BMI Vietnam Consumer Electronics Report Q3 2013

Q3 2013
www.businessmonitor.com
VIETNAM
CONSUMER ELECTRONICS REPORT
INCLUDES 5-YEAR FORECASTS TO 2017
ISSN 2040-9494
Published by:Business Monitor International
Vietnam Consumer Electronics

Report Q3 2013
INCLUDES 5-YEAR FORECASTS TO 2017
Part of BMIs Industry Report & Forecasts Series

Published by: Business Monitor International
Copy deadline: June 2013
Business Monitor International

Senator House
85 Queen Victoria Street
London
EC4V 4AB
United Kingdom
Tel: +44 (0) 20 7248 0468
Fax: +44 (0) 20 7248 0467
Email: [email protected]
Web: http://www.businessmonitor.com
2013 Business Monitor International

All rights reserved.
All information contained in this publication is
copyrighted in the name of Business Monitor
International, and as such no part of this
publication may be reproduced, repackaged,
redistributed, resold in whole or in any part, or used
in any form or by any means graphic, electronic or
mechanical, including photocopying, recording,
taping, or by information storage or retrieval, or by
any other means, without the express written consent
of the publisher.
DISCLAIMER
All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of
publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor
International accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the
publication. All information is provided without warranty, and Business Monitor International makes no representation of warranty of any kind as
to the accuracy or completeness of any information hereto contained.
Vietnam Consumer Electronics Report Q3 2013
CONTENTS
BMI Industry View ............................................................................................................... 5
SWOT .................................................................................................................................... 7
Political ................................................................................................................................................... 9
Economic ............................................................................................................................................... 10
Business Environment .............................................................................................................................. 11
Industry Forecast .............................................................................................................. 12

Table: Consumer Electronics Overview, 2010-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Macroeconomic Forecasts ............................................................................................... 16

Economic Analysis ................................................................................................................................... 16
PMI Data Suggests Economic Recovery Remains On Track ............................................................................ 16
Downward Revision To Reflect Weak Q113, But Growth Trajectory Intact ........................................................ 18
Table: Vietnam - Economic Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Industry Risk Reward Ratings .......................................................................................... 21

Industry Risk/Reward Ratings .................................................................................................................... 21
Table: Asia Pacific Consumer Electronics Risk/Reward Ratings, Q3 2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Market Overview ............................................................................................................... 26

Computers ............................................................................................................................................ 26
Table: Computers Demand, 2010-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
AV Devices ........................................................................................................................................... 31
Table: AV Demand, 2010-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Mobile Handsets .................................................................................................................................... 35

Table: Mobile Handsets Demand, 2010-2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Competitive Landscape .................................................................................................... 40

Computers ........................................................................................................................................... 40
AV Devices .......................................................................................................................................... 42
Mobile Devices ...................................................................................................................................... 44
Demographic Forecast ..................................................................................................... 47

Table: Vietnam's Population By Age Group, 1990-2020 ('000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Table: Vietnam's Population By Age Group, 1990-2020 (% of total) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Table: Vietnam's Key Population Ratios, 1990-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Table: Vietnam's Rural And Urban Population, 1990-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Methodology ...................................................................................................................... 51
Methodology ........................................................................................................................................... 51
Electronics Industry ................................................................................................................................ 51
Sources ................................................................................................................................................ 52
Page 4
BMI Industry View

