Doing business in Vietnam
The V of ‘CIVETS’ – some of the world’s fastest emerging markets – we look at what Vietnam has for British businesses
The CIVETS (Columbia, Indonesia, Vietnam, Egypt, Turkey and South Africa) promise to be among the fastest emerging markets over the next decade. Foreign investment in these nations is growing and – as most of their own production is in raw materials – there is a growing market for secondary goods. If the UK Government is to succeed in its plan for an export-led recovery then the UK must focus on these markets.
Vietnam is an ancient country with a complex and bloody history. The country won its independence from China in 938AD and since then has been embroiled in colonial wars with the French, internal conflict between north and south (which led to well documented “intervention” from major world powers) and ultimately communist rule. But Vietnam is now in a stable political position and as such its economy is flourishing. Economic growth has been among the fastest in the world over the last 12 years and is set to continue at that pace. British businesses would be wise to target the Vietnamese marketplace as an export opportunity.
Vietnam has historically been an agricultural country reliant on wet rice as the staple food source. The Vietnam War (1955 – 1975) changed this forever and subsequent communist rule led to a raft of changes to both the political system and the economic principles of the nation. This began the economic accession of Vietnam which increased most rapidly in the 2000s.
The post war era saw the communist party impose “planned economy” policies intended to rejuvenate the country’s agriculture sector and to push the nation towards industrialisation. These policies included the collectivisation of farms and factories and millions were employed in government programs. These policies brought the nation together and put infrastructure in place that could support development. However, the country suffered as a result of a trade embargo imposed by the USA and most of Europe after the war, which slowed growth. 1986 saw the free market reach Vietnam.
Private ownership of businesses was encouraged and the nation began to trade internationally far more freely. Vietnam’s economy began to grow, rising by around 8% per year throughout the 1990s and 7% from 2000-2005. Manufacturing, IT and high-tech industries are the fastest growing of the Vietnam economic offering. Vietnam is also a top five oil producer in South East Asia. Rapid growth in these industries has led to a steep decline in those living in “deep poverty” and personal wealth is increasing fast. Unemployment is a mere 2.9% and land ownership is increasing. This means that demand for services and consumer goods is on the up in Vietnam.
Citibank predict that the Vietnamese economy will continue to grow at the current rate for 10 years to come. If this is the case the UK businesses must look to take advantage.
Business opportunities for British companies
The Vietnamese already import a vast amount of consumer goods from the US including plastics, dairy products, meat and poultry as well as raw materials such as unfinished iron and cotton. The UK can certainly compete in these marketplaces as well as providing the types of services that are currently exported around the world.
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If the UK is to succeed in its plan for an export led recovery then Vietnam is a prime target market. Relative political stability, economic growth and rapid personal wealth improvements mean that British goods and services will be in demand.
Don’t be left behind.
Torrie Callander is a corporate dealer at independent foreign exchange provider, Global Reach Partners