Potential Market for Consumer Electronics Product Suppliers

At present, the Vietnamese people's spending level for electronics and IT products is high. Thus, investors and companies are paying special interest and considering this a potential market.

Overview
In the past years, the Vietnamese electronics industry has drawn large sums of foreign capital. With an abundant workforce, Vietnam has become a potential market. By the end of 2007, nearly US$10 billion worth of foreign capital was injected into this sector.

At the Vietnam Consumer Electronics Expo 2008 held by IDG Vietnam, Dr Tran Quang Hung, General Secretary of Vietnam Electronic Industries Association (VIEA), said the annual growth rate of this sector reached 20-30 per cent, in which consumer electronic product group grew 35 per cent in the 1991-1995 period, the accessory group increased strongly by 30-45 per cent in the 1995-2000 period, and the IT and telecom product group rose 30-50 per cent in the 2000-2005 period.

From simply assembling imported components, Vietnamese firms can study and design products bearing Vietnamese trademarks and manufacture components for export. To date, the supply of consumer electronic products, refrigerating products and common IT products has basically met domestic demand. Sales in the domestic market valued nearly US$3 billion in 2007.

Vietnamese electronic products have been present in 35 countries and territories in the world. Export revenue rose by 20 times in 10 years: From US$90 million in 1996 to US$1.7 billion in 2006, and to US$2.2 billion in 2007. The figure is estimated to reach US$3.5 billion in 2008. Major exports are electronic products, computers and printers. To date, Vietnam had more than 300 enterprises involved in this industry, in which FDI enterprises accounted for over 30 per cent. Foreign-led enterprises have effectively expanded production networks and many shifted their electronic plants to Vietnam. In fact, there has been a shift of foreign capital investment into the Vietnamese electronic sector.

Potential market
The Vietnam IT and electronic market has more than 80 million consumers. It is one of the fastest-growing IT centres in Southeast Asia. In the Vietnam IT industry development strategy for 2010-2020 on establishing and developing e-government and e-commerce, recently approved by the Prime Minister, investment for the IT industry will account for 1 per cent of the State Budget and two per cent of total social investment.

The consumption tendency of Vietnamese people has increased in both quantity and quality. Products of higher value and more utilities are favoured by Vietnamese people, especially northerners. According to a market survey by GfK Vietnam, in 2007, a Vietnamese person spent US$36.2 on electronic and IT products on average. Mr Lam Nguyen, Country Director of IDC Vietnam, said, Vietnam is a country with high level of personal spending, especially in telecom fields like mobile phones and laptops.
A representative from Sony said, in 2007, Sony enjoyed a high growth rate in LCD TVs, which was higher than the market average and company's forecast.

Mr Omoto Kei, Marketing Director of Sony Vietnam, said competition in the consumer electric market segment will be increasingly fierce, especially in price. However, consumers will choose products more wisely as they do not only pay attention to price but also to quality and durability. Thus, producers and suppliers of electronics and IT products should focus more on quality, durability, design and of course price.

According to a study by IDG, the Vietnamese IT and telecom market will grow at 12.6 per cent per annum over the next five years. IT services will see the highest growth rate, second only to India in the Asia-Pacific.

Huyen Nhi