Vietnam: A ‘VVS’ Market

It may have slipped from its No 1 ranking on A.T. Kearney’s Global Retail Development Index in 2008 to a relatively lowly 6th place in 2009, but Vietnam’s retail market, hidden from world view for many long years, has actually weathered the storm of the economic crisis in the same style as many other Asian countries.

According to official figures, real GDP growth in 2009 was pegged at 5.3%, and the government is targeting a 6.5% rise in 2010. Retail sales posted a year on year growth rate of 18.6 percent in 2009, rising to nearly US$ 65 bn, and are expected to about US$ 78 bn by end 2010.

For a country that opened its retail sector to the world hardly a couple of years ago, the speed of change has been dramatic. Today Vietnam has about 400 supermarkets and 2,000 convenience stores, operated by both domestic and global companies. A survey by Saigon Marketing Newspaper in 2008 revealed that around 50% of the consumers in Ho Chi Minh City purchase goods in supermarkets while only 15% buy products in traditional markets.

The General Statistics Office of Vietnam Census 2009 Report, notes that about 66% of Vietnam’s population is between 15 and 59 years of age. This is its largest spending group and it is expected to fuel the retail market growth. The number of mid and high income people has been increasing quickly and it is expected to reach 25% of the total population in the next couple of years.

"Import total turnover in the country in March 2010 is estimated at US$ 6.5 billion, estimated to the first quarter in 2010 at US$ 17.6 billion 38.4% increase over the same period in 2009 reflecting the recovery and growth of domestic production," says a statement of the Ministry of Planning and Investment.

"In (an) emerging and developing country like Vietnam, a new group of high income consumers has taken shape. They tend to continue to purchase brand name products of high quality, regardless of the economic circumstances." So believes Do Minh Phu, Vice President of the Vietnam Gold Business Association, and CEO of the Gold, Silver, Gemstone and Investment Joint Stock Company (DOJI) in talking about Vietnam’s diamond market at this point in time.

This is good news for diamantaires the world over as they explore newer emerging markets with a renewed vigour even as sales in the older, more established ones have dipped quite drastically.

Indeed, Vietnam’s fledgling diamond jewellery market has now emerged as a multi-million dollar business. Do Minh Phu notes that even during the global slowdown last year, “Demand for diamonds of average quality has fallen, but those of high quality are still very much in demand.”

According to local traders, in Vietnam high income earners favour higher quality diamonds and the D, E or F colours are more in demand. Ho Chi Minh City is the diamond trade’s largest centre. According to an official from SJC Hanoi, prices from VND1 to 2 billion are not uncommon.

Unfortunately, though import taxes on diamonds have been reduced from one per cent to zero, the prevailing high VAT rate of 10% pushes a lot of the diamond business into the illegal market. Thus while official figures are lower, Association officials believe that the estimated annual turnover may touch US$ 300 mn.

However there are a growing number of traders developing a transparent and open business and importing diamnds. Some of the major diamond traders are DOJI, Saigon Jewelry Company (SJC), and Phu Nhuan Jewelry (PNJ). But, analysts believe that it will take a very long time to completely eliminate illegal imports.

The Vietnamese gold and jewellery market value is around US$6.36 billion in 2008, and growing rapidly, According to figures compiled by GFMS for World Gold Council, it is the 6th largest consumer of gold and jewellery in Asian region.

With jewellery imports from ASEAN countries now subject to an import tax of just five per cent, the market is expected to open up some more, presenting opportunities for exporters from other countries as well.

However there are a growing number of traders developing a transparent and open business and importing diamnds. Some of the major diamond traders are DOJI, Saigon Jewelry Company (SJC), and Phu Nhuan Jewelry (PNJ). But, analysts believe that it will take a very long time to completely eliminate illegal imports.

The Vietnamese gold and jewellery market value is around US$6.36 billion in 2008, and growing rapidly, According to figures compiled by GFMS for World Gold Council, it is the 6th largest consumer of gold and jewellery in Asian region.

With jewellery imports from ASEAN countries now subject to an import tax of just five per cent, the market is expected to open up some more, presenting opportunities for exporters from other countries as well.

According to an official survey, 92.5 per cent of the exhibitors were satisfied with the quality of the visitors, and practically all of them met target buyers.

The show is organized by World Trade Fair Ltd. along with Vietnam Chamber of Commerce & Industry exhibition organization and VCCI Exhibition Services Co.

The next edition of the International Jewelry + Watch Vietnam (6th edition) will be held at Tan Binh Exhibition & Convention Centre, Ho Chi Minh, from December 9-12 , 2010, and International Jewelry + Watch Vietnam (7th edition) will be held for the first time at Hanoi from December 16-19, 2010.

For more details: www.vietnamjewelryshow.com