percent of GDP, according to the ADB. Research conducted by The Boston Consulting Groups Center for Customer Insight, including a survey of about 6,000 affluent consumers and extensive ethnographic qualitative research in six major Southeast Asian countries, found that the majority of mass-affluent consumers are young and savvy. Vietnams per capita income is expected to increase to US$3,000 by 2020 from its current level of US$1,960. Both higher education and the business environment can be further improved so that the youth cohort are not underutilized, helping Vietnam realize its full growth potential. Economic growth has averaged more than 7 percent annually over the past decade, and the rate of people living in poverty has dropped from 58 percent in 1993 to 11 percent in 2010. year. FDI has: The corresponding visual shows Vietnams top ten export categories in 2018, which may affect interest in study courses and post-study employment, given their importance to the countrys economic growth. Global data and statistics, research and publications, and topics in poverty and development. However, considering peoples awareness, 96 percent of Vietnamese think their incomes are high enough to be among the middle class. The country's economy grew by 8 percent in 2006, and average per capita income has increased to $723 in 2006 from $485 in 2003. [Source: By Grant McCool , Ho Binh Minh, Nguyen Van Vinh, Reuters, May 10, 2006 ]. ", AFP reported in 2007: "The World Bank and United Nations have often lauded Vietnam as a model partner which has lifted 30 million people out of abject poverty since the launch of doi moi (renewal) market reforms some 20 years ago. With the entrance fee set at a modest 40,000 dong (2.50 dollars), the club also attracts university students, expatriates and middle class Hanoians keen to rub shoulders with the capital's elite. For luxury goods and services to command premium prices, they must connote exclusivity. When they travel further, however, she and her three high schoolage children plan their trips carefully around shopping. We offer six recommendations for how all consumer product companiesnot only luxury brandscan pursue the affluent. "Vietnam is wealthier than what we believe, but we honestly don't know how wealthy," said Ralf Matthaes, managing director of TNS market research in Ho Chi Minh City. "In America, you pay in installments," said Nguyen Hoang Trieu, luxury car dealer in Ho Chi Minh City, the former Saigon. (Photo courtesy of McKinsey), Vietnams civil registration system sees great improvements: official, Nursing home market nascent in Vietnam: Savills, Vietnams economy to slow as population ages: WB report, Vietnam a bright spot for foreign investors: experts, Flag-raising ceremony marks National Reunification Day, Top legislator concludes official visits to Cuba, Argentina, Uruguay, Second int'l hot-air balloon festival opens in Tuyen Quang, Top Vietnamese, Uruguayan legislative leaders hold talks, HCM City unlocks resources for development, Vietjet increases frequency of flights on routes to Australia, Green growth - inevitable choice towards prosperity, Ha Long-Cam Pha coastal road puts into operation, Ministry supports 50% cut on auto registration fees. The World Banks digital platform for live-streaming, Environmental and Social Policies for Projects, International Development Association (IDA). COVID-19 demonstrated that the social protection system faces some challenges in reaching affected individuals and workers who are typically out of the line of sight of government such as informal workers. Vietnam has seen annual economic growth of 7-8 percent in recent years but the scrapping of state subsidies and farm cooperatives has widened the wealth gap and sent poor rural families and lone children to cities looking for work. WebRICH, POOR AND MIDDLE CLASS IN VIETNAM DISPARITY OF INCOME IN VIETNAM Vietnam remains a poor country, with most people earning about $1,500 a year, but it has made tremendous strides since opening its doors up to capitalism in the mid-1980s. The others, Anh said, were worn by film star Nicole Kidman and Victoria Beckham, the former Spice Girl. In the analysis process, these six social classes are grouped into three social strata: the upper stratum (including upper and upper-middle classes), the middle stratum (consisting of the middle and lower-middle classes), and lower stratum (comprising of the upper-lower and lower classes). "This trend presents a potential future social challenge for policy makers in Vietnam," says Robert Glofcheski, a senior economist with UNDP Vietnam. Such sights are as common as the prostitutes filling the bar stools casting for customers. Instead of shifting from an inexpensive whiskey to a premium blended Scotch, for example, these consumers are buying high-end single malts. BCG was the pioneer in business strategy when it was founded in 1963. In contrast, in the remote regions - central and northern highlands, Mekong and Red River deltas - official efforts are geared more toward developing off-farm activities and convincing people to adopt hygienic practices." Hold 15 meetings