With India topping the list, an international retailer index recently placed Vietnam sixth, jumping five places from 2016.
Now in its 16th edition, A.T. Kearney's 2017 Global Retail Development Index (GRDI) “analyzes 25 macroeconomic and retail-specific variables. The study is unique in that it not only identifies the markets that are most attractive today, but also those that offer future potential,” reports the Hanoi Times.
US management consulting firm A.T. Kearney disclosed that Vietnam is emerging as a valuable retail market as a result of recently liberalized investment laws.
Since 2015, Vietnam’s government has allowed companies to be 100% foreign-owned, and a 12.5% growth in foreign investment in 2016 suggests that this is a favorable policy. Vietnam’s trade ministry has projected the retail market to hit US$179 billion by 2020.
Other contributing factors - such as a young population (the average age of Vietnam's population is 30.1 years), a healthy middle class and steady urbanization - make Vietnam very appealing to foreign investors.
Soon Ghee Chua, Partner and Head of Southeast Asia at A. T. Kearney, praised Vietnam in the report, saying that its moment has finally arrived: “The economy is shifting toward more privately owned businesses and higher-value exports, which are expected to boost incomes and consumption in the long-term.”
This is not Vietnam’s highest ranking on the GRDI, however. In 2008, Vietnam made international news by ranking first. In “A Ten-Year Retrospective,” A.T. Kearney reported that Vietnam is among the most consistent countries, alongside Chile, Russia, China and India.
Convenience stores are the fastest-growing business model in the country, most notably Japanese-owned Family Mart and US-owned Circle K. Things appear to be continuing in that direction, as Vietnam’s first 7-Eleven is set to open this week.
Higher-end retailers from East Asian countries such as E-Mart (Korea) and Takashimaya (Japan) are also expanding their market to include Vietnam.
In addition to opening foreign businesses domestically, Vietnam has been hoping to finalize a trade agreement with the European Union in 2018. However, the agreement faces a number of obstacles. Before ratification, disputes regarding human rights discrepancies and quality of goods need to be resolved.
The A.T. Kearney report concludes that among the most important lessons from the past decade, developing local talent is crucial.
Other Southeast Asian countries that made the list include Malaysia (3rd), Indonesia (8th), the Philippines (18th) and Thailand (30th).
[Photo via Nhan Dan]
