The government aimed to boost this further, with a 2018 target of 135,000. "I wouldn't say it's the dark side of Vietnam, but here people say they suffer food shortages for three months a year." This site uses cookies to optimize functionality and give you the best possible experience. For the most part, Na Lia is a small, cashless economy, where people live off what they can grow but lack surplus produce or the means to transport any excess to the nearest market town. The statistics office's figures show that some 61 million people, or 72.9 percent of the Vietnamese population, lived in rural areas in 2006. Some resort to theft, and even drugs and prostitution to make money. For many companies, the prospect of reaching a relatively niche market that is dispersed across a vast region with a wide variety of languages and cultures may seem daunting. If you are the copyright owner and would like this content removed from factsanddetails.com, please contact me. However, considering peoples awareness, 96 percent of Vietnamese think their incomes are high enough to be among the middle class. This site contains copyrighted material the use of which has not always been authorized by the copyright owner. Reporting from Ho Chi Minh City, William Horsley of BBC News wrote: "The slums are an ugly reminder of the legacy of the war. In fact, they seek shopping experiences that combine both online and offline channels, as 62% of respondents confirmed. If you disable this cookie, we will not be able to save your preferences. Most of the children at the shelter are orphans or runaways. A disproportionate number of the poor also belong to ethnic minorities. :/, Reporting from Dalat, Stanley Karnow wrote in Smithsonian magazine, Peasants labored in paddy fields, protected at intervals by gleaming white statues of Phat Ba Quan Am, a Buddhist goddess of compassion. Indeed, high-net-worth individuals represent a minuscule minority of the mass affluent. They can show this by pursuing sustainable, local sourcing of materials; creating jobs by manufacturing products locally; and supporting social programs in the communities in which they operate. Leading brands are visible in social media channels for travelers, and these brands make sure that customers can use Southeast Asian payment systems, such as Mynt for Filipinos and Alipay for Singaporeans and the region at large. While the risk of falling into extreme poverty is now low, achieving economic security at higher levels is still a relevant topic. The income-consumption curve for other products is more linear: spending on laptops, cosmetics, and beer, for example, increases steadily as household incomes rise. But in Myanmar and Vietnam, it comprises only the established middle-class and affluent segments. I went to work in an auto garage, but they beat me too. Distribution of family income: Gini index: 37.6 (2008), country comparison to the world: 75; The Mercedes and BMWs, which belonged to the boys' dismayed parents, were confiscated. Following the restoration of normal relations with the United States in December 2001, Vietnams exports to the US doubled in 2002 and 2003 and the country joined the World Trade Organization (WTO) in January this year. Milano's best customers, Anh said, think nothing of dropping $5,000 on a handbag and a pair of shoes. The corresponding chart tracks USD-VND values from March 2014 to March 2019. But now a report released by the National Center for Social Sciences and Humanities (NCSSH), in cooperation with the United Nations Development Program (UNDP), says there is a fast-growing gap between haves and have-nots in Vietnam. Global retail outlets should cater to these consumers by having staff that speak their native languages and ensuring that purchases can be made through their local payment platforms. They research not only which products and brands to buy but also where to buy them. "I'll never forget how we had to queue for any necessity during the (post-war) subsidised period," said retired teacher Tran Thi Hoa, 56, pushing her shopping trolley through Hanoi's new Citimart. VNA Saturday, December 11, 2021 14:15 Over the next decade, 36 million more consumers may join Vietnams middle class, defined as consumers who spend at least 11 USD a day in purchasing power parity terms. WebVietnam 366.14 Upper middle in 27,104.09 ( 2021 billion) GDP per capita (current US$) Vietnam 3,756.5 Upper middle in 10,828.1 ( 2021) GDP growth (annual %) Vietnam 2.6 I couldn't imagine what life would be like if Vietnam returned to the situation of 20 years ago." They are mostly young, independent, and confident in their choices of brands and in their self-earned wealth. We have identified six behaviors that are exhibited by the majority of affluent Southeast Asians and that are extremely relevant for marketers. We