and network with school leaders who advise teenagers and their parents on the next steps in their academic careers. As the mass-affluent class replaces the middle class as the driver of growth, the dynamics of Southeast Asias consumer market will fundamentally change. The decor is as stylish as the hippest clubs in London or New York and artists from the southern boomtown of Ho Chi Minh City are regularly flown up to perform their latest hits. But the luxury market is booming in Vietnam, where Ho Chi Minh's communist revolution exalted equality and the common man just a generation ago. In the Mekong Delta provinces, for instance, a majority of the population have seen an increase in their incomes in the past several years, while keeping the gap between rich and poor there at a minimum. The sensational case offered a vivid glimpse into the lives of Vietnam's nouveau riche, whose sometimes decadent habits are as unfamiliar to ordinary Vietnamese as the leather upholstery of the bright yellow Mercedes one of the young men was driving. Sixty-eight percent said that they look online first to compare prices, and then they make purchases in person. In Vietnam, 50 percent of population would be listed as middle class with income of $5,000-35,000 a year. "I'll never forget how we had to queue for any necessity during the (post-war) subsidised period," said retired teacher Tran Thi Hoa, 56, pushing her shopping trolley through Hanoi's new Citimart. It is perfumed with frangipani and splashed with color from the flowering apricot blossoms and orchids. According to statistics from the United Nations, 29.9 percent of the gross national income is held by rich people, who account for just 10 percent of the population. Young men did the driving, he said, and sometimes their elegant girlfriends would sit on the back, hugging them tightly as they tore up the road. The poorest had to spend over 50 percent of their income on food, while the richest roughly 44 percent. The middle class earning USD 714 a month or more in Vietnam will double to 33 million people, about a third of the population, between 2014 and 2020, according to Boston Consulting Group. [Source: Makoto Ota, Yomiuri Shimbun, February 1, 2008]. Reaching the ambitious goal of upper-middle-income status would require Vietnam to grow at least 7 percent per year, raising the average income level to over $7,000 or $18,000 in purchasing-power parity terms by 2035, compared with $2,052 or $5,370 in PPP terms in 2014. China, India and the U.S. are projected to retain the top three rankings as the countries with the largest middle-class populations, according to World Data Lab. Improving the relevance and quality of tertiary education curriculum and staffing can help reduce skill gaps and alleviate difficulties in recruiting for certain skills. That compares with 26% who cited advice from friends, colleagues, classmates, and parents as among their most important sources of information and 7% who cited TV ads. So these consumers are relevant not only for luxury brands, such as Chanel and Diageo, but also for companies such as Johnson & Johnson, P&G, Heineken, and adidas. The seven boys are the children of successful private entrepreneurs, including a Central Highlands lumber tycoon and a Saigon textile magnate. The children had reported that lights remained on night and day, and that they were released for only two half-hour periods a day to wash and eat. Develop a regional strategy to target the affluent. "Some of them are children of Communist Party members and government officials, others are businessmen," he added. By 2020, the country is expected to have 30 million middle class and rich consumers. BMI runs more than 80 events in over a dozen countries each year. Vietnam is expected to add 36 million people to its middle class by 2030, according to a recent report by McKinsey. A joint report released in 2016 by the Vietnamese government and the World Bank suggested that Vietnam could achieve upper-middle income status by 2035 with per capita income of more than USD 7,000, which is in the range of what Malaysia or South Korea experienced in the mid-2000s. "Here, you pay all at once, in cash. They are other people with money and propertyincluding large landowners and people connected to the royal familywere either forced to flee Vietnam or were stripped of their money and property. Ten years younger than An, she is busily cleaning before the rush of visitors who will be coming for Tet, including their daughter, who lives in California. These consumers spend an average of 40% more than older members of the segment. It is perfectly common for the well-off to drop $500 during an evening of fun. "He received three years in prison. "There's a new wave, a new income bracket," one restauranteur told the New York Times. License number: 71/GP-CBC, Ministry of Information and Communications, September 22, 2021. By 2020, the country is expected to have 30 million middle class and rich consumers. Some of the kids listen to tourists a bit to understand where you are from then speak your language. Vietnams economic growth over the past two decades has