Communist Vietnam is now on track to raise average per capita GDP to 1,000 dollars a year by 2010, moving the country of 84 million to middle-income 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. Asian Development Bank president Haruhiko Kuroda, at a Hanoi conference this year, warned that in Asia, "although absolute poverty is being significantly reduced, the gap between the poor and the rich is rising". Back in the one-room house he shares with his mother, he says what most impressed him about Hanoi was electricity, but otherwise he didn't really like the big city. A surprisingly small percentage of peopleless than 5%inherited their wealth, except in Thailand, where a greater proportion has family wealth. The classifications are updated each year on July 1 and are based on GNI per capita in current USD (using the Atlas method exchange rates) of the previous year (i.e. For luxury goods and services to command premium prices, they must connote exclusivity. BMI also takes a limited number of accredited institutions on chauffeured visits to top-rated private high schools in Bangkok, Hanoi, HCMC and Jakarta and to meet top high school counsellors at the Vietnam Internation School Workshop & Forum. The roar of engines and blaring stereos awoke Nguyen Van Quang, who sleeps inside the tiny bar where he works. The World Bank assigns the worlds economies [1] to four income groupslow, lower-middle, upper-middle, and high income. In contrast, in the remote regions - central and northern highlands, Mekong and Red River deltas - official efforts are geared more toward developing off-farm activities and convincing people to adopt hygienic practices." The distinction is important because the young upper middle class represents the most promising part of the segment. However, to guarantee that brands maintain an exclusive cachet, companies should still control accesssuch as by allowing only certain products to be purchased onlineand create an integrated experience with physical stores. Brands should identify key international travel hubs and establish a presence so as to engage travelers early in their journey. "He received three years in prison. Continuing improvements in higher education access and quality will be needed. ^^, "Human Rights Watch said Vietnam had launched similar crackdowns in the past on children who shine shoes, beg, pickpocket or sell postcards and chewing gum around Hanoi tourists sites, temples, markets and bus and train stations. BCG X disrupts the present and creates the future by building bold new tech products, services, and businesses. If a particular product has a linear income-consumption curve, for example, companies should ensure that they offer products at each rung of the ladder to make it feasible for consumers to upgrade. Questions or comments, e-mail ajhays98@yahoo.com. "And that's good." The income-consumption curve for other products is more linear: spending on laptops, cosmetics, and beer, for example, increases steadily as household incomes rise. More than 29 percent of juvenile delinquents come from broken home. "But they don't just do it for one night, they do it often, several times a week." The government holds up successful entrepreneurs as role models and honors them with Gold Star awards. Van, for example, enjoys pampering herself at the salon with massages and manicures. Brands such as Forever Living Products and The Face Shop, for example, promote organic beauty and skin care products made from aloe vera and other natural ingredients. HANOI In a recent survey by the Boston Consulting Group (BCG), Vietnam was found to have the fastest growing middle class in Southeast Asia. She is a pleasant, round-faced woman with her hair tucked into a bun. Large supermarkets such as Metro of Germany and Big-C of France are filled at weekends with shoppers buying goods in bulk. WebRICH, POOR AND MIDDLE CLASS IN VIETNAM DISPARITY OF INCOME IN VIETNAM Vietnam remains a poor country, with most people earning about $1,500 a year, but it has made tremendous strides since opening its doors up to capitalism in the mid-1980s. A typical table might drop between $1,000 and $2,000, he said. The World Bank Group works in every major area of development. New World Bank country classifications by income level: 2022-2023 "Instead, the children we talked with said they were deposited at the gates of the centers and expected to find their way. On the other side are street people selling postcards and peasants eking out leave on small parcels of land. Men hurry along carrying scrap metal to sell, or to repair the flimsy shacks they live in. Soon they would appear on national television wearing pinstriped jailhouse jumpsuits, and their recklessness would unleash resentment across the country, where the average annual income is $420. It will take many years. All qualified applicants will receive consideration for employment without regard to race, color, age, religion, sex, sexual