The higher human development is, the less severe is inequality." And then they got nabbed -- in Vietnam's first drag-racing bust. (For an explanation of income groups in Southeast Asias four most populous countries, see BCGs Method for Classifying Household Income Segments.) This disproportionately high level of digital engagement makes the internet a key channel for influencing affluent shoppers. I stopped at a flower farm, where the owner, in his mid-40s, identified himself as Le Mai Xuan. [Source: Makoto Ota, Yomiuri Shimbun, February 1, 2008], The first Rolls Royce in Vietnam was purchased in 2007 by Hoang Khai, the chairman of Khaisilk. "When the World Bank re-engaged with Vietnam in 1993," it says, "income per capita was US$170. A few doors down is the furniture business Cuong's mother helped him set up. Companies must prepare not only to meet exploding demand in new product categories but also to shift to masstige and premium products in other categories. In the analysis process, these six social classes are grouped into three social strata: the upper stratum (including upper and upper-middle classes), the middle stratum (consisting of the middle and lower-middle classes), and lower stratum (comprising of the upper-lower and lower classes). Tracy Dahlby wrote in National Geographic that he talked to one child who had lived on the streets of Ho Chi Minh City for four years. Beyond the poor, a more diverse share of the population is economically vulnerable. He received a 3-year suspended sentence, and five other young men received 18-month suspended sentences. Boston Consulting Group 2023. 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. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner. When asked which channels they use to share recommendations, about half of the affluent respondents said that they use messaging apps, such as Microsoft Messenger and WhatsApp, or social media sites. Herms, for example, tightly limits access to VIP events, and the product selection depends on customers status with the brand. In a cross-country fiscal incidence comparison, Vietnams fiscal policy is about average among LMIC economies in helping contribute to inequality reduction. Use digital channels. 1 JPY = 207.33 VND ", In the late 1990s the Vietnamese government estimated there were has around 16,000 children under 16 living on the streets. When they visit Japan, her son likes to buy special samurai trousers and jeans that mold to his body shape. The owners also appear eager to remain Hanoi's only nightspot catering to the cream of the urban elite. She and a friend visit Bangkok every two or three months, and they buy a suitcase of stuff.. One casino patron told the Yomiuri Shimbun, "I made a fortune thanks to my connections with the [Vietnamese] government. They were caught just as they crossed a bridge over the Saigon River. Indeed, high-net-worth individuals represent a minuscule minority of the mass affluent. Its portfolio in Vietnam, for instance, starts with budget brands (such as Tiger Beer priced at about 50 cents a can) and extends to high-end beers (such as Heineken and Affligem, costing $1 to $2 per bottle) with other brands at key price points in between. 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. ), How long individuals have been part of the mass-affluent class influences them more than their country of origin does. Brands without price ladders that match the upgrading pattern of consumers run the risk of losing their customers to competitors as incomes rise. 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. In the early 1990s, 45 percent of the children in Vietnam were regarded as malnourished and 51 percent of the population ate less than the World Bank's 2,100 calorie a day subsistence level. The World Bank assigns the worlds economies to four income groupslow, lower-middle, upper-middle, and high-income countries. Lining the far wall are the glass-faced shelves that hold his books. Officials did not allow the BBC to interview slum-dwellers or their helpers in the worst slum areas, like the one around the Thi Nghe canal. Even active online shoppers, though, still enjoy shopping in conventional, brick-and-mortar outlets. Poverty rates among some chronically poorer groups was reduced by at least half between 2010 and 2020, including ethnic minorities and households in the Midlands and Northern Mountains regions. 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. Sometimes people come in here with $400,000 in a suitcase." Instead, couples become angry and withdrawn due to fatigue and stress. "Before 1950", said Mr Vong, "people here on the Nhieu Loc canal say they used to bathe in the water. 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. Now we must launch a war against poverty.". When they travel further, however, she and her three high schoolage children plan their trips carefully around shopping. "They spend as much as they want on whatever they want,'' said Thuan, who juggles several part-time jobs, takes home about $65 a month and gets around the city on a bicycle. They even purchase jewelry, watches, and spirits online more than 40% of the time. 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. No matter their starting point, BCG can help. 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. Some brands offer cultural training for staff in key global shopping cities and hire speakers of Southeast Asian languages. The family cooks on a primitive charcoal stove, but they have a radio, television set, videocassette recorder and refrigerator. 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 pulled a $10,000 wad from his pocket, police say, and offered four $100 bills to the cops, hoping the cash would wash his problems away. By using the BMI GlobalEd website you agree to our use of cookies as described in our cookie policy. However, children are dealt the hardest blow in divorce cases. He moonlights as a policeman. The affluent also tend to live in urban centers more than the members of other income groups do. 