German Market

Characteristics of Vietnam's commodity market?

Question: Characteristics of Vietnam's commodity market?

Answer: 

• Market size

Vietnam is a developing country with a high economic growth rate in the region and in the world. According to the General Statistics Office of Vietnam, Vietnam's average GDP growth in the period 2011-2020 was 5.96%. In 2020, although the economy was negatively affected by the COVID-19 epidemic, Vietnam's GDP still grew by 2.91%, reached USD 271.2 billion while many countries in the world had negative GDP growth. This figure shows that Vietnam has succeeded in controlling the pandemic and minimizing negative impacts on the economy.

Vietnam is in the process of transforming its economy from backward agriculture to modern industry. At the same time, Vietnam is also an export-oriented economy, with exports playing an increasingly important role in gross domestic product. Therefore, the demand for modern machinery, equipment and raw materials for production, export and construction has increased.

With a total population of nearly 100 million people and the average GDP per capita of about USD 2,786/person in 2020 (World Bank, 2021), Vietnam is becoming a large and potential consumer market for foreign consumer goods. As a country with a young population (about 55.5% of the population under the age of 35), Vietnam has diverse consumption needs and Vietnamese consumers have quickly grasped new and modern consumption trends. Vietnam's middle class is forming with about 13% of the current population and is expected to increase to about a third of the population by 2026 (World Bank, 2021). This class has modern shopping habits and high demand for quality products.

• Demand for imported goods

Vietnam has 3 sides bordered by the sea, so it is very convenient for trade activities. Vietnam's goods import turnover has continuously increased over the past years, reaching USD 262.7 billion in 2020, an increase of 3.7% compared to 2019. For the first nine months of 2021, despite being heavily impacted by the COVID-19 pandemic that causes domestic consumption demand and many production and export activities to decline, Vietnam's goods import still increased sharply, reaching USD 243.2 billion, an increase of 30.8% compared to the same period last year (General Department of Vietnam Customs, 2021).

Vietnam’s imports can be divided into two categories:

  • Import of machinery, equipment and raw materials for production and export: This is the main import group of Vietnam, with the import turnover of this commodity group reaching USD 245.6 billion, accounting for 93.6% of total import turnover in 2020. Of which, about half are machinery, equipment, means of transport and spare parts (49.4% of total import turnover), the rest is group of raw materials (General Statistics Office of Vietnam, 2020);

  • Import of consumer goods for domestic consumption: This group accounted for about 6.4% of Vietnam's total import turnover in 2020, consisting mainly automobiles, mobile phones, processed vegetables and fruits and foods, chemicals, pharmaceutical products, cosmetics… (General Statistics Office of Vietnam, 2020)

Table: Top 10 products that Vietnam imported the most in 2020

No

Products

Import value (USD billion )

Proportion

1

Computers, electronic products & components

63.97

24.35%

2

Machinery, equipment, & spare parts

37.25

14.18%

3

Mobile phones and accessories

16.65

6.34%

4

Fabrics of all kinds

11.88

4.52%

5

Plastic materials

8.40

3.20%

6

Iron and Steel

8.07

3.07%

7

Plastic products

7.27

2.77%

8

Other common metals

6.05

2.30%

9

Chemical products

5.74

2.19%

10

Textiles, garments, footwear materials

5.38

2.05%

Source: General Department of Vietnam Customs, 2020

Source: The Center for WTO and International Trade

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