"Maybe in 2020", Mr Vong says. But a government survey found that the wealthiest individuals earned 12.5 times more than the poorest, who mostly live in rural, remote areas and depend on agricultural production. "The rich are getting richer, and the rest of us are struggling to make ends meet," said Dao Quang Hung, a Hanoi taxi driver. "They spend as much as they want on whatever they want,'' said Thuan, who juggles several part-time jobs, takes home about $65 a month and gets around the city on a bicycle. Using Digital Media. Web2022 Vietnam Poverty and Equity Assessment From the Last Mile to the Next Mile. Ans wife, Thu Nhan, works in front of the house, sweeping the porch with a short-handled broom. Consumer product companies should ensure that they have a strong public digital presence that goes far beyond their own websites. The figure is comparable to that in China, a country facing its own problems with inequality, where about 33 percent of the country's wealth is held by the rich. Cindy, a former marketer in her mid-40s and a mother of three children, told us that when she was younger, she was a hoarder of luxury brands because it was fun and exciting and a way to connect with the group. Now, she says that it can be really embarrassing to go to a party and see someone else carrying the same designer purse. Experienced-affluent consumers want more than just a luxury brand. The distinction is important because the young upper middle class represents the most promising part of the segment. Companies should also use affluent consumers as digital influencers by actively engaging them through social media. Still employs almost half of the population and is highly labour-intensive in Vietnam; much ploughing is still done by water buffalo. This site uses cookies to optimize functionality and give you the best possible experience. (Photo A disproportionate number of the poor also belong to ethnic minorities. These similarities are fostered by their use of social media (where they keep one another abreast of new products and fashion trends and share opinions) and their travel experiences. growth of middle income population They can show this by pursuing sustainable, local sourcing of materials; creating jobs by manufacturing products locally; and supporting social programs in the communities in which they operate. Thuyet said, repeating the Vietnamese word for 100 with a look of disbelief on his face. The World Bank assigns the worlds economies [1] to four income groupslow, lower-middle, upper-middle, and high income. 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. But most are like James: they buy premium and luxury products and care about the status they convey, but these consumers also do careful research to make sure the products are worth the price. The World Banks LMIC poverty rate ($3.20/day 2011PPP) dropped from 16.8 to 5 percent, and over 10 million people were lifted out of poverty. Seventy-three percent said that they like to buy products online and physically pick them up in stores. But they will not upgrade again as their incomes increase, even if brands add incremental features and frills. In particular, Vietnam is considered a high-potential market for electric cars in the near future. This has contributed to the economic well being of the population and is reflected in the high Human Development Index and the Gender Development Index relative to other countries at similar levels of development. That number could almost double to 125 million households by 2025, making ASEAN a pivotal consumer market of the future. Economic growth averaged 9 percent a year in the five years to 1997, the year of the Asian economic crisis. The group plans to expand into orange, longan and lychee trees, to green the hills, improve the villagers' diets and earn cash. Even though members of the affluent class will remain a minority of the regions population, they will become an increasingly meaningful share of the target market for a wide variety of products. income The houses on both banks are newly-built. Vietnam 26 Red Lion SquareLondonWC1R 4HQUnited Kingdom, BMI GLOBALED LTD. - All Rights Reserved. The classifications are updated each year on July 1 and are based on the GNI per capita of the previous year (2021). In fact, Tokyo and Seoul have emerged as among the top shopping locationstaking over from Hong Kong and Singaporefor affluent Southeast Asians across most major luxury categories. In the one-party state, the Communist Party leadership has made clear that as far as the economy goes, there is no turning back. "We believe this project can be replicated. We face big challenges to help the worlds poorest people and ensure that everyone sees benefits from economic growth. It is perfectly common for the well-off to drop $500 during an evening of fun. Vietnam expected to add 36 million middle class people in 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. 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. In the alcove near the front door, in place of Ans desk and filing cabinets and the piles of magazines and papers, which used to reach toward the ceiling, sits his sons piano. 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. These consumers are impacting some categories more than others. Subsidiary of VnExpress HANOI In a recent survey by the Boston Consulting Group (BCG), Vietnam was found to have the fastest growing middle class in Southeast Asia. (See Exhibit 5.) Still, most workers in this nation of 84 million people still earn just a dollar or two a day toiling in the farm fields. 