Marketing in Vietnam: What to know before starting your venture
Marketing in Vietnam was relatively obscured compared to the rest of the world for a long time. The nation was isolated from the outside world, resisted outside influences, upheld traditional values, and had little interest in capitalism. However, modern Vietnam has established itself as a rapidly developing destination for investment. With this article, you can learn about the advantages and drawbacks of the country’s marketing industry.
Three fruitful opportunities for marketing in Vietnam
Marketing in Vietnam is thriving thanks to the current economic situation of the country as well as the locals’ evolving preferences and access to the latest technological developments.
Favorable economic conditions
Marketing is about incentivizing consumers to purchase goods or services. Naturally, consumer behaviors depend on the current economic situation. Fortunately, Vietnam’s economy is showing many positive signs.
The positive GDP situation
Vietnam, once considered one of the world’s poorest nations in the early 1990s, has undergone a remarkable transformation. Since then, it has become one of the fastest-growing economies, rivaling even China.
This progress can be attributed to a series of economic reforms that have encouraged foreign direct investment (FDI). As a result, Vietnam witnessed a GDP growth rate of 7% in 2019, surpassing neighboring countries such as Laos (5.5%) and the Philippines (6.1%).
The services sector played a significant role, contributing to 45.5% of Vietnam’s GDP and employing 35% of its workforce. Despite the difficulties of the COVID-19 pandemic, Vietnam is one of the few nations in the Asia-Pacific region to demonstrate positive growth, specifically a commendable 2.9% GDP increase despite the difficulties posed by the global pandemic in 2020.
However, Vietnam faced a significant setback in mid-2021 due to the impact of the highly contagious delta variant of COVID-19. The resulting lockdowns took a toll on the country’s economy, slowing down GDP growth to an estimated 3-3.5% despite optimistic forecasts. Fortunately, Vietnam’s market has since implemented a robust vaccination program, facilitating a remarkable rebound in the post-pandemic period.
Each year, Vietnam gains 1 million laborers, adding to the total workforce of over 60 million. Around 35% of them are young individuals born between 1976 and 1995. Additionally, 95% are literate while 88% have completed secondary education. Finally, 10% of the workforce is highly skilled, and 5% are proficient in English.
Due to extensive efforts, Vietnam experiences higher urbanization rates compared to other Southeast Asian countries. Consequently, workers are transitioning from lower-paying agricultural jobs to more lucrative careers.
Vietnam’s economic growth has been fueled by a consistent influx of foreign investment. At the height of the pandemic in 2020, FDI decreased by just 15.5%, $4.8 billion lower than 2019. With a 4.4% year-over-year increase, FDI returned to an upward trend in September 2021. Despite the impact of COVID-19, Vietnam remains an appealing destination for foreign investors, offering some of the lowest corporate tax rates in Southeast Asia.
Evolution in locals’ preference
Recent economic developments have introduced some international conglomerates to the country like Heineken, Unilever, P&G, and PepsiCo. In 2019, these giants totaled an enormous $137.4 billion in annual retail sales. All of a sudden, the Vietnam market became a land of the giants.
The availability of quality foreign brands available equals the birth of a new generation of savvy consumers. However, they do not necessarily lean towards these companies. Instead, this new customer demographic marks the end of Vietnam’s obsession with all things foreign.
These customers have a more sophisticated preference, favoring brands with values and stories that resonate with them instead of ones with a well-known name. To respond to this drastic development, all companies are racing against each other to craft the most appealing marketing strategies.
Consequently, any brand with engaging stories and a firm understanding of their customers is prime for success, creating a great opportunity for businesses to enter. the Vietnam market
Even in rural or isolated parts of the nation, internet access is surprisingly widespread. The country has seen a tremendous increase in Internet usage for the last 10 years, thanks to inexpensive services and a young generation.
Also, more than one-third of the country, specifically 46.7 million people, are active Facebook users. Vietnamese people do not only embrace the Internet with open arms but also integrate it seamlessly into their daily lives.
For example, consumers will search for reviews and information about goods before deciding to make a purchase. Since the digital environment has such a profound impact on consumer behaviors, all businesses now consider this as the place to be for their promotional and outreach efforts.
Three challenges for marketing in Vietnam
Every market in the world comes with some sort of setback and Vietnam is no exception. Most notably, it has three major challenges that businesses should be aware of.
The rural population
Vietnam’s economic growth has been quite impressive, but it still faces many common problems of a developing economy. Its biggest issue is the 61 million-strong rural population. Although the living standard in these areas have improved, communication and transportation are still a tough nut to crack. This will complicate the market research process, should businesses decide to target consumers in these areas.
Complex business setup process
There are currently eight procedures you must complete in order to open a business in Vietnam. They include submitting a number of documents, such as capital requirements, depending on your industry and type of business entity.
For example, there is no specific minimum capital requirement established by the Vietnamese government for launching a business. Though, only businesses with “sufficient capital,” will be granted operation permission. New or foreign businesses may need some time to grow accustomed to these rules and regulations to ensure smooth operation.
Cultural And Language Barriers
Lastly, the language and cultural barriers are typical marketing difficulties for foreign enterprises anywhere. Vietnamese is the official language, therefore, it must be used for all paperwork and business forms. Subsequently, it is common for foreign companies to have both English and Vietnamese versions of legal documents simultaneously.
On the other hand, developing your teams in Vietnam requires a fundamental comprehension of the local business culture. For instance, the majority of Vietnamese are wary of passing judgment, while Westerners may not be. Small differences like this one can lead to misunderstandings, hindering business development.
As a result, a basic understanding of the local language and culture is necessary for an entity to integrate itself into Vietnamese society. Two viable solutions can be having a culturally sensitive member in your team or doing extensive research beforehand.
And there you have it—all the possibilities and difficulties for marketing in Vietnam from On Digitals. Expanding business in Vietnam is a high risk, high reward venture, so enlisting help from trusted professionals can make all the difference. By adhering to the pointers from On Digitals, you can establish a robust foundation for success in this business domain.
Keep an eye out for additional helpful information on our site, and contact us should you require any assistance with digital marketing. On Digitals is a Vietnam-based digital marketing agency, perfect for enterprises seeking solutions to promote your products or services. We welcome the opportunity to collaborate with you on our SEO, social media marketing, and website design projects.