Vietnam might be one of Asia’s tiger economies, a much hyped ‘next 11’ boom market. But, dwarfed by its noisy northern neighbour, the country and its brands face huge challenges as they adjust to a more prominent role on the world stage.
With its young population, wealth of natural resources and its manufacturing capacity, Vietnam looks to be treading a steady route to continued economic growth. But two prominent market-watchers say the country risks losing out on big opportunities unless it comes up with a strategy to develop and communicate what modern Vietnam will stand for – both to domestic consumers and overseas markets.
Unable to compete with Chinese-made goods on price, Vietnam must carve for itself a reputation for quality and specialist capabilities in strategic manufacturing sectors. Madam Ton-Nu Thi Ninh is President of the Tri Viet Institute for International Studies and Exchange and Senior Advisor to the University President of Ton Duc Thang University. Her country’s booming GDP growth rate in the years since economic reform began in the mid-1980s has slowed during the global economic meltdown of the past couple of years; she warns it’s make or break time now for Vietnam’s economy and its fledgling international brands.
Madam Ninh says the sense of excitement in Vietnam when the country joined the World Trade Organization lasted some years, but when one looks at more advanced neighbours like Thailand and Malaysia, and farther afield to the transformation that’s been seen in South Korea and Taiwan, there is cause for concern. “Vietnam is in danger of falling. The kind of drive and momentum that’s gathered in the past two decades is running out of breath,” she says. “It’s true that the resilience of the Vietnamese people is remarkable; it’s true that if you come here and roam the streets it doesn’t feel like a country in crisis. But look deeper beneath the surface.”
The youth of the country’s people – more than half the population is aged under 30 – will no longer be an advantage a decade or so from now, and as Vietnam suddenly ages, there will be seismic shifts in patterns of consumption. Below the surface, there is growing uncertainty and insecurity, she says, and as the rest of the world finds it increasingly easy to do business with China, the effects on developing neighbours are mixed.
“Everybody talks about China … but it’s very hard to beat Chinese products on price, so you have to try and beat them on quality and local tastes. If you say ‘Korea’, you think ‘design’. But if you say ‘Vietnam’, what do you think? We have a number of qualities, but we need a message that has critical mass.”
Luong Van Ly is a former deputy director of the Ho Chi Minh City Office for Investment and Planning and now advisor to the law firm VLT Lawyers. He sees Vietnam well-positioned to recover from the current slowdown in growth. “China is at the same time a challenge and an opportunity in this region. It’s a very big market and has enormous potential, and it’s about to become a superpower, so if we can integrate China into our general development strategy of the whole region, everybody could gain from that, from China being a responsible actor in this region.”
Aside from a few prominent success stories, few Vietnamese brands have yet made it big on the world stage. Vinamilk, a household name in the domestic market, is now selling in neighbouring Laos and Cambodia. A couple of construction companies, petrol companies and Viettel, the telecoms provider, have begun operating in Latin America and parts of Africa, but Vietnam remains primarily an exporter of raw materials.
“It’s a fact that Vietnam is exporting very few manufactured products, and when you go to a supermarket or department store you don’t see many Vietnamese-made goods, apart from garments,” says Mr Ly. “Japanese are very big consumers of Vietnamese seafood but wouldn’t know that their fish or shrimp comes from Vietnam.”
As the ASEAN common market, due to take effect in 2015, becomes a reality, now is the time, Ninh and Ly say, for Vietnam to decide on a strategy for the promotion of its brand and its companies. “I don’t think so far we’ve given much attention to how to brand Vietnam overseas,” says Mr Ly. “We’ve been preoccupied with focusing our efforts on how many products can we export, how much rice can we export in order to make the GDP grow each year. We’ve been thinking about the short term rather than the long term.
“Most companies focus on domestic consumption. When you compete in your own country, you don’t need to think so much about branding because the consumers, when they know a product is Vietnamese-made, they understand it completely. Not many Vietnamese at the current stage realise how important and how deeply Vietnam’s integration into the world economy will change Vietnam in terms of economy, society and even in terms of culture. But people are talking more than in the past about how appreciation of the US dollar will impact on their personal purchasing power, how the price of oil is increasing, these are factors they can feel and touch in their everyday lives.”
Madam Ninh says research must precede the development of an investment and branding strategy. Vietnam can’t do cheap manufacturing to match China, nor beat India and the Philippines at running international call centres. It needs to carve its own niche. “Those entities that engage in market research can help Vietnam’s position more upstream than downstream, defining what can be the greatest strength of Vietnam, rather than just branding particular products,” she says.
“You’ll always be struck by the can-do dynamism, resourcefulness and creativity of Vietnamese people, and their knack for design. The way the government conducts its policies at the moment does not bring into full play the potential of the population. There should be more thinking and resources developed to bringing proper branding – not advertisements or publicity but first things first. Know your strengths, envision yourself clearly.”
Madam Ton-Nu-Thi Ninh is President, Tri Viet Institute for International Studies and Exchange, Ton Duc Thang University, Vietnam. She is former Ambassador to the EU and speaker at TEDx & The Economist and will share her insights firsthand with the regional audience at the ESOMAR Asia Pacific conference taking place in Ho Chi Minh City 7-9 April 2013.