orientation, gender identity / expression, national origin, protected veteran status, or any other characteristic protected under federal, state or local law, where applicable, and those with criminal histories will be considered in a manner consistent with applicable state and local laws.Pursuant to Transparency in Coverage final rules (85 FR 72158) set forth in the United States by The Departments of the Treasury, Labor, and Health and Human Services click here to access required Machine Readable Files or here to access the Federal No Surprises Bill Act Disclosure. Categories such as passenger cars, cosmetics, and restaurant dining will become hot growth segments, replacing categories such as household appliances, baby products, and ready-to-eat foods; similar shifts occurred when China experienced a comparable demographic shift. Beyond the Crazy Rich "What we have done here is not genius, and it's not expensive," said Ahmad, whose project cost 150,000 dollars and half a year to set up, using know-how from Singapore's Nanyang Technological University. A number of experiential factors are important in order for a company to establish a brand or product as premium or luxury among these consumers. In Vietnam, 50 percent of population would be listed as middle class with income of $5,000-35,000 a year. Heineken provides an example. Average income levels in Vietnam in 1993 were less than 20 percent of the level in Papua New Guinea at the time, but PNGs poor performance since then has meant that Vietnam has moved ahead with the margin likely to widen during the rest of this decade. Even so, the respondents broadly concurred that they dont purchase luxury brands just because such products are part of their lifestyle. And pay cash. "People become richer in Ho Chi Minh City while us farmers become poorer and poorer." One of the most successful businessmen in Vietnam in the 1990s was Nguyen Trung Truc. We know each other in our closed group, and people trust you in the fan club.. "Maybe in 2020", Mr Vong says. This means that every time you visit this website you will need to enable or disable cookies again. (Photo courtesy of McKinsey), Vietnams civil registration system sees great improvements: official, Nursing home market nascent in Vietnam: Savills, Vietnams economy to slow as population ages: WB report, Vietnam a bright spot for foreign investors: experts, Flag-raising ceremony marks National Reunification Day, Top legislator concludes official visits to Cuba, Argentina, Uruguay, Second int'l hot-air balloon festival opens in Tuyen Quang, Top Vietnamese, Uruguayan legislative leaders hold talks, HCM City unlocks resources for development, Vietjet increases frequency of flights on routes to Australia, Green growth - inevitable choice towards prosperity, Ha Long-Cam Pha coastal road puts into operation, Ministry supports 50% cut on auto registration fees. "The rich are getting richer, and the rest of us are struggling to make ends meet," said Dao Quang Hung, a Hanoi taxi driver. Hoang Trong Ltd. said a Vietnam businessman had placed an order for a Rolls-Royce Phantom manufactured this year. I went to work in an auto garage, but they beat me too. [Source: Hoang Uy, Tuoi Tre, September 18, 2007], Reporting from Ho Chi Minh City, Ben Stocking wrote in the Mercury News, "Wealthy young rebels without a cause, they ran wild in the streets, racing $50,000 luxury cars down the boulevards of old Saigon. In addition, less than 10% gained affluence through investment earnings. No more bad smell!" But in Myanmar and Vietnam, it comprises only the established middle-class and affluent segments. The country is expected to achieve by 2015 most of the ambitious Millennium Development Goals set by the United Nations. Whoever they are, they have influence or at least high-ranking sponsors who have allowed the club to use the premises of the neighbouring National Library as a carpark for their Mercedes-driving patrons. We project that by 2030, 47% of mass-affluent consumers will have held that status for more than a decade, compared with only 31% now. Beneath the club's flash veneer though lurks the slightly troubling question of how people in their 20s and early 30s can afford such extravagance in one of the world's poorest countries. Online channels and physical stores are also increasingly deploying digital technologies, such as augmented and virtual reality. We may become richer but lose our soul." However, considering peoples awareness, 96 percent of Vietnamese think their incomes are high enough to be among the middle class. However, considering peoples awareness, 96 percent of Vietnamese think their incomes are high enough to be among the middle class. "Some of them are children of Communist Party members and government officials, others are businessmen," he added. In the early 1990s, 45 percent of the children in Vietnam were regarded as malnourished and 51 percent of the population ate less than the World Bank's 2,100 calorie a day subsistence level. As of a 2016 report from the General Statistics Office of Vietnam (GSO), median wages sit just below 6 million VND a month. In that time more than 25 million people escaped poverty. 