project that by 2030, 47% of mass-affluent consumers will have held that status for more than a decade, compared with only 31% now. International Comparison Program & Purchasing Power Parity, International Household Survey Network (IHSN), Trust Fund for Statistical Capacity Building, Poverty headcount ratio at $2.15 a day (2017 PPP) (% of population), Unemployment, total (% of total labor force) (modeled ILO estimate), Personal remittances, received (% of GDP), Annual freshwater withdrawals, total (% of internal resources), Electricity production from renewable sources, excluding hydroelectric (% of total), People using safely managed sanitation services (% of population), Intentional homicides (per 100,000 people), Central government debt, total (% of GDP), Statistical performance indicators (SPI): Overall score (scale 0-100), Individuals using the Internet (% of population), Proportion of seats held by women in national parliaments (%), Foreign direct investment, net inflows (% of GDP). But opinion surveys show that the 60 percent of Vietnamese born after 1975 are very optimistic about the future and determined to enjoy the here and now. Nearly 40 percent of the middle class in 2016 slid to a lower economic group by 2018. "Products with an emotional component are crucial to satisfy the rising need for pampering oneself," he said, pointing out that the number of skincare products on sale has almost doubled in three years to 940 in 2006. The gains enjoyed by the urban population, however, are not limited to such things as increased income per capita. Experienced-affluent consumers want more than just a luxury brand. WebDemocratic president Lyndon Johnsons escalation of the Vietnam War in 1965 gave SDS a cause of its own, as well as a recruiting boost. ^^, "Human Rights Watch said Vietnam had launched similar crackdowns in the past on children who shine shoes, beg, pickpocket or sell postcards and chewing gum around Hanoi tourists sites, temples, markets and bus and train stations. In Indonesia, MAC households have monthly incomes exceeding $224. But economists remark that the growth could be better if the gains had been shared more evenly across different groups in the population and geographical regions of the country. "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. Morley said many parents who grew up with food stamps are eager to give their children what they didn't have. As middle-class families enter the ranks of the affluent, they greatly accelerate their consumption of premium and luxury goods and services, such as cars, liquor, restaurant dining, and travel. Making a difference isn't always easy, but neither is it impossible, said Ahmad, speaking at the opening of a new primary school and library here, built as part of his group's first rural development project in Vietnam. Historically, the Vietnamese Dong reached an all-time high of 23,360 in November of 2018 and a record low of 13,878 in February of 1999. "What we have done here is not genius, and it's not expensive," said Ahmad, whose project cost 150,000 dollars and half a year to set up, using know-how from Singapore's Nanyang Technological University. Even though members of the affluent class will remain a minority of the regions population, they will become an increasingly meaningful share of the target market for a wide variety of products. Some brands offer cultural training for staff in key global shopping cities and hire speakers of Southeast Asian languages. Most of them were scarce and of very poor quality. Vietnams per capita income is expected to increase to US$3,000 by 2020 from its current level of US$1,960. Because he already owns standard luxury goods that he wears to business meetings or parties, he now buys luxury products with a view of them as an investment. Roughly seven in ten respondents to our survey agreed that quality is important if a luxury brand is to be a worthy purchase and that it should retain its value or appreciate. Average income levels in Vietnam in 1993 were less than 20 percent of the level in Papua New Guinea at the time, but PNGs poor performance since then has meant that Vietnam has moved ahead with the margin likely to widen during the rest of this decade. Instead of taking group tours, they travel independently. A coastal road connecting Ha Long and Cam Pha cities in the northern province of Quang Ninh was put into operation on April 30. Specifically, these consumers are embracing premiumization, searching for quality and value, seeking exclusivity, relishing immersive experiences, using digital media, and traveling frequently. HANOI In a recent survey by the Boston Consulting Group (BCG), Vietnam was found to have the fastest growing middle class in Southeast Asia. The type of travel changes as affluent Southeast Asians become more experienced consumers. 