Having considered the situation in India and China, we cannot overlook Vietnam, which is currently one of the most developed countries in Southeast Asia. The perseverance and diligence of the local population enabled the country not only to recover from the exhausting and devastating war against the US and China, but also contributed to the improvement of its economic position and the standard of living.
Vietnam's GDP Growth
Over the last decade, Vietnam has been increasing its rate of economic growth. At present, economic indicators have doubled. Let’s look at this trend through specific examples.
Since 2010, Vietnam’s GDP has grown from $115.9 billion to $340.8 billion. As a result, there is a trend of major American multinational companies, such as Apple, shifting production from China to Vietnam. It is important to note that the currently ruling Communist Party of Vietnam is promoting information technology in the country to create a favorable environment for attracting foreign investment, including the development of special economic zones and technology parks.
In the past ten years, Vietnam’s GDP per capita has grown from $1,317 to $3,499, while labor costs have remained relatively low. Meanwhile, the average wage in the country has remained stable (around $1,000 per year).
Exports and Technology
From 2010 to 2020, Vietnam strengthened its position in foreign trade, with trade volume rising from $157 billion to $518 billion. The main export items are light industry goods such as footwear, clothing, and small consumer goods. Thanks to the presence of numerous factories of foreign technology companies in the country, technology exports are also on the rise.
Vietnam is not yet fully developed technologically. As a result, the country finds it difficult to respond to modern environmental trends and to actively switch to renewable energy sources (RES). However, in the last decade, the share of power plants using renewable energy increased from 1% to 10%.
The government is also investing in R&D. In 2020, this indicator reached 0.5% of GDP. On a global scale this may not seem significant, but for Vietnam it provides a good foundation for strengthening its position in the region. As a result of these investments, the digital economy has grown from 1% of GDP in 2010 to 5% of GDP in 2020. The Vietnamese market is extremely attractive to international technology companies. In 2017, the Chinese company Xiaomi entered the Vietnamese market and began promoting its products through digital strategies using social media and other online resources, which triggered explosive growth in sales in the country. Such promotion would not have been possible without Vietnam’s existing digital infrastructure.
Limitations and Problems
Nowadays, Vietnam continues to face the acute problem of social inequality. Compared to 2010, when more than 27% of the population lived below the poverty line, by 2020 this figure had dropped to 4.8%. The government is trying to address this problem by raising living standards and creating new jobs. However, in developed major cities, a worker’s monthly salary can be comparable to the annual salary of residents in rural areas.
The development of the domestic market has led to an increase in the number of dollar millionaires in the country. Over the last decade, their number has nearly doubled, from 10,000 to 19,490.
Based on all the above figures, it can be concluded that Vietnam does not yet constitute strong competition for India and China. However, within its region, the country demonstrates impressive growth in economic indicators and export capacity.
About RASPP
The Russian-Asian Union of Industrialists and Entrepreneurs (RASPP) is a public organization implementing government cooperation programs aimed at strengthening collaboration between public and business associations in Russia and Asian countries.
One of RASPP’s key objectives is to support the business communities of Russia and Asia in developing and strengthening multilateral relations, as well as attracting investment into the Russian Federation. Over 10 years of activity, RASPP has attracted more than $800 billion in direct foreign investment to Russia and has increased trade turnover by more than $1 billion.
RASPP specializes in business solutions in the fields of import, export, investment attraction, and implementation of investment projects in Asian countries. It also organizes business events and business missions in these areas, including helping companies find industrial equipment in China free of charge.
Advantages:
Over 10 years of experience
Russian-speaking specialists in China
Turnkey supply organization
For consultation, you can send a request by email to business@raspp.ru or by phone at +7-963-963-8363. Natalia Sapunova, Head of the RASPP Department of Trade and Economic Cooperation, will be glad to assist you.