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. In Vietnam, for example, 45% of affluent respondents told us that they used digital channels, compared with 31% of respondents in the established middle class and 21% in the emerging middle class. Because these consumers are frequent travelers and heavy users of digital media, a remarkably high number of them across Southeast Asias markets share similar sets of values regarding what and how they buy. But she lives in fear that her father, a college professor, will learn about her five Louis Vuitton handbags. Using Digital Media. Health care costs have rocketed beyond the reach of most poor families and women tend to sacrifice their own health needs to allow their children and husbands to receive services, she added. This is a major change for Vietnam: in 2000 less than 10% of the population spent more than 11 USD per day whereas today, this number reaches 40% and is expected to reach 75% by 2030. Others work for powerful state-owned companies and many have made fortunes in Vietnam's small but booming private sector. As we strolled around the meticulous, one-acre plot, he told me that he cultivates chrysanthemums that wholesale for 7 or 8 cents each. The Asian upper middle class can be viewed as two subsegments: those below 35 and those above it. The youngest are five or six. (See Exhibit 5.) "People are buying premium brands," Morley said. Section 107, the material on this site is distributed without profit. 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. Vietnam's nouveau riche have made their money through tourism, real estate, trade, corruption, manufacturing and joint ventures with foreign companies. ////, Ben Rowse of Agence France Presse wrote: "Loud, glitzy and ostentatious, Hanoi's hottest nightspot, the New Century Discotheque, is a magnet for Vietnam's small legion of pop stars, models, and scions of government officials. Its so small that it cant even hold my mobile, she said. Media accounts portrayed two of the young men as loafers who spent their time spending their parents' money. That is why in the major cities of Hanoi and Ho Chi Minh City, the focuses are on boosting production, protecting the environment and fighting "social evils". Households are exposed to a range of shocks that can be costly, and for the poor can be poverty traps. Cuong and his pals were convicted of disturbing the public order Sept. 8, four months after their midnight thrill ride. This website uses cookies so that we can provide you with the best user experience possible. Those tire-sandaled troops who bested the French colonial army and outlasted the Americans embodied frugality and egalitarianism. The war generation wasted nothing and always saved for the future, convinced that catastrophe lurked around every corner. Vietnam expected to add 36 million middle class people in "However, in a communist state where GDP per capita hovers around a paltry 400 dollars a year, the contrasting lifestyles enjoyed by those inside the multi-levelled club and those on the outside are extreme. In the two decades since Vietnam began implementing its economic reforms, the nation's poverty rate has been cut in half, and per capita income has doubled in the last five years. Using consumption patterns and household income as a gauge, we found that about 5% to 10% of the population in each Southeast Asian nation is affluent. Such material is made available in an effort to advance understanding of country or topic discussed in the article. VNA Saturday, December 11, 2021 14:15 Over the next decade, 36 million more consumers may join Vietnams middle class, defined as consumers who spend at least 11 USD a day in purchasing power parity terms. But what he really enjoys is the hunt for something unique. That number could almost double to 125 million households by 2025, making ASEAN a pivotal consumer market of the future. in Vietnam Surveys conducted by the General Statistics Office in 1993 and 1998, using expenditure data, showed that during this period, the Gini coefficient increased slowly and modestly from 0.330 to 0.357. In 2004, though one in five households lived in poverty, per capita expenditures were steadily rising for all including the ethnic minorities. [Source: Reuters, October 8, 1998 |+|], Khai said sexual abuse of children, child labor and the sight of children breaking the law was painful for all society. Both higher education and the business environment can be further improved so that the youth cohort are not underutilized, helping Vietnam realize its full growth potential. The son of one top Communist Party leader is widely believed to be among the investors. faces of the Vietnamese consumer More-experienced-affluent consumers search for tangible proof of value, such as workmanship, the use of advanced technologies, or the use of special or sustainably sourced materials. Two-thirds are under 40 years of age, and more than three-quarters graduated out of the middle class within the past ten years and earned their wealth as salaried professionals or business owners. "He had about $10,000 in cash in his pocket.'' For other products, such as refrigerators, TVs, and smartphones, spending experiences a step change at an income inflection point and then stabilizes. Affluent consumers spend considerably more in some product categories than others as their household incomes rise. 