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NEWS UPDATES Asean Affairs        21  June 2011

Vietnam businesses lack confidence

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The first quarter of this year has seen a drop in confidence among both business leaders and consumers about the nation's economic prospects, according to the Viet Nam Business Barometer Survey carried out by Nielsen.

"Nearly two-thirds of the business leaders surveyed said that business conditions were worse now compared to a year ago and 48 percent fewer leaders expect to beat their targets compared to a year go," a company press release said.

Only one-third think that conditions will improve over the next12 months, while the majority thinks status quo will prevail, it added.

While business executives mentioned inflation and recent devaluations of dong as their top concerns, they also said they had achieved their targets thus far.

The vast majority (90 percent) of business leaders still expected double-digit growth in their businesses, the survey found.

"The financial services, telecom and pharmaceutical sectors seem set to continue to grow, while fast moving consumer goods (FMCG) is likely to be affected by consumers reducing spending in the face of inflation and will show slower growth.

"Most executives plan no reductions in advertising spending however, and 43 per cent actually plan on increasing spending over the course of the year to capture the increasingly value-driven consumer. TV continues to be the top channel for advertising, followed by point-of-sale materials and in-store signage, while online continues to show promise," the release said.

It quoted the Managing Director of Nielsen Viet Nam, Darin Williams, as saying: "GDP growth in Vietnam is set to slow this year, and macroeconomic challenges facing the country require business leaders to work even harder to achieve success.

"That means expanding into rural areas to capture growth, identifying new potential categories, and understanding their pricing and promotion mix better, and how much a price increase can be passed on to customers."

The consumer is faced with steadily increasing prices, so they are increasingly saving their money and buying more goods on promotion. Almost two-thirds (64 per cent) of survey respondents said they would be looking for promotions, an increase from 51 per cent in the second half of 2010.

Fifty percent of the respondents said they would do without some non-essential goods (up from 41 percent in the second half of 2010) while 41 percent said they would buy less expensive products.

The Nielsen Business Barometer is an online survey designed to gauge Vietnam's business leaders' sentiment. It covers many topics including advertising expenditure and growth forecasts. It is conducted twice-yearly and covers companies in various industries throughout Vietnam.


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