BMI View: We project Vietnam consumer electronics spending will grow by about 12% in US dollar terms
in 2013 to US$5.9bn. Sales of handsets and TV sets reported a dip in Q113, despite a typical boost from the
Lunar New Year shopping season. In 2012 Vietnamese retail demand for consumer electronics products
grew robustly, although there was pressure on consumers' incomes from rising inflation. In 2013,
uncertainties over the outlook for employment could cause households to cut back on spending. The
country's vast, underpenetrated rural market offers the greatest growth potential, while Hanoi and Ho Chi
Minh City accounted for most sales. Growth areas include smartphones, which could comprise 50% of
handset sales in 2013, and LED TV sets, which reported triple-digit growth in 2012.However, sales of
FLED TVs and smartphones have been fuelled by lower prices, placing pressure on retailer and vendor
margins.
Headline Expenditure Projections
Computer hardware sales: US$1.8bn in 2012 to US$2.1bn in 2013, +13% in US dollar terms. Forecast
in US dollar terms is unchanged, but due to Windows 8 tablets and ultrabooks we expect sales in these
areas to grow in 2013.
AV sales: US$1.4bn in 2012 to US$1.6bn in 2013, +14% in US dollar terms. Forecast in US dollar terms
unchanged, with flat-screen TV sets expected to provide the most dynamic development.
Handset sales: US$2.0bn in 2012 to US$2.2bn in 2012, +9% in US dollar terms. Forecast in US dollar
terms unchanged, with Android smartphones and low-cost feature phones the main driver of growth.
Risk Reward Rating
Vietnam's score was 59.8 out of 100, which gave it an unchanged sixth place in our latest Asia CE RRR
table. BMI expects Vietnam to attain a higher place in our rankings over time due to the rising penetration
of consumer electronics devices such as smartphones and flat-screen TV sets.
Key Trends & Developments
The growth in smartphone sales has been fuelled by the popularity of Android-based models, which
continued to be popular in 2012. = Although the operating system landscape is becoming increasingly
competitive, we expect Android to maintain its top position over our forecast period. In 2012,
smartphones grew by around 40% and accounted for about one-third of the market, and this could
increase to 50% in 2013. However, lower-priced smartphones at price-points between VND2.5mn -5mn
are a growing trend which is bringing down average prices.
Demand for LED and plasma TV sets will drive AV growth. TV upgrades should be spurred by
Vietnam's gradual progress towards digital TV broadcasting, which is supposed be available nationally
Page 5
by 2020. The government's plan for digital migration sets out a number of key targets, including
assistance for around 200,000 low-income households to buy digital TV equipment. Meanwhile, lower
prices are also a key driver, with the average price of a LED set falling by more than one-third since
2011.
Currently, Hanoi and Ho Chi Minh City are understood to account for around 85% of notebook sales. The
spread of fixed and mobile broadband services will spur purchases of mobile PCs as connectivity devices.
As elsewhere, telecoms operators such as Viettel are emerging as significant distribution channels for
notebooks as vendors seek tie-ups.
Page 6
SWOT
SWOT Analysis
Strengths
The domestic market is still in a rapid growth phase, with trade liberalisation and
growing affordability driving projected double-digit growth of key products, such as
digital TV sets, notebook computers and mobile handsets.
Low penetration rates for key products such as computers and smartphones.
Rising incomes and GDP growth are increasing affordability, with a huge and
relatively untapped market in the rural and suburban areas.
Weaknesses
Weak domestic industry, with local vendors lacking brand identity and distribution
network to compete with foreign vendors.
Low incomes and huge digital inequalities mean high price sensitivity and low prices.
Large 'grey' market for illegal products.
Relatively low level of demand for higher end products.
Infrastructure deficiencies, with only a small number of Vietnamese houses capable of

receiving broadband.
Opportunities
Economic instability and high inflation deflating potential demand.
Smartphones, which are projected to account for 50% of handset sqles in 2013.
Further possible cuts in import tariffs would drive increases in demand for imported
electronic products.
Rapid growth in mobile subscriptions, which will almost double, will drive booming
mobile handset market, with most of the action in the sub-VND1mn bracket.
Set-top boxes, with the Vietnamese government offering support to lower-income

families to purchase decoders as part of its digitalisation programme.
Page 7
SWOT Analysis - Continued
LED TV sets, with triple-digit growth in 2013 as Vietnamese consumers upgrade to

take advantage of the digital viewing experience. Low-cost tablets are expected to
provide a new market opportunity.
Substantial opportunity for expansion in under-penetrated semi-urban and rural

areas.
Threats
Concerns about unemployment and a potential economic slowdown in 2 013 may

constrain household spending.
Lack of political will for economic and social reform may delay market development.
Relentless pressure for lower prices in key product categories like TV sets and
smartphones could erode margins.
Page 8
Political
SWOT Analysis
Strengths
The Communist Party of Vietnam remains committed to market-oriented reforms and