been steady and impressive, averaging 5.5% since 1990 and nearly 8% annually through the 1990s. Vietnam introduced fees for both health care and education in the late 1980s, said Faulkner, adding that these policies have particularly penalized women in rural areas. It will take many years. Vietnam is determined to pursue rapid and sustainable economic growth combined with environmental protection to progress to prosperity. Lining the far wall are the glass-faced shelves that hold his books. Indeed, many members of the affluent class would not be regarded as particularly rich by the standards of a developed economy. Growth has been driven by rising foreign direct investment, vigorous export growth, strengthening agriculture, and robust domestic demand. However, since many of these consumers live in urban centers and exhibit similar behaviorssuch as using digital media and traveling frequentlyit is entirely feasible for brands to create a regional strategy that reaches a very high share of the areas mass-affluent consumers as a collective target group. When they visit Japan, her son likes to buy special samurai trousers and jeans that mold to his body shape. Web2022 Vietnam Poverty and Equity Assessment From the Last Mile to the Next Mile. She recently bought Cuong a home in Saigon worth about $350,000, according to a story on VN Express, a Vietnamese Web newspaper. As the war continued to escalate, so did the militancy of anti-war students. Managing Director & Senior Partner; Global Leader, Technology, Media, & Telecommunications Practice. Providing you the unique ability to connect with influential leaders at the secondary school level from across Vietnam. ++, "Says NCSSH deputy director Do Hoai Nam: "High human development tends to lessen inequality. More-experienced-affluent consumers search for tangible proof of value, such as workmanship, the use of advanced technologies, or the use of special or sustainably sourced materials. Vietnam doesnt really have any old money. The share of agriculture in gross domestic product has fallen from 25 percent to 20 percent between 2000 and 2006, by which time industry was contributing 48.1 percent and services 38.1 percent. As there is no private land ownership in Vietnam, trade in land-use rights is roaring, creating a housing bubble in the country. The percentage of salaried professionals ranges from 50% in Indonesia to 86% in Singapore. Because the region is highly diversified and covers a wide area, Southeast Asias affluent population may appear to be a collection of niche markets. "Few people in Na Lia an hour's drive from the nearest highway in a valley in Lan Son province have seen Hanoi, where people bring laptops to wi-fi cafes and play the stock market. About 80% of Vietnams affluent live in cities with populations of at least 1 million, for example. Among the most needy and vulnerable to poverty are millions of migrant workers, poor farmers and people with disabilities. In Indonesia, MAC households have monthly incomes exceeding $224. Affluent Southeast Asians make about 40% of their purchases of goods such as cosmetics, watches, jewelry, and skin care products while traveling. The youngest are five or six. Learn more about the countrys robust growth below and contact us for help or advice when recruiting in Vietnam. In Vietnam, for example, 45% of affluent respondents told us that they used digital channels, compared with 31% of respondents in the established middle class and 21% in the emerging middle class. Global retail outlets should cater to these consumers by having staff that speak their native languages and ensuring that purchases can be made through their local payment platforms. Newly affluent consumers are significantly affected by famous fashion bloggers and public social media, but those who are more experienced pay more attention to trusted online circles and tend to purchase through private channels, such as a closed adidas group on Facebook or private WhatsApp groups. For example, an affluent Filipino reporting a monthly household income of about $5,500, when measured in local purchasing power, may appear to be in the upper middle class. Vietnam's gross domestic product grew by an estimated 8.2 percent this year, second only to China. The labor market is still characterized by low wages, high informality, and a slow expansion of high-skilled occupations. Economic growth averaged 9 percent a year in the five years to 1997, the year of the Asian economic crisis. Agriculture is the main source of raw materials for the processing industries and a major contributor to exports (mining in the north and rubber plantations in the south). In 2020, they accounted for 20 percent of that groups consumer spending and this will rise to nearly 25 percent in 2030. WebVietnam 366.14 Upper middle in 27,104.09 ( 2021 billion) GDP per capita (current US$) Vietnam 3,756.5 Upper middle in 10,828.1 ( 2021) GDP growth (annual %) Vietnam 2.6 This is particularly true with luxury brands. VNA Saturday, December 11, 2021 14:15 Over the next decade, 36 million more consumers may join Vietnams middle class, defined as consumers who spend at least 11 USD a day in purchasing power parity terms. In the 1990s Vietnamese yuppies in Hanoi congregated at the Com Nieu restaurant where home-style peasant cuisine was served. Brands without price ladders that match the upgrading pattern of consumers run the risk of losing their customers to competitors as incomes rise. Its such an integral part of the brand experience and what the brand means.. (See Exhibit 7.). A report released by the U.K.