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. The report also said the group of middle-aged people from 45 to 65 years old would play the main role in Vietnams middle class population. Newly affluent consumers are significantly affected by famous fashion bloggers and public social media, but those who are more experienced pay more attention to trusted online circles and tend to purchase through private channels, such as a closed adidas group on Facebook or private WhatsApp groups. They are also more interested in setting trends than following them. Across the hall at the Milano store, the display last year featured a $54,000 Dolce and Gabbana dress, one of just three in the world, according to marketing director Dang Tu Anh, who represents both stores. Rice is the most important crop. For the cost of a bottle of whisky -- ranging from a mere 65 dollars up to a staggering 180 dollars -- one of the multitude of cyclo or rickshaw drivers waiting outside could put their feet up for a couple of months, But in Vietnam's deeply traditional Confucian society, where maintaining face is all important, there are few better places in the capital to flaunt one's financial prowess than the New Century. In fact, they seek shopping experiences that combine both online and offline channels, as 62% of respondents confirmed. The affluent are the New Age premium and luxury consumers. 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. Cuong and his pals were convicted of disturbing the public order Sept. 8, four months after their midnight thrill ride. Not so long ago just getting water was a daily struggle in Na Lia, where people had to fill water buckets from nearby creeks. Vietnam is expected to add 36 million people to its middle class by 2030, according to a recent report by McKinsey. Updated country income classifications are available here. 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. And as part of its Masters collection of bags, Louis Vuitton has formed an exclusive collaboration with the American artist Jeff Koons. On one bank is a slum, where people live below the official poverty line of US$1 a day. If you disable this cookie, we will not be able to save your preferences. We have identified six behaviors that are exhibited by the majority of affluent Southeast Asians and that are extremely relevant for marketers. 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. "Vegetables, meat, household utensils, everything. In 1999 alone, the richest 20 percent of the population earned 7.3 times as much as the poorest 20 percent. Consumer product companies should ensure that they have a strong public digital presence that goes far beyond their own websites. "You are not allowed to talk to these people.". 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. "Families who can afford it, make almost an overadjustment and think a chubby baby is a healthy baby." Offer some form of exclusivity. For some basic products, such as toothpaste, shampoo, and instant noodles, spending by Southeast Asian households remains very stable as incomes rise. Many newly affluent Southeast Asians care most about following trends and owning the same brands as their peers. In 1995, there was virtually nil mobile phone ownership and today in Ho Chi Minh and Hanoi most families have at least one." Other development indicators such as school enrollment, life expectancy, the unemployment rate and access to basic social services show that in many urban areas, residents are doing better in other areas than their compatriots in the countryside. That compares with 26% who cited advice from friends, colleagues, classmates, and parents as among their most important sources of information and 7% who cited TV ads. Fiscal policy can support the development of a prosperous and inclusive middle-class society. 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. =, "In its country strategy and programme for Vietnam, the Asian Development Bank said that the Vietnamese government was aiming to reduce poverty levels by half to around 10 percent by 2010. We arent referring only to an income level. ////, AFP reported from Hanoi: "Over a generation, urban Vietnam has emerged from post-war austerity into a fast growing consumer society, a trend set to speed up as WTO membership attracts more foreign companies, analysts say. One of her friends has 50 Louis Vuitton bags, Van said. Vietnam is expected to add 36 million people to its middle class by 2030, according to a recent report by McKinsey. As these consumers become part of the affluent class, they shift to purchasing more expensive products within the same categories, a process we call premiumization. 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. When consumers crossed that threshold, they purchased certain productssuch as smartphones, cosmetics, branded liquor, and frozen yogurtfor the first time. Van's indulgences are modest compared to those of Vietnam's super elite, who tool around in the ultimate status symbols: a shiny BMW or Mercedes-Benz. The youngest, 18 years old, is still in high school. 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. 