[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. In fact, our research found that as incomes increase, the affluent who previously bought well-known consumer brands are passing over well-known premium brands and gaining the confidence to move directly to superpremium, niche, and boutique brands. 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. For other products, such as refrigerators, TVs, and smartphones, spending experiences a step change at an income inflection point and then stabilizes. 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. WebVietnam 366.14 Upper middle in 27,104.09 ( 2021 billion) GDP per capita (current US$) Vietnam 3,756.5 Upper middle in 10,828.1 ( 2021) GDP growth (annual %) Vietnam 2.6 This will require greater overall spending while consolidating the currently fragmented mix of programs to achieve greater efficiency. When it comes to very premium products, the affluent prefer to shop online through trusted circles rather than public marketplaces. middle class ), How long individuals have been part of the mass-affluent class influences them more than their country of origin does. ++, "Each year, we must buy fertilizers and chemicals at higher prices and sell our rice cheaper and cheaper," grumbles Le Van Nam, a 48-year-old farmer in Dong Nai province. Blog:Connecting Vietnams youth to high-skilled jobs: What does it take? Working and studying to fulfill their ambitions leave almost no time for them to take care of each other and their children, she added. Many settled on the damp ground along the city's network of four large canals. But she lives in fear that her father, a college professor, will learn about her five Louis Vuitton handbags. "Instead, the children we talked with said they were deposited at the gates of the centers and expected to find their way. Rice grows in small paddies but the hills are denuded from erosion caused by slash-and-burn farming and felling of trees by villagers to sell for timber. The Thi Nghe canal runs just a few blocks from the modern heart of the city. -, "The government is naturally sensitive about the slums. They indulge their urge to splurge at Dolce and Gabbana, Burberry, Escada, Rolex, Clarins, Shiseido and the like. [Source: Agence France Presse, November 8, 2007 ], In 2006, Reuters reported: "World Bank senior poverty economist Carrie Turk said the rate at which poverty was being reduced in Vietnam was "almost globally unprecedented" and the benefits widely shared. Not so long ago just getting water was a daily struggle in Na Lia, where people had to fill water buckets from nearby creeks. This is a major change for Vietnam: in 2000 less than 10% of the population spent more than 11 USD per day whereas today, this number reaches 40% and is expected to reach 75% by 2030. [Source: The Associated Press - September 22, 2007 :/], "Members of the new generation want to enjoy life and pamper themselves with luxurious things," said Nguyen Thi Cam Van, 39, who has purchased five $1,000 handbags at Louis Vuitton. She recently bought Cuong a home in Saigon worth about $350,000, according to a story on VN Express, a Vietnamese Web newspaper. Another reason for buying abroad is confidence in a products authenticity. In accordance with Title 17 U.S.C. "Now the younger generation in Vietnam is racing for materialistic enjoyment," said Huu Ngoc, a 90-year-old scholar and author. These considerations far outweighed respondents concerns that the brand had a reputation for being very expensive and for not offering discounts. 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. "Some of them are children of Communist Party members and government officials, others are businessmen," he added. Efforts to clear them began 15 years ago, but up to quarter of a million people still live in them. income Even active online shoppers, though, still enjoy shopping in conventional, brick-and-mortar outlets. One of the racers had lived her dream, going abroad to study for several months. The Asian upper middle class can be viewed as two subsegments: those below 35 and those above it. In a cross-country fiscal incidence comparison, Vietnams fiscal policy is about average among LMIC economies in helping contribute to inequality reduction. "And that's good." The broad based growth in Vietnam in the 1990s and 2000s contributed to rapid poverty reduction across all regions of the country. The right mix of fiscal policy can help finance the investments needed for the country and its workers to become more productive and higher earners, such as modernization of agriculture, improved skills and higher-quality education, a more robust digital backbone, and accompanying services. Booming Upper Middle Class As middle-class families enter the ranks of the affluent, they greatly accelerate their consumption of premium and luxury goods and services, such as cars, liquor, restaurant dining, and travel. [Source: By Grant McCool , Ho Binh Minh, Nguyen Van Vinh, Reuters, May 10, 2006 ]. These consumers spend an average of 40% more than older members of the segment. With a total of 56 million middle-class people by 2030, Vietnam is set