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. In other words, things can only get better for the people in these areas. Meanwhile, market research firm Nielsen has estimated that the number of middle class Vietnamese will reach 44 million by 2020 and 95 million by 2030. ++. Companies should think of travel as an important channel for reaching Southeast Asias mass market of affluent consumers. 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. While most consumers tighten their budgets during economic slowdowns, the spending of these consumers tends to remain steady or continue to increase. Jasmine, a tax consultant and university lecturer in her early 30s who is married with no children, explained that she visits branded stores when buying a luxury product because they make you feel special: sales agents are so soft-spoken, sensitive, and knowledgeableunlike in a department store. Michael, a Singaporean in his mid-40s who is in the telecommunications infrastructure business, described himself as passionate about Burberry: The store visits take me someplace else. Web2022 Vietnam Poverty and Equity Assessment From the Last Mile to the Next Mile. James can afford to splurge on luxuryhell buy a Giorgio Armani suit. "Children reported that Dong Dau staff members slap, punch and beat children with rubber truncheons for violations of rules, which sometimes have not been clarified with the children," said the 88-page report. These factors include not only the store location and level of service but also the types of special events and whether or not these consumers personally identify with the brands marketing story. 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. A Thai households average spending per trip leaps nearly ninefold when the family graduates from the middle class to the affluent class. However, the mass affluent are far more accessible than most companies realize. Vietnam has its sights set on becoming a developing, upper-middle-income country with modern industry by 2030, when it celebrates the 100th anniversary of the founding of the Communist Party of Vietnam. Define a premiumization journey. Go-to-Market Strategy, Indeed, why have one bottle of a 150-dollar cognac for a table of six when you can have two or three at the same time? 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. Thuyet said, repeating the Vietnamese word for 100 with a look of disbelief on his face. The bird is mimicking the voice of Ans grandson, who lives here along with Ans three grown sons. Updated country income classifications are available here. [Source: By Grant McCool , Ho Binh Minh, Nguyen Van Vinh, Reuters, May 10, 2006 ]. "Then they will be able to enjoy the water. The World Bank assigns the worlds economies [1] to four income groupslow, lower-middle, upper-middle, and high income. Some men, with families to feed, scrape a living as pedicab drivers. A fashion shop in Hanoi. Its important to clarify what we mean by mass affluent. 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. 2020 in this case). In Vietnam, for example, brands heavily promote returning expatriates, who are known as Viet Kus, as Instagram personalities to influence online buyers. This has contributed to the economic well being of the population and is reflected in the high Human Development Index and the Gender Development Index relative to other countries at similar levels of development. Vietnam is expected to add 36 million people to its middle class by 2030, according to a recent report by McKinsey. Global data and statistics, research and publications, and topics in poverty and development. When they visit Japan, her son likes to buy special samurai trousers and jeans that mold to his body shape. ByAparna Bharadwaj,Justine Tasiaux, andVaishali Rastogi. Whether it is families dining at fancy restaurants, businessmen buying luxury cars or people shopping for vanity items, conspicuous consumption is "in" especially in the commercial hub, Ho Chi Minh City, and the capital, Hanoi. A forum on opportunities for Vietnamese handicraft products has taken place as part of the MIDA Florence International Crafts Fair 2023, which runs in Italy from April 25 to May 1. In Burberrys new flagship store in Beijings Sparkle Roll Plaza, for example, customers are surrounded by giant video screens for projecting fashion shows, musical performances, and elaborate holograms. The son of one top Communist Party leader is widely believed to be among the investors. Capitalist role models Not so long ago, extravagant displays of wealth were frowned upon in Vietnam, where the Communist government used to demonize businessmen as exploiters of the working class. Phong says he survives on less than 100 dollars a year. (See Exhibit 2.) When consumers crossed that threshold, they purchased certain