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. 2020 in this case). middle class Vietnam Seventy-three percent said that they like to buy products online and physically pick them up in stores. Vietnam Updated country income classifications are available here. In 1999 alone, the richest 20 percent of the population earned 7.3 times as much as the poorest 20 percent. [Source: Xinhua, January 10, 2007], In 2002, Tran Dinh Thanh Lam of the Inter Press Service wrote: "Up until recently, economists saw no great difference in individual incomes in Vietnam as could be expected in a socialist country. They make 12 international trips a year, on averagenearly half of them for leisure. "However, ask a cyclo driver outside and you get a wry smile and a mumbled comment about rampant corruption in the party and the government. But wide areas of slum dwellings are not. In the Philippines, for example, we project that the affluent will control 64% of household wealth by 2030. Over the next decade, 36 million more consumers may join Vietnams middle class, defined as consumers who spend at least 11 USD a day in purchasing power parity terms. The report highlighted the Dong Dau social protection center, 30 kilometers (20 miles) northeast of Hanoi, which also serves as a holding center for sex workers, drug addicts and disabled and elderly people without family support. They are mostly young, independent, and confident in their choices of brands and in their self-earned wealth. Quoted on Yahoo at $328,750, in Vietnam it attracted an additional 70 percent import tax, 50 percent luxury tax, and 10 percent value-added tax. The family cooks on a primitive charcoal stove, but they have a radio, television set, videocassette recorder and refrigerator. Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, Lonely Planet Guides, Library of Congress, Vietnamtourism. "Under the communist style regimes that are becoming a dim memory, the governments role was critical and domineering. We face big challenges to help the worlds poorest people and ensure that everyone sees benefits from economic growth. Vietnam's government and its foreign donors are aware of the growing urban-rural divide, a problem common to much of Asia. Vietnam's per capita income rose to 835 dollars in 2007 from 423 dollars in 2001, and the percentage of households living in poverty declined to 14.7 percent in 2007 from 28.9 percent in 2002. But Luong Van Ly, of Saigon's Planning and Investment Department, says 50,000 households have still to be re-housed, most in new high-rise tenements in the suburbs. 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. The stereotype of affluent Southeast Asian consumers showing off their wealth with designer labels is badly outdated. The houses on both banks are newly-built. By 2020, the country is expected to have 30 million middle class and rich consumers. SDS leaders opposed the war because they felt it was unjust and feared being drafted. Airport duty-free shops should be viewed as outlets for selling much more than cosmetics and spirits. In other words, things can only get better for the people in these areas. According to the city's Committee for Population, Family and Children (CPFC), the city's number of juvenile delinquents was 6, 300 in 2000, a sharp rise from only 1,311 in 1991. [Source: Kate McGeown, BBC, November 27, 2006], Brian Gomez wrote in The National: "Although North and South Vietnam were unified under the communist regime in 1976, the countrys rapid social and economic transformation began a decade later when the government introduced its Doi Moi programme or change to new or reforms. Many settled on the damp ground along the city's network of four large canals. Mahruba, 36, a Malaysian who has two children and owns a travel agency, said she avoids the US for luxury purchases because you always have this image of famous US brands selling at a huge discount. Instead, she buys in Europe, where she knows that she will get the latest designs and more niche and exclusive products. Shahne, an Indonesian real estate executive, said that he trusts buying 30-year-old Hibiki whiskey, which his family keeps on hand for special occasions, only in Japan. Klaus Rohland, who is due to leave his World Bank post in Hanoi this month