we do not expect major shifts in policy direction over the next five years. The oneparty system is generally conducive to short-term political stability.
Relations with the US have witnessed a marked improvement, and Washington sees
Hanoi as a potential geopolitical ally in South East Asia.
Weaknesses
Corruption among government officials poses a major threat to the legitimacy of the
ruling Communist Party.
There is increasing (albeit still limited) public dissatisfaction with the leadership's tight
control over political dissent.
Opportunities
The government recognises the threat corruption poses to its legitimacy, and has
acted to clamp down on graft among party officials.
Vietnam has allowed legislators to become more vocal in criticising government

policies. This is opening up opportunities for more checks and balances within the
one-party system.
Threats
Macroeconomic instabilities in 2012 are likely to weigh on public acceptance of the

one-party system, and street demonstrations to protest economic conditions could
develop into a full-on challenge of undemocractic rule.
Although strong domestic control will ensure little change to Vietnam's political scene
in the next few years, over the longer term, the one-party-state will probably be
unsustainable.
Relations with China have deteriorated over recent years due to Beijing's more
assertive stance over disputed islands in the South China Sea and domestic criticism
of a large Chinese investment into a bauxite mining project in the central highlands,
which could potentially cause wide-scale environmental damage.
Page 9
Economic
SWOT Analysis
Strengths
Vietnam has been one of the fastest-growing economies in Asia in recent years, with
GDP growth averaging 7.1% annually between 2000 and 2012.
The economic boom has lifted many Vietnamese out of poverty, with the official
poverty rate in the country falling from 58% in 1993 to 14.0% in 2010.
Weaknesses
Vietnam still suffers from substantial trade, current account and fiscal deficits, leaving
the economy vulnerable to global economic uncertainties in 2012. The fiscal deficit is
dominated by substantial spending on social subsidies that could be difficult to
withdraw.
The heavily-managed and weak currency reduces incentives to improve quality of

exports, and also keeps import costs high, contributing to inflationary pressures.
Opportunities
WTO membership has given Vietnam access to both foreign markets and capital,
while making Vietnamese enterprises stronger through increased competition.
The government will in spite of the current macroeconomic woes, continue to move
forward with market reforms, including privatisation of state-owned enterprises, and
liberalising the banking sector.
Urbanisation will continue to be a long-term growth driver. The UN forecasts the

urban population rising from 29% of the population to more than 50% by the early
2040s.
Threats
Inflation and deficit concerns have caused some investors to re-assess their hitherto
upbeat view of Vietnam. If the government focuses too much on stimulating growth
and fails to root out inflationary pressure, it risks prolonging macroeconomic
instability, which could lead to a potential crisis.
Prolonged macroeconomic instability could prompt the authorities to put reforms on

hold as they struggle to stabilise the economy.
Page 10
Business Environment
SWOT Analysis
Strengths
Vietnam has a large, skilled and low-cost workforce, which has made the country
attractive to foreign investors.
Vietnam's location - its proximity to China and South East Asia, and its good sea links
- makes it a good base for foreign companies to export to the rest of Asia, and
beyond.
Weaknesses
Vietnam's infrastructure is still weak. Roads, railways and ports are inadequate to
cope with the country's economic growth and links with the outside world.
Vietnam remains one of the world's most corrupt countries. According to

Transparency International's 2012 Corruption Perceptions Index, Vietnam ranks 123
out of 176 countries.
Opportunities
Vietnam is increasingly attracting investment from key Asian economies, such as

Japan, South Korea and Taiwan. This offers the possibility of the transfer of high-tech
skills and know-how.
Vietnam is pressing ahead with the privatisation of state-owned enterprises and the
liberalisation of the banking sector. This should offer foreign investors new entry
points.
Threats
Ongoing trade disputes with the US, and the general threat of American
protectionism, which will remain a concern.
Labour unrest remains a lingering threat. A failure by the authorities to boost skills
levels could leave Vietnam a second-rate economy for an indefinite period.
Page 11
Industry Forecast
Vietnam's consumer electronics devices market,
defined as the addressable computing devices,
Consumer Electronics Demand
mobile handsets and video, audio and gaming
2010-2017, (US$)
products, is estimated to have been worth about US

