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June 6, 2008

Vietnam tops list for most attractive retail detination

Vietnam leapt over India, Russia and China as the most attractive emerging market destination for retail investment this year, consulting firm AT Kearney reported on June 2.

"Vietnam has ended Indias three-year reign as the most attractive emerging market destination for retail investment, according to the seventh annual Global Retail Development Index (GRDI)," AT Kearney announced in a statement.

The firm attributed Vietnams leap from fourth in the 2007 GRDI to first place in 2008 to strong gross domestic product (GDP) growth, changes to the countrys regulatory structure favouring foreign investors, and increasing consumer demand for modern retail concepts.

While Vietnam's retail market is valued at $20 billion, it is minuscule compared with Indias market at around $510 billion. However, the absence of competition plus 8 per cent GDP annual growth make it an attractive expansion opportunity for global retailers, according to the company.

"Vietnamese consumers are among the youngest in Asia, with 79 million below the age of 65. They increased their consumer spending by more than 75 percent between 2000 and 2007.

The country is growing increasingly urbanised and concentrated with more than 1 million people a year migrating into Ho Chi Minh City and Hanoi," the firm reported.

The firm was also optimistic about expectations that the Government would remove controls on fully foreign-owned retailers in the country, under a new program to develop wholesale and retail real estate to 2010.

"The Vietnamese consumer is seeing rapidly growing per capita income and regulations are drastically opening up the market for new entry," said Mike Moriarty, a partner with AT Kearney and co-leader of the GRDI.

"Now is the perfect time to get involved. It wont be easy and you'll be a pioneer, but now is the moment. Currently the top five organised retailers in the country, including Sai Gon Co-op, G7 and Casino, have less than 3 percent of the market," he said.

India, Russia and China, the top three countries in last years GRDI, fell to second, third and fourth, respectively.

The region has already seen the recent emergence of modern retailers in Thailand, the Philippines and Malaysia.

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