to leap up eight places from the current 26th position to 18th in the global ranking of 30 economies with the largest middle-class populations. "Mothers today may have been malnourished as children," he said. "It may be a mobile phone or a premium beer, or a credit card that suggests the owner travels internationally. ", AFP reported in 2007: "The World Bank and United Nations have often lauded Vietnam as a model partner which has lifted 30 million people out of abject poverty since the launch of doi moi (renewal) market reforms some 20 years ago. Fiscal policy can support the development of a prosperous and inclusive middle-class society. The affluent also actively seek to influence others through digital media. Thanks to a decade of annual economic growth above seven percent, the ratio of the desperately poor has fallen below 20 percent, from nearly 60 percent in 1993, while national per capita GDP has risen to more than 700 dollars. But in Myanmar and Vietnam, it comprises only the established middle-class and affluent segments. (Photo courtesy of McKinsey), Vietnams civil registration system sees great improvements: official, Nursing home market nascent in Vietnam: Savills, Vietnams economy to slow as population ages: WB report, Vietnam a bright spot for foreign investors: experts, Flag-raising ceremony marks National Reunification Day, Top legislator concludes official visits to Cuba, Argentina, Uruguay, Second int'l hot-air balloon festival opens in Tuyen Quang, Top Vietnamese, Uruguayan legislative leaders hold talks, HCM City unlocks resources for development, Vietjet increases frequency of flights on routes to Australia, Green growth - inevitable choice towards prosperity, Ha Long-Cam Pha coastal road puts into operation, Ministry supports 50% cut on auto registration fees. RICH, POOR AND MIDDLE CLASS IN VIETNAM The higher human development is, the less severe is inequality." Business owners constitute the second-biggest cohort. Its so small that it cant even hold my mobile, she said. Beyond the poor, a more diverse share of the population is economically vulnerable. Vietnamese consumers enter the middle class and put midsize cities on the radar Asia is the worlds consumption growth engine: miss Asia and you could miss half the global picturea $10 trillion consumption growth opportunity over the next decade, according to recent McKinsey Global Institute research. [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. A disproportionate number of the poor also belong to ethnic minorities. As the war continued to escalate, so did the militancy of anti-war students. "People are buying premium brands," Morley said. "In the past, having a bicycle was a dream already, let alone a motorcycle now even farmers go to the field on motorbikes," said To Vinh from Thai Binh province in the northeast as he shopped for a Honda for his son, a first-year Hanoi university student. In Indonesia, MAC households have monthly incomes exceeding $224. The poverty and equity agenda is no longer only about raising minimum living standards and tackling chronic poverty; it is also about creating new and sustainable economic pathways for a more aspirational population. :/, Vietnam's older generation, shaped by the hardships of war, finds itself at odds with younger Vietnamese over the new consumerism. Because affluent consumers are comfortable with digital channels, they make a significant percentage of their purchases online. 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. But the new report says that Vietnam's Gini coefficient has risen from 0.350 in 1995 to 0.410 today, just above the level of China, which has a Gini coefficient of 0.404. ^^, "The group said it had been unable to visit detention centers commonly off limits to UN groups and journalists but that interviews with former inmates had painted a harsh picture that breached global child protection standards. Chronically higher poverty rates among certain groups is the Last Mile challenge but some positive trends emerged. 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. A forum on opportunities for Vietnamese handicraft products has taken place as part of the MIDA Florence International Crafts Fair 2023, which runs in Italy from April 25 to May 1. Therefore, they are a more accessible market than the middle class and will likely respond well to a regional strategy. "The rate of change in Vietnam is accelerating beyond even our optimistic assessments," gushed a Merrill Lynch report in October. Many children in Saigon sell cigarettes, postcards and souvenirs to tourists. Some resort to theft, and even drugs and prostitution to make money. [Source: By Tran Dinh Thanh Lam, Inter Press Service, April 10, 2002 ++], "Economists warned that Vietnam country appears to be reaching relatively high inequality rates much more quickly than China. Phong says he survives on less than 100 dollars a year. (See Exhibit 5.) But the water is still badly polluted. For many companies, the prospect of reaching a relatively niche market that is dispersed across a vast region with a wide variety of languages and cultures may seem daunting. Khai added that households and communities should be educated to stop the drift of children from the countryside to major cities, the official English language daily Vietnam News reported. Vietnam has seen annual economic growth of 7-8 percent in recent years but the scrapping of state subsidies and farm cooperatives has widened the wealth gap and sent poor rural families and lone children to cities looking for work. Today it is US$620 and by 2010, it could reach US$1,000." Within the ASEAN region, Vietnam was predicted to have the highest CAGR in terms of middle income population with 10.1 percent from 2016 to 2021. 