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June 29, 2017

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Vietnam emerges as key market for S. Korea

Vietnam is emerging as a major market for South Korean goods on the strength of strong sales of South South Korean cars and mobile handsets, the Ministry of Strategy and Finance said Monday.

In a report on the 20th anniversary in which South Korea forged formal ties with Vietnam, the ministry said the middle-class consumers in Vietnam were showing greater appetite for South Korean products and that the Vietnamese government was encouraging South Korean firms to enter the local market.

The Vietnamese economy has been growing between 5 percent and 8 percent a year, a heady expansion that helps give the country's middle class greater purchasing power.

"The Vietnamese market is becoming more important than ever for South Korea as it's a crucial gateway country in the Asia-Pacific market," the ministry said. "To promote cooperation with Vietnam further, South Korea should draw up a set of plans customized for the Vietnamese market."

Vietnam is an economic hub that offers a key logistical channel to ASEAN countries, China and India.

The Finance Ministry said that Vietnam's demographics were rapidly changing in a way that offered more business opportunities for South Korean makers of consumer goods. It expects the proportion of low income earners in the population will fall to 27.7 percent by 2020, down from about 80 percent recorded in 2009.

The ministry projected that sales of mobile handsets will surge to 31 million units by 2015.

On the back of the growing consumer market, Vietnam has become the eighth-biggest export destination for South Korea. Over the past decade, South Korea's exports to Vietnam jumped eightfold, with the volume reaching US$13.6 billion last year.

Vietnam accounts for 19 percent of South Korea's exports to ASEAN, the second-biggest volume after Singapore.

Vietnam's demand for South Korean textiles, steel plates and resins has also steadily increased in recent years.

Business conditions in Vietnam continue to improve, the ministry said, as the Vietnamese government is spearheading policies designed to attract more foreign investment.

South Korea ranked second in direct foreign investment into Vietnam by injecting a total of US$24 billion as of December.

The sweeping popularity of South Korean pop culture in Vietnam is also helping South Korean companies to do business under largely positive consumer views on South Korean products. About 10 percent of Vietnamese TV programs are devoted to broadcasting South Korean drama series amid heightened interest about the Korean language and culture.

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