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Vietnam Emerging as Attractive Retail Space for Investment
Aug 20, 2008

The Vietnamese retail industry has emerged as a preferred investment destination for foreign players owing to rising per capita income, GDP growth and favorable business conditions.

According to A.T. Kearney, a leading research company, Vietnam has grown into the most lucrative emerging destination for retail investment, as reported by VietnamNet.

Vietnam has emerged as the preferred destination for global players as it provides liberalized retail trade environment. The government is anticipated to remove ceiling from 100% foreign investment in the sector. Though Vietnam has a around US$ 30 Billion (as of 2007) retail industry, very low in comparison to the Indian and Chinese retail markets, changes in the regulatory structure are encouraging foreign investors to pour investment into the country.

The rise in investment in the retail industry is primarily due to increasing per capita income of consumers and strong GDP of 8%. Apart from this, the retailers in the country have taken benefits from favorable economic and domestic conditions by increasing their sales and productivity.

Besides, the Vietnamese retail sales are boosted by the country’s young consumers as at around 79 Million consumers below the age of 65, they are the youngest in the Asian region. The young consumers in Vietnam are very cautious about new fashion trends, technologies and innovations. Also, the Vietnamese retail industry witnessed highest growth rate on account of rising consumer spending that escalated 75% from 2000 to 2007 due to rising wages and employment in the country.

In addition, Vietnam is rapidly changing into an urbanized country; as a result, people have become trendier. They pay a great deal of attention on their clothes and electronic gadgets that are boosting the retail sales in Vietnam. Another important factor that helped in growth of the Vietnamese retail sales is absence of competition; consequently, the price level of products has significantly gone down and demand has increased.

According to a Research Analyst at RNCOS, “The rapidly improving economic conditions in Vietnam are supporting growth in its retail sales and creating vast opportunities for the foreign players to come forward and invest in the retail sector because the government is encouraging FDI inflow in the country. This is further improving the technological support and innovations in the retail sector.”

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