-based analytical NGO and data refinery enterprise World Data Lab forecasts that Indonesia will have the worlds fastest-growing middle class population with 75.8 million, followed by Pakistan (59.5 million) and Bangladesh (52.4 million). Companies must use the shape of the curve for each product to plan their own price laddersincluding the right premium and luxury price pointsin order to make upgrades accessible to their customers. Men hurry along carrying scrap metal to sell, or to repair the flimsy shacks they live in. Continuing improvements in higher education access and quality will be needed. We estimate that 57 million people in this dynamic region have gained affluencethe purchasing power and intent to sharply increase their acquisition of a wide variety of premium and luxury goods and services. The classifications are updated each year on July 1 and are based on the GNI per capita of the previous year (2021). Those tire-sandaled troops who bested the French colonial army and outlasted the Americans embodied frugality and egalitarianism. ^^, In 2007, AFP reported from Na Lia, a poor village in northwest Vietnam, "Vietnam's cities are being transformed by rapid economic growth which has brought fashion boutiques, fast food and traffic jams, but most people in this remote northern village wouldn't know. ////, The room has been changed since I last visited. Rice is the most important crop. Companies can accomplish this by taking several steps: using social media and chat groups (such as Line, WhatsApp, and Instagram) to infiltrate the private circles of sophisticated affluent consumers; engaging with fashion bloggers and influencers to promote their brands; and, appreciating the powerful influence that affluent consumers have on one another, encouraging them to communicate and share their opinions in public social media forums. "You should create a kind of policy that builds your capacity, that can serve as a springboard but really help you to escape poverty and manage risks in your life," said Duong, director of the Institute for Social Development Studies. But in Myanmar and Vietnam, it comprises only the established middle-class and affluent segments. Not long ago, displays of wealth were frowned upon in Vietnam. The poorest neighborhood in Ho Chi Minh City in the 1990s District 4 was known as the district of the "five no's""no sewers, no water, no electricity, no jobs, no hope." So I became a street boyI'd just like to have an occupation where I can support myselfAnd, well, maybe a motorbikea Honda. Use digital channels. In a cross-country fiscal incidence comparison, Vietnams fiscal policy is about average among LMIC economies in helping contribute to inequality reduction. They are well educated and theres a general sense of optimism because of that," he said. One of her friends has 50 Louis Vuitton bags, Van said. The government holds up successful entrepreneurs as role models and honors them with Gold Star awards. :/, Vietnam's older generation, shaped by the hardships of war, finds itself at odds with younger Vietnamese over the new consumerism. Blog:Reducing gaps in education remains important in Vietnam as new school year kicks in, A Year Deferred Early Experiences and Lessons from COVID-19 in Vietnam (2021), 2012 Vietnam Poverty Assessment Well Begun but Not Yet Done. Other development indicators such as school enrollment, life expectancy, the unemployment rate and access to basic social services show that in many urban areas, residents are doing better in other areas than their compatriots in the countryside. Companies should also use affluent consumers as digital influencers by actively engaging them through social media. The government aimed to boost this further, with a 2018 target of 135,000. As the war continued to escalate, so did the militancy of anti-war students. It is now part of an Urban Upgrade Project, which aims to bring clean water and sanitation to 1.5 million residents of Saigon who lack them. Related Expertise: Below the open windows sits a fish tank that holds the third component in Ans menagerie. They also said that they usually post in private chat groups. "And I would never tell him how much they cost. These sentiments suggest that the affluent want a luxury lifestylebut one that they define themselves. High-protein grass has been planted for the cows to feed on in enclosures increasing cattle yield, converting manure into organic fertiliser, and preventing the animals from destroying other plants. Still employs almost half of the population and is highly labour-intensive in Vietnam; much ploughing is still done by water buffalo. And according to World Bank estimates, poverty levels in