to take up his new position as country director for the Russian Federation, says in an online video interview that 35-year-old Vietnamese employees in his office all faced the reality of hunger in the 1980s. Indeed, from a country that found it hard to feed its growing population some 10 years ago, this Indochinese nation has developed into the world's second-largest rice exporter. In fact, our research found that as incomes increase, the affluent who previously bought well-known consumer brands are passing over well-known premium brands and gaining the confidence to move directly to superpremium, niche, and boutique brands. [Source: Frank Zeller, Agence France Presse, November 12, 2006 ^^], "Communist Vietnam has stepped up its campaign against "social evils" ahead of the gathering, its largest ever international conference, that will bring to Hanoi the leaders of 21 economies also including China, Russia and Japan. The seventh -- a high school student accused of organizing the race -- was sent to jail for three years. Over the last decade, poverty declined impressively. We believe that companies in the region, as well as those outside it, should take a closer look at the mass-affluent market and plan to target it. More than one billion Asians are set to join the global middle class by 2030, the report said, predicting also that the current Covid-19 pandemic will be a temporary pause in the world economys great demographic shift. Now the Vietnamese government intends keeping a steady hand on government spending, aiming to keep its national budget at around 22 percent of GDP, according to the ADB. The main online channels are mostly official brand websites and online marketplaces, followed by social media groups and other specialty websites. They have also worked for their wealth. The hot-rodding episode underlined how out of sync Vietnam's crusty communist image has become with the freewheeling frontier capitalism that is taking root here. Most observers believe that with the new U.S.-Vietnam trade deal signed in May, it is only a matter of time before Vietnam's young middle class will be sipping coffee at Starbucks and eating at McDonald's like their counterparts in Bangkok and Hong Kong. Now, the mass-affluent class is growing faster than any other income segment in the regionand the pace is projected to accelerate. Vietnam has seen annual economic growth of 7-8 percent in recent years but the scrapping of state subsidies and farm cooperatives has widened the wealth gap and sent poor rural families and lone children to cities looking for work. Vietnamese policy-makers now think that by promoting both economic development and human development, they will gradually narrow the gap between rich and poor. In the Philippines, these households have monthly incomes exceeding $465, in Thailand $442, and in Vietnam $660. Economic growth averaged 9 percent a year in the five years to 1997, the year of the Asian economic crisis. Distribution of family income: Gini index: 37.6 (2008), country comparison to the world: 75; Ans wife, Thu Nhan, works in front of the house, sweeping the porch with a short-handled broom. income Upper-middle-income economies have GNI per capita of $4,046 to $12,535. "Sometimes I ask myself how they can spend all that money in one night," said Sonny, the club's resident Filipino DJ. Yet spending on cars, restaurant dining, travel, and spirits dramatically accelerates as consumers enter the ranks of the affluentand keeps rising in step with increases in income. The heavy security presence, which, according to several waiters, includes undercover, gun-carrying guards hired from police ranks, appear keen to keep observers guessing. Vietnam Indeed, why have one bottle of a 150-dollar cognac for a table of six when you can have two or three at the same time? I am past owning the big brands, said Cindy. Most of it was in $100 bills, and Cuong suggested the officers use the $400 to buy themselves some coffee, Thuyet said. However, considering peoples awareness, 96 percent of Vietnamese think their incomes are high enough to be among the middle class. Research conducted by The Boston Consulting Groups Center for Customer Insight, including a survey of about 6,000 affluent consumers and extensive ethnographic qualitative research in six major Southeast Asian countries, found that the majority of mass-affluent consumers are young and savvy. One is the Nhieu Loc canal district, on the road used by visitors arriving in Saigon from Tan Son Nhat airport. |+|, In 2006, AFP reported: "A US human rights group slammed Vietnam for roundups and violent abuses of street children ahead of key international events including this week's Asia-Pacific Economic Cooperation summit. As these consumers become part of the affluent class, they shift to purchasing more expensive products within the same categories, a process we call premiumization.
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