Vietnam’s middle class is growing faster than anywhere else in Southeast Asia.
Exports of goods manufactured in the country have created jobs and increased pay. As people’s buying power increases, so has “conspicuous consumption.” That phrase describes spending money on costly goods and services to show a person’s wealth.
It is a way people might try to show their economic power.
The Boston Consulting Group says Vietnam’s “middle and affluent class” is expected to double to 33 million people by 2020. The business group considers people earning $714 or more a month members of Vietnam’s middle class.
By 2020, the group says, about one third of the country will be defined as middle class.
In 1987, Vietnam opened the country to foreign investment. Since 2012, it has dealt with issues like labor and the exchange value of its money, the dong.
Vietnam is a member of the Association of Southeast Asian Nations. It is one of 12 countries that have signed the Trans Pacific Partnership free trade agreement. Vietnam also has signed trade deals with Europe.
Companies manufacturing goods for export in Vietnam like the low operating costs in the country.
Foreign factories have helped the local economy. The factories have created related businesses that supply stores and provide financial services.
Vietnam regularly raises the minimum amount workers can be paid. To save money, workers often live with family to save on housing costs.
Some employers say it is hard to find skilled people to do higher level office work. So people who can perform these jobs get paid higher wages.
Aparna Bharadwaj covers Southeast Asia for the Boston Consulting Group. She said unlike other emerging Asian countries, Vietnam’s government investment in agriculture has created a rural middle class. She said the middle class has moved quickly into smaller towns and rural markets and is spread widely among the population.
Boston Consulting Group says the average income per person in Vietnam will rise from $1,400 in 2014 to $3,400 by 2020.
A sign of increased wealth in the country’s financial center of Ho Chi Minh City is increased traffic jams. Among the vehicles are costly cars and motorcycles built by Honda and Yamaha. Those are considered status brands for Vietnamese.
Restaurants serve foreign foods, which are more expensive than local food. They fill up at night with loud groups of people showing off their Apple and Samsung mobile phones.
Some people are so status conscious that they might have less furnishings in their homes so they can spend more on items others can see.
Oscar Mussons works for Dezan Shira & Associates in Ho Chi Minh City. He says, if you go inside a Vietnamese house, they might not have a lot of things.
“They would probably eat on the floor, but still they would have a mobile phone or a motorbike because this is what they see, they can show from the outside. It’s not just about being middle class, but also about showing that they’re middle class.”
Tam Nguyen is a 36-year-old office worker in Ho Chi Minh City. Her wages have gone up more than 10 percent in two years. She eats out with her family on weekends and spent $5,000 for a trip for four people to Japan.
She says she likes to spend money on traveling and tourism. She decided to save some money to buy property in the next five years.
Growth in Vietnam’s middle class means foreign companies are competing in many different areas. These include fast food restaurants, dairy products, hygiene, consumer electronics and vehicles. Foreign companies with businesses in the capital include Burger King, Starbucks, Family Mart, Nestle and Sony.
U.S.-based computer company, Dell, says people prefer different companies depending on where they live in the country. One business development manager says, in the north, people like European companies, while those in the south like American and Japanese ones.
Dell now brings attention to providing service to customers after a sale to build “trust” in their products
Words in This Story
conspicuous – adj. not easy to miss or ignore
affluent – adj. having a lot of money, rich
emerging – adj. growing in strength, becoming widely known
status brands – n. kinds of products considered better or more desirable than others
status conscious – n. wanting to give the impression of status, position or wealth
hygiene – n. things people do to keep themselves and their surroundings clean to support good health