About 60% of respondents said that official brand websites are among the top sources that inform their purchasing decisions the most, followed by online shopping marketplaces, such as Amazon and Lazada, and recommendations on social networking sites. in Vietnam growth of middle income population For some basic products, such as toothpaste, shampoo, and instant noodles, spending by Southeast Asian households remains very stable as incomes rise. One of her friends has 50 Louis Vuitton bags, Van said. So I became a street boyI'd just like to have an occupation where I can support myselfAnd, well, maybe a motorbikea Honda. This may further widen gaps in human capital formation. [Source: Reuters, October 8, 1998 |+|], In 2002, Xinhua reported: "With Ho Chi Minh City's divorce rate increasing in recent years, more kids make a home on streets of the Vietnamese city. 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 output value of both manufacturing and services surpassed that of agriculture in the early 1990s. "However, ask a cyclo driver outside and you get a wry smile and a mumbled comment about rampant corruption in the party and the government. 1 AUD = 16,423.54 VND We offer six recommendations for how all consumer product companiesnot only luxury brandscan pursue the affluent. Graduating to high-income status requires higher labor productivity. 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. Most observers believe that with the new U.S.-Vietnam trade deal signed in May, it is only a matter of time before Vietnam's young middle class will be sipping coffee at Starbucks and eating at McDonald's like their counterparts in Bangkok and Hong Kong. Van, for example, enjoys pampering herself at the salon with massages and manicures. The number of newly established enterprises in Vietnam in 2017 hit a record high of 126,859 and was up by 15.2% from 2016. As the country begins to embrace private enterprise, its nouveaux riches are snapping up shoes at Gucci, handbags at Louis Vuitton and watches at Cartier, offering proof of how much the country has changed after decades of war. 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. ^^, 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. 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. This will require greater overall spending while consolidating the currently fragmented mix of programs to achieve greater efficiency. Media accounts portrayed two of the young men as loafers who spent their time spending their parents' money. Vietnam doesnt really have any old money. Morley said many parents who grew up with food stamps are eager to give their children what they didn't have. An additional difference is that newly affluent consumers increase their spending on items such as skin care products, cosmetics, and international travel. About 80% of Vietnams affluent live in cities with populations of at least 1 million, for example. It is perfumed with frangipani and splashed with color from the flowering apricot blossoms and orchids. 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. Vietnam Phong, who like some 80 percent of the people of Na Lia does not own a moped, made the six-hour trip by motorcycle-taxi and bus for 12 dollars return, a small fortune for him. HANOI Vietnam is expected to add 36 million people to its middle class by 2030, according to a recent report by McKinsey. A model developed by BCGs Center for Customer Insight segments the populations of countries into five groups on the basis of monthly household income, census data, and purchasing behavior. -, "The government is naturally sensitive about the slums. "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. This site contains copyrighted material the use of which has not always been authorized by the copyright owner. The young men raced along a one-mile straightaway at speeds of up to 70 mph, whipped around a traffic circle and then headed back toward downtown. It didn't. While the World Bank has praised Vietnam for poverty reduction it has also stressed that "the poverty rate among ethnic minorities and communities in mountainous areas is much higher compared to the national average," standing at 60 percent in 2004 for these groups. Lai Hai Nhu, a 21-year-old university student, said the young men seemed to have squandered the opportunities their wealth had given them. Vietnam is expected to add 36 million people to its middle class by 2030, according to a recent report by McKinsey. HANOI In a recent survey by the Boston Consulting Group (BCG), Vietnam was found to have the fastest growing middle class in Southeast Asia. Online channels and physical stores are also increasingly deploying digital technologies, such as augmented and virtual reality. But they also realize that the varying circumstances from province to province mean fashioning different policy approaches for each area. 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. To finance the public investments needed to eliminate poverty and grow the economically secure and middle classes, Vietnam can broaden its tax revenue base (personal income tax, property tax), and explore the use of new taxes which both raise revenue and address negative externalities. [Source: Agence France Presse, November 8, 2007 ], In 2006, Reuters reported: "World Bank senior poverty economist Carrie Turk said the rate at which poverty was being reduced in Vietnam was "almost globally unprecedented" and the benefits widely shared. However, as these consumers mature, they increasingly prefer goods that few others have and seek out exclusive and niche, harder-to-find brands. But what he really enjoys is the hunt for something unique. On the other side are street people selling postcards and peasants eking out leave on small parcels of land. (See Exhibit 6.). Providing you the unique ability to connect with influential leaders at the secondary school level from across Vietnam. However, all attempts to find out the names of the owners were met with a stony silence, while the club's manager, who gave his name as Minh, simply said the stakeholders were "Vietnamese people". 