As the pandemic slowly comes to an end, businesses are starting to look for new opportunities in countries that have weathered the storm well. Vietnam is one of those countries. With a young workforce, a strong economy, and good infrastructure, it is poised for growth in the coming years.
Despite a harsh COVID lockdown during the second half of 2021, Vietnam achieved a 2.58% GDP growth rate last year, according to PwC, and is one of the few economies that posted two consecutive years of growth since COVID-19 began globally. The General Statistics Office also stated that its economy expanded by 5.03% in real terms during the first three months of 2022.
Capitalising on the demographics in Vietnam
This growing economy boasts a young and growing Vietnamese population, which has grown by 197.9% over the past 60 years, from 32 to 97 millions people, according to World Data. The power of its demographics must not be underestimated. With one of the youngest populations in the world, over 60% of the population is under the age of 30; this young population can be a significant source of economic growth. They are the future workers, entrepreneurs, and consumers that will drive the country’s economy and be more open to new ideas and technologies.
For businesses looking to capitalise on the growing Vietnamese economy, it is essential to understand the power of these young demographics in the market. By understanding and leveraging the unique characteristics of the Vietnamese population, businesses can position themselves for success.
Looking at the demographics of Vietnam, it is evident that there is great potential for businesses, especially for those operating in the financial sector. According to data from the British research platform Merchant Machine, Vietnam has 69% of its population lacking access to traditional banking services or comparable financial organisations. This puts it second on the list of underbanked countries in Asia.
In February 2020, Vietnam’s former prime minister and now president, Nguyen Xuan Phuc officially approved a sweeping national financial inclusion strategy that aims to have at least 80% of the adult population with a bank account by 2025. Because of the current inadequacy of the conventional banking system, coupled with many young and digitally native customers, there is a significant potential for businesses that provide digital financial services.
Other aspects that make Vietnam an attractive country to do business:
- The population is relatively well-educated, with a literacy rate of over 90%.
- It also has a growing middle class, which is expected to have a high disposable income with an increased willingness to spend on luxury goods and services.
- As a relatively stable country, the government has successfully maintained peace and order despite challenges such as border disputes with China. This stability is attractive for businesses and investors looking to expand into new markets.
- It has a very low cost of doing business with competitive labour costs and attractive tax and investment incentives for businesses.
- Vietnam possesses a sound infrastructure which helps position it as a significant player in the region.
An example of an organisation that has capitalised on the business opportunities in the country is Samsung. In 2021, the company’s revenues were $74.2 billion and they also saw their export turnover increase by 14% in Vietnam, with a total value of $65.5B USD.
Vietnam is more than a travel destination or world heritage site; it’s a country with massive potential for businesses to thrive, with plenty of factors, including a robust demographic profile, to ensure the future looks bright for those looking to invest and do business in it. Offering significant opportunities for businesses to grow and prosper, we can expect to see more and more companies, over the coming years, expanding into Vietnam to take advantage of these favourable conditions.
If you’re thinking about expanding your business into Vietnam’s burgeoning economy and need help with your strategic HR needs in Vietnam, and across Asia Pacific, including executive management, transition management or disruption management, please contact us at LLM to see how we can help.