$5.3bn in 2012. This is forecast to rise to US$5.9bn
in 2013. We expect the market will increase to US
$10.4bn by 2017, driven by the growing
affordability of key products.
e/f = BMI estimate/forecast. Source: BMI
Page 12
The country's vast, underpenetrated rural market

offers the most growth potential, while Hanoi and
Consumer Electronics Demand

2011-2017, (US$mn)
Ho Chi Minh City account for most sales. In Q113

vendors reported healthy sales of products such as
smartphones and LED TV sets in the run-up to the
Lunar New Year holiday, as retailers launched new
promotions. 2012 brought triple-digit growth in LED
sets and 80% growth in smartphone volume sales.
Vietnamese retail demand for consumer electronics
products has grown despite pressure on consumers'
incomes from rising inflation. Growth areas include
smartphones, where a surge in demand has been
fuelled by lower prices, and flat-screen TV sets,
which now comprise above two-thirds of TV set
sales. However, overall handset sales dipped in the
first three quarters of 2012.
In 2013, we expect private consumption growth to accelerate towards 5.6%. However, we note that the risk
of a sustained collapse in exports and further bankruptcies among SMEs could potentially lead to
widespread job losses in export-driven sectors. Uncertainties over the outlook for employment could in turn
prompt households to cut back on spending on discretionary lifestyle products such as TV sets and
smartphones.
The electronics devices market is forecast to grow at an overall CAGR of 15% through to 2017, with key
growth areas including low-price handsets, 3G handsets, notebook computers and LCD TV sets. The vast
and relatively under-penetrated rural market presents a significant growth opportunity as the government
launches measures to boost rural incomes.
The China-ASEAN Free Trade Agreement offers opportunities and challenges to vendors, especially
considering the growing presence of low cost Chinese vendors in Vietnam. Back in January 2009 tariffs on
imported electronics products and components imported from other ASEAN countries were reduced to
0-5%. The new tariff regime led to a readjustment of multinational strategies for the Vietnamese market, but
many vendors overestimated demand, which led to oversupply.
Page 13
Mobile handsets accounted for the largest part of consumer electronics spending in 2012, at about 35%.
Handset sales were sluggish, but smartphone sales grew robustly, boosted by the expanded availability of
low-cost Android smartphones. The share of mobile handsets in overall consumer electronics spending will
fall slightly due to the growing popularity of low-priced handset models and a slowing rate of increase in
mobile subscriber penetration. According to operator estimates, about 95% of mobile users do not own a 3G
handset, and lower service tariffs as well as connectivity device prices will be needed for the market to
expand. 3G handsets were expected to comprise up to one-third of sales in 2012.
Table: Consumer Electronics Overview, 2010-2017
2010
2011
2012e 2013f 2014f 2015f 2016f 2017f
Consumer Electronics Devices Total Demand (US$mn)
3,694 4,434
5,314 5,946 6,831 7,890 9,039 10,422
Computers (US$mn)
1,427 1,616
1,847 2,091 2,397 2,708 3,032
3,451
Video, Audio & Gaming (US$mn)
1,067 1,238
1,424 1,623 1,834 2,073 2,322
2,600
Communications (US$mn)
1,199 1,580
2,044 2,232 2,599 3,109 3,686
4,370
Government Electronics Industry Plan
The government has outlined a strategy to raise the technology level of Vietnam's manufacturing. The plan
focuses on six hi-tech industries, with the first being electronics-information technology. The government
has set a target of increasing investment in scientific research for these industries to 3.5-5.0% of revenues
by 2015 and 8-10% by 2020. The current level is 0.2-0.3% of revenues. Meanwhile, investment in
technological upgrades will be raised from the current 8-10% to 10-15% by 2015 and 20% by 2020.
The government will also prioritise technology skills and training. The aim is to enable the high-tech sector
to meet domestic demand while at the same time integrating Vietnam into the global electronics industry
chain. The government has identified a number of barriers to high-tech development. These include slow
progress in building high-tech industrial zones.
Another government policy that may boost demand for computers is a two-year plan to enhance IT use by
government agencies. The plan, outlined by Vietnam Prime Minister Nguyen Tan Dung, requires basic
public services such as information exchange, sending and receiving documents as well as making
Page 14
payments online to be provided to citizens and enterprises. By 2010, about 50% of directives from central,
municipal and province governments are to be published online, according to the target.
The Ministry of Information and Communications is the policymaking and regulatory body in the fields of
press, publishing, post, telecommunications and internet, transmission, radio frequency, information
technology, electronics, broadcasting and national information infrastructure.
In the areas of electronics and IT, the ministry's specific functions include issuing policies and regulations
on IT and electronics products, granting licences and organising government projects.
Page 15
Macroeconomic Forecasts
Economic Analysis
Vietnam's real GDP growth came in relatively weak at 4.9% year-on-year (y-o-y) in Q113, missing
Bloomberg consensus of 5.2% by a significant margin. The latest GDP print has fuelled concerns that the
economic recovery could be losing momentum as the government races to restructure the banking sector
and reassure investors that a banking crisis can be avoided. Although we acknowledge that uncertainties
over the build-up of bad debt in the banking sector could continue to weigh on investor sentiment and
undermine efforts by the government to reignite growth, this is typically the final saga of a credit cycle.
Furthermore, we have witnessed encouraging evidence that an economic recovery in the coming quarters
remains on track.
Banking Sector Woes Continue To Weigh