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). "If I can afford to buy something nice, it makes me feel proud," said Van, who works at Siemens and also consults for a Vietnamese import company. If a particular product has a linear income-consumption curve, for example, companies should ensure that they offer products at each rung of the ladder to make it feasible for consumers to upgrade. BMI also takes a limited number of accredited institutions on chauffeured visits to top-rated private high schools in Bangkok, Hanoi, HCMC and Jakarta and to meet top high school counsellors at the Vietnam Internation School Workshop & Forum. Luxury brands are addressing this desire for craftsmanship, functionality, and quality ingredients. The income bands for these segments are different in each country, since they measure the purchasing power for a basket of goods. By 2020, the country is expected to have 30 million middle class and rich consumers. :/, "Those working low-wage jobs find the new lust for luxury hard to stomach. As agricultural land is taken over for industrial use, people living in these areas will become more vulnerable - especially those who are old, uneducated or infirm. The assessed value of the land per square meter in front of the Ben Thanh Market, in the center of Ho Chi Minh City, was 200,000 dollars, or 21.7 million yen, in 2006--more than the 19 million yen the same-sized piece of land would cost in Tokyo's ritzy Ginza 2-chome. Over this period, the number of affluent people in those four nations alone is projected to grow from 46 million to 125 million, and their share of the population is projected to more than double, to 21%. Experienced-affluent consumers want more than just a luxury brand. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful. The classifications are updated each year on July 1 and are based on the GNI per capita of the previous year (2021). I stopped at a flower farm, where the owner, in his mid-40s, identified himself as Le Mai Xuan. The member states of ASEAN had a combined 2017 GDP of $6.5 trillion, making Southeast Asia the equivalent of the fourth-largest economy worldwide behind the US, China, and India. And pay cash. The price tag, including tax, was estimated at above US$600,000. said Ha Ngoc. Several buyers in Ho Chi Minh City were interested in the car but Khai offered the highest price which was, however, not disclosed. [Source: The Associated Press - September 22, 2007 :/], "Members of the new generation want to enjoy life and pamper themselves with luxurious things," said Nguyen Thi Cam Van, 39, who has purchased five $1,000 handbags at Louis Vuitton. Vietnam News said the conference was told that the government had approved a 9.2 billion dong ($661,680) project to help tackle the problem of homeless children. By 2020, the country is expected to have 30 million middle class and rich consumers. In Indonesia, MAC households have monthly incomes exceeding $224. growth of middle income population Booming Upper Middle Class The report concludes with policy suggestions following the Last Mile to Next Mile framework. Upper middle class ////, Cuong's mother, Nguyen Thi Nhu Loan, owns the Cuoc Cuong timber company, which is based in the Central Highlands. upper class in Vietnam We also found widespread agreement that balance is important and that they would rather enjoy life now than worry about the future. -, "Le Hung Vong, a journalist from the English-language newspaper Vietnam News, explained that the new housing was now linked to a modern sewage system. "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. The World Bank noted that between 1990 (USD 6.472 billion) and 2016 (USD 205.276 billion), Vietnams GDP grew by a whopping 3,303% making it the second-fastest growth rate worldwide, only surpassed by China. Ordinary Vietnamese such as Le Binh Thuan were awed by newspaper accounts of the racers' wealth. "There's a new wave, a new income bracket," one restauranteur told the New York Times. Companies should think of travel as an important channel for reaching Southeast Asias mass market of affluent consumers. "People become richer in Ho Chi Minh City while us farmers become poorer and poorer." 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." ***. Vietnam expected to add 36 million middle class people in The canal water often breaks its banks and floods this area, especially during the summer rainy season, leaving a layer of mud that breeds disease. He received a 3-year suspended sentence, and five other young men received 18-month suspended sentences. 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. Reuters reported: "Children selling newspapers, postcards or chewing gum, shining shoes, and begging are common sights in Hanoi and Ho Chi Minh City. The legendary North Vietnamese general Gen. Vo Nguyen Giap said: "Before, we launched a war against foreign aggressors. In fact, Tokyo and Seoul have emerged as among the top shopping locationstaking over from Hong Kong and Singaporefor affluent Southeast Asians across most major luxury categories. "Vegetables, meat, household utensils, everything. The affluent also tend to live in urban centers more than the members of other income groups do. Although the newly affluent frequently associate a top brand and high price with quality, experienced-affluent consumers are more discerning. WebThe 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. Questions or comments, e-mail ajhays98@yahoo.com. Saigon's economic boom has raised land prices to record highs. 