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Vietnam Cited as Fastest Growing 2015 SE Asian Electronics Market

Global survey pinpoints Vietnam as world's fifth fastest growing electronics market and the fastest growing in Southeast Asia, an outlook luring investment into production facilities, as well as putting a new focus on its youthful consumers.

Photo: Vietnam: A dynamic consumer and production base in the electronics sector.
Vietnam: A dynamic consumer and production base in the electronics sector.
Photo: Vietnam: A dynamic consumer and production base in the electronics sector.
Vietnam: A dynamic consumer and production base in the electronics sector.

Vietnam has been identified as one of the world's top five fastest growing technology equipment markets. The findings come in a survey by the GfK Group, one of Germany's leading market research companies, and show that sales in Vietnam's electronics sector will total more than US$0.6 billion next year. This sees Vietnam as the only Southeast Asian country ranked in the top five places, with Indonesia and the Philippines coming in at number nine and 10, respectively, on the list.

All of the top 10 growth markets singled out by GfK are emerging economies. Tellingly, contrary to the usual assumption that China is the strongest growth market in the technology sector, GfK is predicting that India will enjoy the most growth. For the Indian market – as in many others – smartphones are seen as the main area of expansion, a move partly spurred by a fall in the price of handsets.

In Vietnam, overall spending in the electronics sector in the first quarter of 2014 was up 27.5% on the same period in 2013. Other markets in the region also saw increases, but at a lower rate, with Indonesia up 10.6% and Singapore up 7.3% year-on-year. Smartphones and tablets remain the standout products, with phones accounting for some 40% of total expenditure in the sector.

The big players in the electronics business in Vietnam are the FPT Group – a Hanoi-based, company with branches in 14 countries – and Mobile World JSC, a specialist in mobile and digital devices.

In the first six months of 2014, FPT recorded steady growth in the software export sector, with its revenue up 21% compared to the same period in 2013. In telecommunications, its revenue was also up. With a 17% rise here, it outperformed expectations by a staggering 108%.

FPT's retail and distribution divisions also showed considerable improvement. In particular, the revenue from the distribution of iPhones was almost four times higher in the first half of 2014 than in the same period in 2013. Meanwhile, the company's bid to expand its retail chain has also met with some success, with retail sales in the first six months up by 81%. In 2013, its retail arm actually recorded a loss.

Back in November, Mobile World JSC was ranked 409th among Asia Pacific's 500 largest retail businesses by Retail Asia Magazine. This list is based on success in meeting various key criteria, notably sales, retail locations, total retail space and revenue per square metre.

Photo: Hanoi’s FPT Group.
Hanoi's FPT Group.
Photo: Hanoi’s FPT Group.
Hanoi's FPT Group.
Photo: Samsung: Investing in Vietnam.
Samsung: Investing in Vietnam.
Photo: Samsung: Investing in Vietnam.
Samsung: Investing in Vietnam.

Speaking at the time, Tran Huy Thanh Tung, head of Mobile World's Supervisory Board, said: "We are excited that we remain a major retailer, not only in Vietnam, but in the region as a whole. This is a well-earned acknowledgment of our success in raising the levels of convenience and service we offer our customers." In a busy month for Mobile World, November also saw the company open three new superstores.

Apart from the smartphone and tablet sectors, demand also increased for a number of other items, notably electronic/digital (televisions, speakers), refrigeration (refrigerators, air-conditioners), and electrical appliances (cookers, microwave ovens). These sectors enjoyed an across-the-board, 20% year-on-year increase in sales for the first quarter of 2014. According to industry sources, Vietnam's electronics sector is expected to remain buoyant in 2015, attracting a number of new foreign firms to the market.

Samsung is already one of the highest-grossing and most popular mobile phone brands in Vietnam, with the country now also home to one of the South Korean giant's biggest global production centres. In 2013, Samsung Vietnam shipped more than 100 million units, with 97% of its output going for export. With two factories located in the country's Bac Ninh and Thai Nguyen provinces, Samsung's total investment in Vietnam is now around US$4.5 billion.

Reflecting on the company's commitment to Vietnam, Shim Won Hwan, a Director of Samsung Vietnam, said: "We have promoted investment in Vietnam as it has political stability and abundant human resources, while the sector also has substantial government backing. We are now introducing our most advanced technological systems to our two factories in Vietnam, both of which are now key elements in Samsung's global production base. In terms of our overall strategy, Vietnam will also be leading several aspects of our research and development activity."

A number of other blue-chip electronics brands, including Nokia, Sony and Canon, are investing heavily in Vietnam. More recently, Microsoft has also announced plans to shift a part of its production from China to Vietnam.

Commenting on Vietnam's emerging role in the sector, George Yeo, Singapore's Foreign Minister, said: "Several years ago, for many of the world's major manufacturers, China was the number one investment destination. The global production model, however, is changing as production and labour costs in China continue to rise. Many corporations are now making a strategic decision to shift their investment from China to the Southeast Asian countries, especially Vietnam."

Photo: Newly-affluent, young consumers lead Vietnam’s electronics surge.
Newly-affluent, young consumers lead Vietnam's electronics surge.
Photo: Newly-affluent, young consumers lead Vietnam’s electronics surge.
Newly-affluent, young consumers lead Vietnam's electronics surge.

With a strong economic performance in 2014, consumer demand in Vietnam increased significantly, with the door now clearly open to any Hong Kong business looking for new opportunities to invest. Assessing the opportunities for overseas businesses, Alain Chevalier, a Senior Advisor on export enhancement for the Swiss Government, said: "Vietnam has a population of 90 million people, 70% of whom are young. Obviously, there is very high potential in the electronic products market. It is also one of the reasons why foreign direct investors in the electronics sector are increasingly focussing on Vietnam."

Pham Tuong Vi, Special Correspondent, Ho Chi Minh City

Content provided by Picture: HKTDC Research
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