The middle and affluent class will double in size in Vietnam and Myanmar between now and 2020, according to the Boston Consulting Group.
Consumers in these two countries are also among the most optimistic in the world – more optimistic than even their counterparts in China, India, Indonesia and other fast-growing emerging markets. By 2020, there will be more than 30 million middle and affluent consumers in Vietnam and about 10 million in Myanmar.
“Companies that invest in Vietnam and Myanmar now have an opportunity to build businesses, brands and momentum early in the development of these formerly closed economies – but only if they have a solid understanding of these markets’ consumers and how to satisfy them,” Douglas Jackson, a BCG partner based in Ho Chi Minh City and co-author of “Vietnam and Myanmar: Southeast Asia’s New Growth Frontiers”, said last week.
“If Vietnam is a here-and-now opportunity, Myanmar is a more long-term play. The market is still developing, so there is time to learn and be focused in your strategy,” said Tuomas Rinne, a BCG partner and another co-author of the study.
More than 90 per cent of all consumers in Vietnam and Myanmar believe that their children will lead a better life than themselves. Consumers sharing that belief are more than 20 percentage points lower in China, India and Indonesia.
Vietnam has been on the upswing for 20 years, and that trajectory has steepened since 2007, when the country joined the World Trade Organisation. Few Vietnamese consumers, however use banking products other than a savings account. Only 5 per cent own a credit card, for example. Rich, poor, or in between, Vietnamese enjoy the hunt for deals, discounts and promotions, more so than consumers in Thailand or Myanmar.
The report showed that Myanmar’s emergence from economic isolation is more recent and provides a rare opening for companies to reach a small, undeveloped but rapidly growing market. Only about one-quarter of consumers go on vacation and fewer than four out of 10 frequent restaurants. Consumers in Myanmar frequently buy entertainment products, however, especially VCRs, before they buy consumer durables. The uncertainty of electrical service discourages the use of expensive appliances, and the lack of movie theatres and other entertainment venues encourages at-home options. For example, 53 per cent of urban consumers own a mobile phone but only 18 per cent own a washing machine.
The report grew out of a desire to understand middle and affluent consumers in Vietnam and Myanmar and help companies win them over. BCG’s Centre for Consumer and Customer Insight (CCCI) conducted primary research in both countries. To project the growth of consumers and their spending, the CCCI analysed population and income trends in nearly 1,400 districts in Vietnam and nearly 75 provinces in Myanmar. It also surveyed 2,000 urban consumers in Vietnam and 1,000 urban consumers in Myanmar about their purchases in 20 categories of consumer goods.
The Boston Consulting Group is a global management consulting firm and adviser on business strategy. It partners with clients from the private, public and not-for-profit sectors in all regions to identify opportunities, address challenges and transform their enterprises.
Source The Nation