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. Traveling Frequently. Today, these individuals constitute up to only 10% of the population in the regions biggest economies, but by 2030, the ranks of the mass affluent are expected to reach 136 million and represent 21% of the population. These behaviors were also particularly strong when it came to premium items, such as watches, alcohol, skin care products, and jewelry. The company markets a variety of beers at price points that target different consumer segments in Southeast Asia. According to these experts, while the growth has benefitted rich and poor alike, those who were well off to begin with ended up with more gains. "You are not allowed to talk to these people.". The real needs in Vietnam are in places like this, beyond the mountains and at the ends of inaccessible roads. But while some Vietnamese have benefitted from the emerging market economy, many have been left behind, and have even abandoned their hometowns altogether for Bavet. com, Vietnam National Administration of Tourism, CIA World Factbook, Comptons Encyclopedia, The Guardian, National Geographic, Smithsonian magazine, The New Yorker, Time, Newsweek, Reuters, AP, AFP, Wall Street Journal, The Atlantic Monthly, The Economist, Global Viewpoint (Christian Science Monitor), Foreign Policy, Wikipedia, BBC, CNN, Fox News and various websites, books and other publications identified in the text. growth of middle income population The used, 2006-model Phantom, imported by Hoang Trong Ltd. is a four-door sedan equipped with a 453hp, 6.75-liter cylinder V12 engine and six gears. Diageo is opening experiential, invitation-only retail stores for connoisseurs to sample and learn about rare and reserve Johnnie Walker whiskeys. Time interviewed one Vietnamese businessman who bought a parcel of land for $40,000 and sold it ten days later for $57,000. While the risk of falling into extreme poverty is now low, achieving economic security at higher levels is still a relevant topic. (See Exhibit 1.). Airport duty-free shops should be viewed as outlets for selling much more than cosmetics and spirits. 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. "Some of them are children of Communist Party members and government officials, others are businessmen," he added. Though Do La and his friends are refusing to discuss their lavish lifestyle or anything else about their case, their recklessness has enraged many of their less affluent fellow citizens, who seem embarrassed that such a thing could happen in Vietnam. Companies can convey this by restricting availabilitymanufacturing a limited edition of a product, for example, or crafting a product by hand. "And that's good." At Vine, the chef, Donald Berger, said the clientele is "only 30 percent Vietnamese, but they're the biggest spenders." 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. More than one billion Asians are set to join the global middle class by 2030, the report said, predicting also that the current Covid-19 pandemic will be a temporary pause in the world economys great demographic shift. Cuong and his pals were convicted of disturbing the public order Sept. 8, four months after their midnight thrill ride. "In light of the regional crisis, the impact of the economic slowdown on marginalised groups such as these will be felt even more strongly,'' the statement said. The population that is no longer poor, but also not economically secure or middle class, is about 13.6 million. Le Labo, for example, hand blends perfumes in front of customers, enabling them to share in the experience of preparation. The report highlighted the Dong Dau social protection center, 30 kilometers (20 miles) northeast of Hanoi, which also serves as a holding center for sex workers, drug addicts and disabled and elderly people without family support. With 23.2 million people joining the demographic by 2030, Vietnam is ranked seventh among nine nations with fastest growing middle class populations in the coming decade. Vietnams per capita income is expected to increase to US$3,000 by 2020 from its current level of US$1,960. Develop a regional strategy to target the affluent. However, children are dealt the hardest blow in divorce cases. We provide a wide array of financial products and technical assistance, and we help countries share and apply innovative knowledge and solutions to the challenges they face. Updated country income classifications are available here. For Vietnamese sociologist Le Bach Duong, the achievement of alleviating hunger for a large number of people needs to be sustained with state and private sector involvement. "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. 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. 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? upper class in Vietnam upper class in Vietnam Soon they would appear on national television wearing pinstriped jailhouse jumpsuits, and their recklessness would unleash resentment across the country, where the average annual income is $420. Offer some form of exclusivity. The difference for spending on household appliances was 7.2 times, education 5.2, transport 12.1, and culture, sports and entertainment 69.8. 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. But all items were local brands that couldnt be found anywhere else. The classifications are updated each year on July 1 and are based on GNI per capita in current USD (using the Atlas method exchange rates) of the previous year (i.e. The classifications are updated each year on July 1 and are based on the GNI per capita of the previous year (2021). Now, the mass-affluent class is growing faster than any other income segment in the regionand the pace is projected to accelerate. Large supermarkets such as Metro of Germany and Big-C of France are filled at weekends with shoppers buying goods in bulk. Upper-middle-income economies have GNI per capita of $4,046 to $12,535. Progress in poverty reduction was set back but did not reverse in 2020. 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. 