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. Go-to-Market Strategy, The slums grew up during the war, when refugees from the countryside streamed into Vietnam's biggest city to escape the bombs and the fighting. Seeking Exclusivity. The heavy security presence, which, according to several waiters, includes undercover, gun-carrying guards hired from police ranks, appear keen to keep observers guessing. ^^, "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. Because the region is highly diversified and covers a wide area, Southeast Asias affluent population may appear to be a collection of niche markets. Target travelers. To reach these consumers, companies must appeal to their desire for better, more distinctive products that speak to their new, higher status. Over half the country lived in absolute poverty, compared to 9 percent in China and 15 percent in the Philippines and four million children under the age of five suffer from malnourishment. The government holds up successful entrepreneurs as role models and honors them with Gold Star awards. Searching for Quality and Value. 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. As the war continued to escalate, so did the militancy of anti-war students. These factors include not only the store location and level of service but also the types of special events and whether or not these consumers personally identify with the brands marketing story. An additional difference is that newly affluent consumers increase their spending on items such as skin care products, cosmetics, and international travel. But in Myanmar and Vietnam, it comprises only the established middle-class and affluent segments. Blog:Reducing gaps in education remains important in Vietnam as new school year kicks in, A Year Deferred Early Experiences and Lessons from COVID-19 in Vietnam (2021), 2012 Vietnam Poverty Assessment Well Begun but Not Yet Done. Because affluent consumers are comfortable with digital channels, they make a significant percentage of their purchases online. 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. Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, Lonely Planet Guides, Library of Congress, Vietnamtourism. In 2006, the income of 20 percent of Vietnamese richest households was 8.4 times higher than that of 20 percent of the poorest households, up from 8.3 times in 2004, according to the newspaper Vietnam News. But as they become experienced-affluent consumers, they tend to focus on fine dining and luxury goodssuch as watches, jewelry, and liquorthat reflect more refined tastes. Upper-middle-income economies have GNI per capita of $4,046 to $12,535. Other countries ahead of Vietnam are the Philippines, Egypt and the U.S., ranked fourth, fifth and sixth, respectively. The distinction is important because the young upper middle class represents the most promising part of the segment. Even though he has a collection of classic Citroen automobiles he often drives to work on a motorbike to avoid the heavy Saigon traffic. For the most part, Na Lia is a small, cashless economy, where people live off what they can grow but lack surplus produce or the means to transport any excess to the nearest market town. But all of the residents in these places still suffer from inadequate provision of clean water and basic sanitation and remain highly vulnerable to natural disasters and market fluctuations. They already know which stores they will visit during an upcoming trip to the US. License number: 71/GP-CBC, Ministry of Information and Communications, September 22, 2021. And pay cash. =, "The numbers of people living in abject poverty has dropped from 70 percent to less than 20 percent and there is now a smaller proportion of people having to survive on less than US$1 a day than in China, India or the Philippines. Improving the relevance and quality of tertiary education curriculum and staffing can help reduce skill gaps and alleviate difficulties in recruiting for certain skills. ByAparna Bharadwaj,Justine Tasiaux, andVaishali Rastogi. Boston Consulting Group is an Equal Opportunity Employer. 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. "Mothers today may have been malnourished as children," he said. While the risk of falling into extreme poverty is now low, achieving economic security at higher levels is still a relevant topic. The Mercedes and BMWs, which belonged to the boys' dismayed parents, were confiscated. But as countries GDPs have continued to rise, this large middle class has started to graduate to the affluent class. 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). Vietnams per capita income is expected to increase to US$3,000 by 2020 from its current level of US$1,960. I couldn't imagine what life would be like if Vietnam returned to the situation of 20 years ago." [Source: Reuters, October 8, 1998 |+|], In 2002, Xinhua reported: "With Ho Chi Minh City's divorce rate increasing in recent years, more kids make a home on streets of the Vietnamese city. They are well fed. "If they can buy something luxurious, it proves they have money," Anh said. Although the newly affluent frequently associate a top brand and high price with quality, experienced-affluent consumers are more discerning. Airport duty-free shops should be viewed as outlets for selling much more than cosmetics and spirits. Vietnam Here drugs, crime and prostitution flourish. (See Exhibit 1.). The income segments are affluent, established middle class, emerging middle class, aspirant, and poor. But while some Vietnamese have benefitted from the emerging market economy, many have been left behind, and have even abandoned their hometowns altogether for Bavet. Phong, who like some 80 percent of the people of Na Lia does not own a moped, made the six-hour trip by motorcycle-taxi and bus for 12 dollars return, a small fortune for him. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful. HANOI Vietnam is expected to add 36 million people to its middle class by 2030, according to a recent report by McKinsey. 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. As we strolled around the meticulous, one-acre plot, he told me that he cultivates chrysanthemums that wholesale for 7 or 8 cents each. There was significant progress in poverty reduction from 2010-2020, but Last Mile challenges in tackling poverty remain. Many of those that live there in some way supported the American side in the war. Rice is the most important crop. growth of middle income population