certain pockets of Vietnam - specifically in ethnic minority highland areas - are falling far more slowly than in the rest of the country. The Asian upper middle class can be viewed as two subsegments: those below 35 and those above it. (See Exhibit 3. The owners also appear eager to remain Hanoi's only nightspot catering to the cream of the urban elite. Indeed, from a country that found it hard to feed its growing population some 10 years ago, this Indochinese nation has developed into the world's second-largest rice exporter. Those born in the baby boom years that followed the Vietnam War have turned 30, and a group known as the 8X-generation born in the 1980s strive to make their mark as professional choices increase. The stereotype of affluent Southeast Asian consumers showing off their wealth with designer labels is badly outdated. A surprisingly small percentage of peopleless than 5%inherited their wealth, except in Thailand, where a greater proportion has family wealth. Travel spending increases sharply when Southeast Asians enter the ranks of the affluent. according to the World Bank. Over the last decade, poverty declined impressively. In Southeast Asias four most populous nationsIndonesia, the Philippines, Thailand, and Vietnamthe percentages of people in each income segment are as follows: The population of middle-class and affluent consumers (MACs) in Indonesia, Malaysia, Thailand, and the Philippines comprises the emerging and established middle-class and the affluent segments. But the water is still badly polluted. One is the Nhieu Loc canal district, on the road used by visitors arriving in Saigon from Tan Son Nhat airport. For Jamesa successful Filipino talent agent and former restauranteur who is in his late 40stravel is a passion. We have identified six behaviors that are exhibited by the majority of affluent Southeast Asians and that are extremely relevant for marketers. That number could almost double to 125 million households by 2025, making ASEAN a pivotal consumer market of the future. There was no access to medical treatment or rehabilitation or educational activities. They are also more interested in setting trends than following them. In particular, Vietnam is considered a high-potential market for electric cars in the near future. Therefore, they are a more accessible market than the middle class and will likely respond well to a regional strategy. ::: "In contrast, more than 70 percent of the 83 million Vietnamese live in the countryside and work in agriculture, in some places still struggling to make one dollar a day. [Source: Makoto Ota, Yomiuri Shimbun, February 1, 2008], The first Rolls Royce in Vietnam was purchased in 2007 by Hoang Khai, the chairman of Khaisilk. Those ten countries have a total population of more than 650 million people. Heineken provides an example. 36.1 (1998). Over half the country lived in absolute poverty, compared to 9 percent in China and 15 percent in the Philippines and four million children under the age of five suffer from malnourishment. This is a major change for Vietnam: in 2000 less than 10% of the population spent more than 11 USD per day whereas today, this number reaches 40% and is expected to reach 75% by 2030. As we stare at the papers heaped in the driveway." Even active online shoppers, though, still enjoy shopping in conventional, brick-and-mortar outlets. A report released by the U.K.-based analytical NGO and data refinery enterprise World Data Lab forecasts that Indonesia will have the worlds fastest-growing middle class population with 75.8 million, followed by Pakistan (59.5 million) and Bangladesh (52.4 million). According to McKinsey, the number of companies headquartered in country with more than USD 1 billion in revenue in 2010 was: According to the Minister of Planning and Investment Nguyen Chi Dung, over the past 30 years, foreign direct investment (FDI) has become an important part of the economy. Vietnamese consumers enter the middle class and put midsize cities on the radar Asia is the worlds consumption growth engine: miss Asia and you could miss half the global picturea $10 trillion consumption growth opportunity over the next decade, according to recent McKinsey Global Institute research. Beyond the poor, a more diverse share of the population is economically vulnerable. But Luong Van Ly, of Saigon's Planning and Investment Department, says 50,000 households have still to be re-housed, most in new high-rise tenements in the suburbs. The 1986 reforms came at a time when, faced with severe famine and a failing Soviet-style command economy, the government began to experiment with market mechanisms and carried out an "egalitarian" distribution of communal land to farmers. The broad based growth in Vietnam in the 1990s and 2000s contributed to rapid poverty reduction across all regions of the country. These findings indicate that consumer product companies should thoroughly define their digital strategies and find ways to integrate their shopping experience across offline and online channels. Vietnamese agriculture experts have introduced soy beans and a high-yield rice, doubling output.