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. Access to new knowledge and innovations, including application of appropriate digital technologies, would support productivity growth by substituting for labor intensity. The main online channels are mostly official brand websites and online marketplaces, followed by social media groups and other specialty websites. In the past year it has persecuted dissidents, restricted public gatherings, controlled access to the Internet and prohibited all free press and independent labor unions. This compares with 76% of established middle-class respondents and 56% of emerging middle-class respondents. [Source: Xinhua, January 10, 2007], In 2002, Tran Dinh Thanh Lam of the Inter Press Service wrote: "Up until recently, economists saw no great difference in individual incomes in Vietnam as could be expected in a socialist country. Vietnams economic growth over the past two decades has been steady and impressive, averaging 5.5% since 1990 and nearly 8% annually through the 1990s. 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. 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. In the Mekong Delta provinces, for instance, a majority of the population have seen an increase in their incomes in the past several years, while keeping the gap between rich and poor there at a minimum. ++. We face big challenges to help the worlds poorest people and ensure that everyone sees benefits from economic growth. [Source: CIA World Factbook, Xinhua, Inter Press Service], In January 2007, Xinhua reported: "The spending of the richest households on housing, electricity and hygiene was 8.8 times higher than that of the poorest, the newspaper quoted results of a survey of Vietnam's households in 2006 by the country's General Statistics Office. To learn more about cookies, click here. Population below poverty line: 11.3 percent (2012 est., CIA World Factbook). They are well fed. The real needs in Vietnam are in places like this, beyond the mountains and at the ends of inaccessible roads. All of my international travels have to have a shopping component to them, said Jen, 27, a Singaporean marketing manager. The Thi Nghe canal runs just a few blocks from the modern heart of the city. The mass affluent account for up to 40% of household wealth in major Southeast Asian markets and more than half of the total spending in premium and luxury categories. Still employs almost half of the population and is highly labour-intensive in Vietnam; much ploughing is still done by water buffalo. They indulge their urge to splurge at Dolce and Gabbana, Burberry, Escada, Rolex, Clarins, Shiseido and the like. Men hurry along carrying scrap metal to sell, or to repair the flimsy shacks they live in. His wife, Thuy, is a teacher; together they earn $14,000 annuallya staggering sum compared with the Vietnamese average of about $500. 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. Associated Press reported from Ho Chi Minh City: "In a country whose peasant army once marched on flip-flops cut from old tires, Gucci beach sandals priced at $365 can come as a shock. Demand is also likely to surge for premium products, such as organic moisturizing creams, rather than mass-market skin care products. [Source: Agence France Presse, January 11, 2007 ***], "Two thirds of Vietnamese were born after the war with the United States and they want to join the materialist mainstream of their dynamic Asian neighbourhood rather than think about the troubled history their parents lived through. It is crucial that companies understand the income-consumption curve for every one of their products and then match each products price ladder to that curve. Morley said many parents who grew up with food stamps are eager to give their children what they didn't have. The stereotype of affluent Southeast Asian consumers showing off their wealth with designer labels is badly outdated. Vietnam's per capita income rose to 835 dollars in 2007 from 423 dollars in 2001, and the percentage of households living in poverty declined to 14.7 percent in 2007 from 28.9 percent in 2002. Using consumption patterns and household income as a gauge, we found that about 5% to 10% of the population in each Southeast Asian nation is affluent. With cabinet ministers receiving an annual salary of around 1,350 dollars and the prime minister officially taking home a mere 1,640 dollars, it is easy to understand such cynicism. Heineken provides an example. Consumer product companies must not lose sight of the fact that the wealth gap in much of Southeast Asia remains wide, and rising inequality can lead to a social backlash over time if incomes among the middle class stagnate. "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. 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. The seventh -- a high school student accused of organizing the race -- was sent to jail for three years. Earlier this month, three youths died and two were badly injured racing their motorbikes in another part of the city. "Urban Vietnam has a middle class and, when a country has a middle class, it means it is able to sustain itself for the future," he added. The richest and most successful businessmen in the past were mostly Chinese. Vietnams per capita income is expected to increase to US$3,000 by 2020 from its current level of US$1,960. Vietnam's government and its foreign donors are aware of the growing urban-rural divide, a problem common to much of Asia. In Indonesia, for example, the affluent already account for a significant amount of all spending on restaurants (42%); leisure and travel (46%); watches, jewelry, and eyewear (49%); and cars (53%). Categories such as passenger cars, cosmetics, and restaurant dining will become hot growth segments, replacing categories such as household appliances, baby products, and ready-to-eat foods; similar shifts occurred when China experienced a comparable demographic shift. "And a sign of this wealth is to go out to restaurants." 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. 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. Companies can also restrict access to goods by holding private events for select clients. "People from other villages have come to take a look," he said. 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.

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