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|More Vietnamese nouveau riche are making their money talk with an appetite for big ticket items|
Vietnam has ranked the top Asia-Pacific market on spending priorities on dining and entertainment for the next six months.
The MasterCard Worldwide Index of Consumer Purchasing Resilience survey released last week in Singapore showed that 89 per cent of Vietnamese consumers surveyed said they would prioritise dining and entertainment spending, 78 per cent for fashion and accessories and 69 per cent for fitness and wellness.
In Asia-Pacific, Korea was the second top country spending priority on dining and entertainment (78 per cent) and Hong Kong was third (75 per cent).
Regionally, Vietnam was also the country with the highest percentage of consumers planning to maintain their level of discretionary spending, with 62 per cent, Australia and Korea second with 59 per cent.
Christina Yu, director of Ipa Nima Accessories, said: “I am pretty certain that Vietnamese spend a lot on luxury items – from food to fashion, fancy cars and gadgets.”
She said there was no doubt that Vietnamese and the mainland Chinese were the main ones in South East Asia who had a lot of spare cash to spend.
“They all seem to be buying the same brands and the same kind of things - very typical of the ‘nouveau riche’ syndrome,” Yu noted.
“In the time to come, more famous brand names are landing Vietnam. Just look at Ho Chi Minh City -Chanel, Dior, Ralph Lauren, Burberry - they are all landing in Vietnam one after another in quick succession like it is one of the last goldmines of Asia.
“This trend will continue of course, as when the rich Vietnamese get richer and after they have all the luxury goods that they want - they will go and buy other things like antiques, paintings, villas and chateaus around the world, yachts and jet planes.
They are beyond food, entertainment and fashion at this point as what they will yearn for is a unique personal experience, and something that is rare which others do not have. And then there will be the next generation of rich Vietnamese who will follow the same footsteps, we see it all around the world, not just in Vietnam,” she told VIR.
According to 2011 Fearless Forecast Report done by property consultant CB Richard Ellis Vietnam, famous brand names such as Ritz Carlton, St.Regis, Mandarin Oriental, Shangri-La and Four Seasons will come to Vietnam in the next five years.
Ralf Matthaes, regional managing director of TNS Vietnam and Malaysia, said Vietnam had been growing in terms of wealth and gross domestic product (GDP) during the last six years (6 per cent + average), so it stood to reason that spending on dining and entertainment was growing.
However, Matthaes highlighted, under an annual consumer confidence poll across 1,000 Vietnamese in Hanoi and Ho Chi Minh City conducted by TNS in January 11, dinning and entertainment was seen as the lowest purchase and spend priority of all 12 categories measured. Accordingly, 55 per cent noted spending less on dining and entertainment in 2011, while only 11 per cent noted spending more this year compared to last year (chart below).
“Considering Vietnam has had a cumulative inflation rate of 41 per cent in the past three years, averaging over 13 per cent per year, inflation has taken the bite out of non-essential purchasing for many Vietnamese households,” he said.
Matthaes, however, agreed that more luxury and famous brands would arrive. But he said they might be in for a shock, considering that over 60 per cent of the population of 86 million survive on under $150 per month.
“Also, there are only roughly 1.5 million wealthy consumers in Vietnam who can regularly afford to spend $100 per a meal, many of these brands will find it tough going at first, as novelty purchase.
“However, as Vietnamese wealth continues to grow and Vietnamese do find fine dining and entertainment aspiration, brands with the right mix of international style and delivery, with a Vietnamese taste and aspiration values, should do well in the mid to long term,” he added.
MasterCard Worldwide global products executive Yunsok Chang, said: “While it is no surprise that dining and entertainment is at the top of consumers priorities again, it is interesting to see continued positive movement in terms of priorities for the three top categories for the third year running.
This is in line with regional economic sentiment and growth over the last six months. Combined with the data on discretionary spending, which are at the highest levels since the survey began, the latest findings show strong consumer sentiment for private consumption over the first half of 2011.”