Is Vietnam A Luxury Market?
December 19, 2007
In what it described as a "dazzling debut", German automaker Porsche has launched its full range of sports cars and SUVs through a new showroom in Ho Chi Minh City.
According to the company’s press release, “The time for Porsche in Vietnam is now,” said Mr. Andreas Klingler, General Director of Prestige Sports Car Company. “Drivers in the high-end market are now looking for more than just average luxury vehicles."
Drive a Porsche in Vietnam? Not so fast …
Anyway, the point isn’t that the traffic in Vietnam is horribly congested, although it is. What’s significant about the Porsche debut is that Vietnam now has enough "drivers in the high-end market" to attract one of the world’s most exclusive and expensive brands of automobiles.
The Rise From Poverty to Opportunity
Since initiating a program of economic and social reforms two decades ago, Vietnam has experienced a remarkable reversal of fortune. Poverty has been slashed by half. Health, education, and literacy have improved steadily. And foreign investments and export volumes are not only at record levels, they are among the fastest growing in the world.
These factors have all contributed to a steep rise in consumer confidence and spending. During the past five years alone, the country has doubled its average consumption per capita**.
Vietnam is following India and China in becoming a booming market for luxury products. High-end brands like Mercedes-Benz, Bulgari, Dolce and Gabbana, and Cartier have built a visible presence in Vietnam’s major cities, and together they’re spending millions of marketing dollars (billions of Dong) to capture the attention of Vietnam’s nouveaux riche.
Younger Consumers Are Driving Most Luxury Sales
In Vietnam, the older generations, hardened by decades of war and poverty, are typically very cautious about spending, especially on items they consider to be frivolous. Only the wealthiest and most elite among the elders are indulgent consumers.
For young, educated professionals, opportunities for upward mobility can be found in each of Vietnam’s major industrial sectors:
- As employees of the many multinational corporations currently expanding into Vietnam.
- As managers of Vietnam’s large and powerful state-owned enterprises.
- As participants in Vietnam’s relatively small but explosive private sector.
Talent in Vietnam is in tight supply and high demand, and wages are appreciating steadily for young, skilled workers. Furthermore, it’s not uncommon for unmarried Vietnamese to live with their parents, rent-free, so a greater share of their income is available to spend on fashionable items.
To this younger generation of Vietnamese, purchasing a stylish mobile phone or Italian handbag is an expression of success, self-confidence, and independence from their parents’ strict conservatism.
For more information, see our other articles about Vietnam.
*Source: U.S. Department of State **Source: General Statistics Office of Vietnam
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