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. ////, The room has been changed since I last visited. At the new Gucci shop in Ho Chi Minh City, the flip-flops are among the economy items. According to the World Bank the number of poor households decreased from 58 percent in 1993 to below 20 percent in 2004. It is perfectly common for the well-off to drop $500 during an evening of fun. Herms, for example, tightly limits access to VIP events, and the product selection depends on customers status with the brand. The company markets a variety of beers at price points that target different consumer segments in Southeast Asia. However, children are dealt the hardest blow in divorce cases. Continuing improvements in higher education access and quality will be needed. About one-third of the respondents in Vietnam, for example, said that they always share their cosmetic recommendations with people they know online or in person, and half reported that they sometimes or usually share their opinions with acquaintances. FULL REPORT (ENG) | FULL REPORT (VN)|OVERVIEW (ENG) | OVERVIEW (VN), EVENT POSTER [JPG] | PRESENTATION (ENG) | PRESENTATION (VN). (See Exhibit 1.). It was clean." 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. Reaching the ambitious goal of upper-middle-income status would require Vietnam to grow at least 7 percent per year, raising the average income level to over $7,000 or $18,000 in purchasing-power parity terms by 2035, compared with $2,052 or $5,370 in PPP terms in 2014. Seven joy riders, all in their teens and 20s, had roared through the hot tropical night in a Camry, a Lexus, a Mercedes and three BMWs. So these consumers are relevant not only for luxury brands, such as Chanel and Diageo, but also for companies such as Johnson & Johnson, P&G, Heineken, and adidas. Such material is made available in an effort to advance understanding of country or topic discussed in the article. Travel spending increases sharply when Southeast Asians enter the ranks of the affluent. Over the past decade, the main reason for the rise of Southeast Asian markets was the expansion of the middle class. 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. ++. This is in contrast to the term lower middle class, which is used for the group at the opposite end of the middle-class stratum, and to the broader term middle class. SDS leaders opposed the war because they felt it was unjust and feared being drafted. Still, most workers in this nation of 84 million people still earn just a dollar or two a day toiling in the farm fields. The revolutionary government snatched up the assets of the wealthy and redistributed them to the poor. It is perfumed with frangipani and splashed with color from the flowering apricot blossoms and orchids. We provide a wide array of financial products and technical assistance, and we help countries share and apply innovative knowledge and solutions to the challenges they face. In addition to the current situation, Vietnam will add 36 million people to its middle class by 2030 . This would require Vietnam to grow at least 7% per year, raising the average income level to over USD 7,000 (or USD 18,000 in purchasing-power parity terms) by 2035 (compared with USD 2,052 or USD 5,370 in PPP terms in 2014). The World Bank assigns the worlds economies to four income groupslow, lower-middle, upper-middle, and high-income countries. Clean water is more accessible. Lai Hai Nhu, a 21-year-old university student, said the young men seemed to have squandered the opportunities their wealth had given them. When they travel further, however, she and her three high schoolage children plan their trips carefully around shopping. Vietnam has its sights set on becoming a developing, upper-middle-income country with modern industry by 2030, when it celebrates the 100th anniversary of the founding of the Communist Party of Vietnam. The family cooks on a primitive charcoal stove, but they have a radio, television set, videocassette recorder and refrigerator. The paper said Khai wanted immediate action to stop children begging, living on rubbish dumps and annoying visitors at tourist sites. A rice farming hamlet of about 400 Tay ethnic minority people without telephones, television or even electricity, Na Lia is part of another Vietnam, the rural hinterland that is struggling to catch up with the boom. Thuyet said, repeating the Vietnamese word for 100 with a look of disbelief on his face. TNS research showed that in an average household in the city most still call by its old name, Saigon, people spent 2.5 to seven times more than they said they earned. 