productssuch as smartphones, cosmetics, branded liquor, and frozen yogurtfor the first time. The income bands for these segments are different in each country, since they measure the purchasing power for a basket of goods. But as they become experienced-affluent consumers, they tend to focus on fine dining and luxury goodssuch as watches, jewelry, and liquorthat reflect more refined tastes. "People become richer in Ho Chi Minh City while us farmers become poorer and poorer." The youngest, 18 years old, is still in high school. All rights reserved. In Vietnam, 50 percent of population would be listed as middle class with income of $5,000-35,000 a year. SDS leaders opposed the war because they felt it was unjust and feared being drafted. Population below poverty line: 11.3 percent (2012 est., CIA World Factbook). The labor market is still characterized by low wages, high informality, and a slow expansion of high-skilled occupations. ", In the late 1990s the Vietnamese government estimated there were has around 16,000 children under 16 living on the streets. One of the few villagers who has made the trip is Vi Van Phong, 31, who travelled to the capital for the first time this year, to visit the museum of Vietnam's first president Ho Chi Minh. As of a 2016 report from the General Statistics Office of Vietnam (GSO), median wages sit just below 6 million VND a month. "Leave now," one told a reporter asking a table of young, affluent-looking cognac sippers about their lifestyle. By using the BMI GlobalEd website you agree to our use of cookies as described in our cookie policy. Lien Aid has installed sand-filtered water tanks in all 71 households, fed via pipes from the nearby stream, where an eco-turbine generates power to light the new school, which replaces a dark timber shack. Heineken provides an example. They are also spurning designer labels and choosing tailor-made or made-to-order brands, such as bespoke Gyunel and Ong Shunmugam dresses. Economic policies to sustain growth must be complemented by strategies to protect households from falling back into poverty. And when he and his friends were pulled over for drag racing, 21-year-old Nguyen Quoc Cuong proved true to his nickname. Not so long ago just getting water was a daily struggle in Na Lia, where people had to fill water buckets from nearby creeks. 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. The growth rate slowed to 6.8 percent annually in the subsequent eight-year period to 2004 and has since returned to around 8 percent. But the water is still badly polluted. Ethnic minority workers are shifting more quickly out of agriculture. Relishing Immersive Experiences. Upper-middle-income economies have GNI per capita of $4,046 to $12,535. The stereotype of affluent Southeast Asian consumers showing off their wealth with designer labels is badly outdated. And as part of its Masters collection of bags, Louis Vuitton has formed an exclusive collaboration with the American artist Jeff Koons. The World Bank Group works in every major area of development. In addition, companies must master newways to market productsways that appeal to a consumer psyche that is dramatically different from that of the middle class. "It lets you show people your taste and style." The country is expected to achieve by 2015 most of the ambitious Millennium Development Goals set by the United Nations. "People from other villages have come to take a look," he said. Van, for example, enjoys pampering herself at the salon with massages and manicures. By 2020, the country is expected to have 30 million middle class and rich consumers. But a government survey found that the wealthiest individuals earned 12.5 times more than the poorest, who mostly live in rural, remote areas and depend on agricultural production. This compares with 76% of established middle-class respondents and 56% of emerging middle-class respondents. Poverty levels in Vietnam have dropped from around 70 percent of the population to less than 20 percent in the past 15 years, according to the World Bank. For a while he lived with a foster family that "beat me everyday so I left. We believe that companies in the region, as well as those outside it, should take a closer look at the mass-affluent market and plan to target it. HANOI In a recent survey by the Boston Consulting Group (BCG), Vietnam was found to have the fastest growing middle class in Southeast Asia. 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. Equitable human capital formation is needed for inclusive poverty reduction and breaking intergenerational poverty patterns. Hanging on the porch and from poles set in the driveway are the cages where An keeps his laughing thrushes, golden-fronted leafbirds, magpies, canaries, and other songbirds.
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