Vietnam’s short-term economic outlook remained positive in the third quarter of 2020, with the country still being expected to be one of the few countries that will continue to grow in 2020, while the rest of the world is being projected to enter into a recession. Vietnam’s economy continued to see steady growth as a result of increases in manufacturing and exports, and increasing foreign direct investment.
Along with the other developing countries in the region, Vietnam is also undergoing rapid modernization and advancing technology, which local consumers are generally adopting and embracing. Sales of the top three major appliances have been surging, with market trends pointing towards bigger capacity refrigerators and washing machines, as well as inverter air-cons.
As younger people enter the workforce and income levels and standards of living rise, consumers are eager to explore new technology trends from around the country and are willing to buy or replace their current appliances if the new products offer greater convenience and meet their requirements. For example, in terms of technology, digital inverters have become standard in many appliances, as they reduce energy consumption.
The Air Conditioner market in Vietnam is expected to grow in the upcoming years with a much higher growth rate. The huge demand for Air conditioners in the commercial, hospitability, and residential sector is propelling the market in Vietnam. The government is also investing heavily in the construction sector due to which the sale of Air Conditioner is expected to increase. Innovation in Air Conditioner for energy efficiency and IoT are the other factors for growth.
The market for Air Conditioner in Vietnam is growing year on year, this growth is due to the rising middle-class population, increasing number of houses, buildings, and other structures comprising demand for Room Air Conditioners (RAC), including window type and small-sized split type ACs as well as Commercial Air Conditioners.
With the gradual change in shopping patterns seen among the Vietnamese population, an emerging trend towards buying larger refrigerators has become apparent. Sales of bigger washers are also on the rise as price gaps between brands and models are narrowing due to intensifying competition.
The Vietnamese consumer electronics market has been underpinned by the country’s healthy economic growth and its tech-savvy young population. The sustained rise in disposable incomes is expected to support steady growth in demand for electronics in the coming years.
Japanese company Panasonic Vietnam continued to lead consumer appliances in 2020 and was the only player to hold a double-digit retail volume share. In terms of the competitive landscape, Vietnam has progressively ramped up its manufacturing capability, attracting foreign investors and leading to a flurry of companies moving their operations to Vietnam.
Accounting for over 70% of the total retail volume, specialist electronics stores are the dominant distribution channels in the consumer electronics market. Specialist retailers offer a wide range of brands and product categories, frequent discount programs, and technical and after-sales support for consumers. With extensive retail networks, specialist retailers are the preferred sales partner for foreign brands. Within the specialist electronics segment, several key players, including Dien May Xanh, Synnex FPT, and Nguyễn Kim, occupy up to 80% of the market.
The online shops of authorized specialist retailers are often regarded as more reliable in terms of product quality and after-sale service, compared with other online channels such as e-commerce platforms or social networks. Consumers are more cautious towards sellers on e-commerce platforms such as Lazada and Shopee, as some of them are not authorized, retailers.
Apart from multinational manufacturers, such as Samsung and LG, which have production facilities in Vietnam, large and mid-sized foreign brands usually set up their own limited companies for importing and distributing products in Vietnam. This strategy enables companies to better control their brand names and provide support services to customers.
Consumer appliances are expected to continue to see strong growth in the upcoming quarters, although the rate of growth is expected to be considerably slower than that seen in the recent period as maturity becomes evident in some categories along with Covid related externalities. Nevertheless, rising demand for new homes, urbanization, and increasing incomes will fuel growth in consumer appliances over the coming years.