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. She says she misses her children back home, but added: "At least now I can send them to school." It will take many years. For example, middle-class consumers may upgrade their refrigerator from a basic two-door model to one with four doors and an icemaker. (Photo 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. The income bands for these segments are different in each country, since they measure the purchasing power for a basket of goods. A few doors down is the furniture business Cuong's mother helped him set up. The share of agriculture in gross domestic product has fallen from 25 percent to 20 percent between 2000 and 2006, by which time industry was contributing 48.1 percent and services 38.1 percent. He eats meat or fish once or twice a month -- a far cry from Hanoi, where sushi bars have mushroomed, fast-food chain KFC opened its first outlets this year, and health authorities warn of rising obesity rates. The Vietnamese government is committed to "market-oriented socialism with Vietnamese characteristics" but sensitive about the growing gap between rich and poor. In the Philippines, for example, 88% of respondents told us that they used digital channels in the previous year to perform some actionsuch as searching for information, buying a product, or posting feedbackrelated to a purchase. This is a major change for Vietnam: in 2000 less than 10% of the population spent more than 11 USD per day whereas today, this number reaches 40% and is expected to reach 75% by 2030. US President Bill Clinton came here on a visit four years ago, to see the progress being made. Beyond the Crazy Rich Within the ASEAN region, Vietnam was predicted to have the highest CAGR in terms of middle income population with 10.1 percent from 2016 to 2021. Diageo is opening experiential, invitation-only retail stores for connoisseurs to sample and learn about rare and reserve Johnnie Walker whiskeys. But big-ticket sales are also growing in a country where household incomes may be larger than previously thought because many people are thought to under-report what they earn to both the tax man and their own families. By its own estimates, the most affluent 20 percent of the population is seven times better off than the poorest two percent. [Source: William Horsley, BBC News, October 24, 2004 -], But there is frenzied activity in its alleys. ++, "Between 1995 and 1999, 31 of Vietnam's 62 provinces have also seen income inequality increase by 10 percent. Klaus Rohland, who is due to leave his World Bank post in Hanoi this month to take up his new position as country director for the Russian Federation, says in an online video interview that 35-year-old Vietnamese employees in his office all faced the reality of hunger in the 1980s. These behaviors were also particularly strong when it came to premium items, such as watches, alcohol, skin care products, and jewelry. She said poverty in Vietnam was reduced from an estimated 70 percent of the population to 20 percent over two decades of shedding centrally planned economic policies. Affluent Southeast Asians make about 40% of their purchases of goods such as cosmetics, watches, jewelry, and skin care products while traveling. We know each other in our closed group, and people trust you in the fan club.. For decades, the dominant economic trend in Southeast Asia has been the growth of the middle class. income Vietnam doesnt really have any old money. Households are exposed to a range of shocks that can be costly, and for the poor can be poverty traps. By 2020, the country is expected to have 30 million middle class and rich consumers. It didn't. But as countries GDPs have continued to rise, this large middle class has started to graduate to the affluent class. More-experienced-affluent consumers search for tangible proof of value, such as workmanship, the use of advanced technologies, or the use of special or sustainably sourced materials. The mass-affluent class is also particularly resilient during difficult economic times. He didn't know who his parents were. All rights reserved. The son of one top Communist Party leader is widely believed to be among the investors. Vietnam Reaching the ambitious goal of upper-middle-income status would require Vietnam to grow at least 7 percent per year, raising the average income level to over $7,000 or $18,000 in purchasing-power parity terms by 2035, compared with $2,052 or $5,370 in PPP terms in 2014. Offer some form of exclusivity. In the 1990s there were an estimated 20,000 street kinds in Ho Chi Minh City alone. But in Myanmar and Vietnam, it comprises only the established middle-class and affluent segments. The government has re-housed over 35,000 people in the past 10 years. "Vietnam is wealthier than what we believe, but we honestly don't know how wealthy," said Ralf Matthaes, managing director of TNS market research in Ho Chi Minh City. 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).
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