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. Because the region is highly diversified and covers a wide area, Southeast Asias affluent population may appear to be a collection of niche markets. "Maybe in 2020", Mr Vong says. When we asked affluent consumers what makes a brand premium to them, I identify with the product and its story was one of the top responses. The IDA says that "electricity, once a luxury, is now commonplace". These are natural branches of the Saigon river, whose waters rise and fall with the rains. Hanoi's once-sleepy streets are now choked with scooters and, increasingly, the luxury cars of the new rich, including several Humvees. He didn't know who his parents were. 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. "Individualism is destroying our cultural identity. Global data and statistics, research and publications, and topics in poverty and development. And how long will it take before they will be able to swim in the water safely again ? Consumer confidence is sky-high, according to a recent Gallup survey of 56 countries that found Vietnam to be the world's most hopeful country, with 94 percent of respondents optimistic about their country's future. Quoted on Yahoo at $328,750, in Vietnam it attracted an additional 70 percent import tax, 50 percent luxury tax, and 10 percent value-added tax. Moreover, the social protection system can play a larger role (discussed as part of the Next Mile agenda). At that time people slept on the zoo grounds. These similarities are fostered by their use of social media (where they keep one another abreast of new products and fashion trends and share opinions) and their travel experiences. This compares with 76% of established middle-class respondents and 56% of emerging middle-class respondents. In 1999 alone, the richest 20 percent of the population earned 7.3 times as much as the poorest 20 percent. Photo by VnExpress/Phuong Anh. Vietnams per capita income is expected to increase to US$3,000 by 2020 from its current level of US$1,960. Relishing Immersive Experiences. "The money they spend on a Louis Vuitton bag could buy several cows for a farmer's family and lift them out of poverty." in Vietnam The youngest are five or six. In 2020, about 23 percent of ethnic minorities were working in manufacturing, nearly the same rate as the Kinh majority at the start of the decade. Business owners constitute the second-biggest cohort. Vietnam took just 11 years (from 1995 to 2006) to double its per capita GDP from USD 1,300 to USD 2,600 (according to McKinsey & Co, 2014). One of the most successful businessmen in Vietnam in the 1990s was Nguyen Trung Truc. Why did the other kids only get suspended sentences?'' 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. Cac watched Khoa's family transform their small household sewing operation into Thuan Phuong Co., one of the biggest garment companies in Saigon. Their teenage son Hung sat at a makeshift desk in a corner, learning English on a computer. Booming Upper Middle Class They also said that they usually post in private chat groups. (See Exhibit 7.). In Thailand, for example, these consumers make about 50% of their fashion, skin care, and cosmetic purchases online. [Source: Hoang Uy, Tuoi Tre, September 18, 2007], Reporting from Ho Chi Minh City, Ben Stocking wrote in the Mercury News, "Wealthy young rebels without a cause, they ran wild in the streets, racing $50,000 luxury cars down the boulevards of old Saigon. As the war continued to escalate, so did the militancy of anti-war students. But in Myanmar and Vietnam, it comprises only the established middle-class and affluent segments. 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. There was significant progress in poverty reduction from 2010-2020, but Last Mile challenges in tackling poverty remain. This sentiment was especially true among those who are experienced-affluent consumers. This would require Vietnam to grow at least 7% per year, raising the average income level to over USD 7,000 (or USD 18,000 in purchasing-power parity terms) by 2035 (compared with USD 2,052 or USD 5,370 in PPP terms in 2014). Stocked with puffy sofas and easy chairs, it is a couch potato's paradise. Go-to-Market Strategy, The heavy security presence, which, according to several waiters, includes undercover, gun-carrying guards hired from police ranks, appear keen to keep observers guessing. The houses on both banks are newly-built. Whoever they are, they have influence or at least high-ranking sponsors who have allowed the club to use the premises of the neighbouring National Library as a carpark for their Mercedes-driving patrons. The hot-rodding episode underlined how out of sync Vietnam's crusty communist image has become with the freewheeling frontier capitalism that is taking root here. If these ten member states were one country, it would have the worlds third-largest population. But wide areas of slum dwellings are not. Seeking Exclusivity. Fiscal policy can support the development of a prosperous and inclusive middle-class society. In the current context of worsening air pollution, electric vehicles (EVs) are becoming an inevitable trend in the global automobile industry, and Vietnam is no exception. Upper middle class Reaching Next Mile aspirations:The millions who have escaped poverty over the last decade now need to continue climbing up to higher economic classes. According to the CIA World Factbook Household income or consumption by percentage share: lowest 10 percent: 3.2 percent; highest 10 percent: 30.2 percent (2008). In those parts, sewage is still dumped straight into the water, so it stills flows through parts of the city. They snake through the city towards the west and north. Companies that take into account the common values and behaviors among the affluentand use digital and travel channels to reach these consumerswill greatly increase their ability to succeed in what promises to be one of the greatest growth opportunities in Southeast Asias economy. 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. The Connections between the New Century and some senior-level government officials, although not necessarily illegal, allegedly run deep.
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