beyondbrics

Who would have thought hi-tech gadgets would take off so fast in a country where the per capita GDP, at $1,050, is lower than the cost of a new iPhone 4 ($1,100)?

But the unlocked phones are selling fast – four a day at Hoang Mobile in downtown Hanoi, according to enthusiastic sales staff in the cramped store just a few blocks from the equally tiny Digiworld, a licensed Apple vendor. It, too, is jammed most days, with customers asking for advice on how to work the 3G connection on their iPads.

None of this is a surprise to the folks at the market research group Nielsen, who last month reported that in Q2 of 2010, Vietnamese were more eager than any other consumers in Asia to spend extra cash on consumer electronics. Forty seven per cent of Vietnamese said they wanted to spend the money they had left over after living expenses on “new technology”.

Globally, Vietnamese tied with Indonesians for the second-highest level of consumer confidence, with both placed behind the ebullient Indians.

One might have concluded that “new technology” might mean things like cars, vacuum cleaners and dishwashers (or, in many villages, mattresses).

But Nielsen Vietnam’s Tam Nguyen confirmed that the survey results referred only to computers, phones, digital cameras — in short, things that go bleep.

This might help to explain the fact that while Apple fans were still scouring the world for pre-release prototypes of the iPhone 4, the second place where one turned up was at a coffee shop in Saigon.

What’s telling about the appetite for consumer electronics in Vietnam is how it fits into a booming culture of conspicuous consumption. Apple products have leapt to popularity over the past year because the logo is recognizable from a distance, and immediately sets the owner apart as a member of Vietnam’s rising urban elite.

This also explains the popularity of cheap knockoff Chinese iPhones here. The clunky touch-screens may barely work, the reception may be inferior, but they look and sound like the real thing – from a distance, anyway. A similar impulse seems to be behind the increasing number of Bentleys, Porsches, Maseratis and Rolls Royces cruising the absurdly cramped streets of old Hanoi these days.

OECD denizens worrying that rising Asia may not serve as an engine of global recovery often fret over east Asians’ tendency to save their cash, rather than spend it. Interestingly, the Vietnamese seem to want to do both — Nielsen reports that the percentage of Vietnamese who said they would invest their extra cash leapt from 16% to 31% between Q1 and Q2.

But it’s not all positive news, as Vietnam finds itself on the wrong side of another global trend: trade imbalance.

One senior government official identified the growth in imports of high-priced consumer electronics as a major factor in Vietnam’s ballooning trade deficit with China, which hit $7.4 billion in the first 7 months of this year, double the figure for the same period last year.

But with Vietnam’s economy likely to show 6.5% growth this year, not much can put a dent in the eagerness of its citizens to keep spending their newfound cash on things with buttons.

This post is part of a two-week special series on emerging market consumers.

Related reading:
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