Vietnam - Real GDP, VNDbn (LHS) & % chg y-o-y (RHS)
Source: BMI, General Statistics Office
PMI Data Suggests Economic Recovery Remains On Track

The HSBC Purchasing Managers' Index (PMI) showed that Vietnam's manufacturing sector witnessed a
strong rebound in March, with the index punching above the crucial 50 point mark to post a 23-month high
Page 16
of 50.8, up from 48.3 in February. We have also witnessed a strong PMI reading of 51.6 in China, up from
50.4 in February, signalling that robust demand from the Chinese economy could lend some support in
boosting Vietnam's exports over the coming months. The latest set of PMI data reinforces our conviction
that economic activity in Vietnam will accelerate over the coming quarters on the back of improving
macroeconomic fundamentals and easing credit conditions. Meanwhile, the Vietnamese equity market has
also witnessed a strong performance since the beginning of the year, with the benchmark Ho Chi Minh
Index (VNI) recording impressive gains of around 20% year-to-date. We view this as a sign of increasingly
bullish sentiment towards the country's long-term growth story.
The Vietnamese government has also taken a more aggressive stance with regards to speeding up economic
reforms since 2012, and we expect this trend to remain in play in 2013 and beyond. Prime Minister Nguyen
Tan Dung approved a master plan in February to further restructure the economy, strengthen oversight of
the banking system and establish a roadmap to clean up state-owned enterprises (SOEs). The plan is
expected to be implemented by June. We are optimistic that reforms to strengthen regulatory oversight of
the banking system will help to improve the quality of credit and reinstall confidence in the banking sector
going forward.
Investors have been staying on the sidelines and are keeping a close eye on the government's plan to
establish a new debt management agency that is expected to consolidate non-performing loans from ailing
banks. Progress on this front is encouraging, with the government unveiling plans to launch the debt
management agency within a matter of weeks. Such reforms will play a crucial role in attracting greater
foreign direct investment (FDI) into Vietnam over the coming quarters, and should complement renewed
efforts by the government to speed up privatisation of state-owned enterprises (SOEs) to allow the private
sector to assume a greater role in driving economic growth going forward. It is widely expected that at least
seven SOEs will launch initial public offerings (IPOs) in 2013 and another 20 more SOEs could be listed by
the end of the year if the response is favourable.
Page 17
Recovery Remains On Track

Vietnam - Purchasing Managers' Index
Source: BMI, Markit/HSBC
Downward Revision To Reflect Weak Q113, But Growth Trajectory Intact

That said, we do not deny that it has been a wobbly start for the Vietnamese economy in Q113, and that
progress on restructuring the banking sector has been relatively slow compared to what we have initially
anticipated. We expect the recovery in real GDP growth to come into focus in the latter parts of 2013, or
potentially even 2014. Accordingly, we have toned down our real GDP growth target for 2013 from 7.0% to
6.3% to take into account of the weaker-than-expected first quarter data and we are keeping our growth
target of 7.2% for 2014.
Expenditure Breakdown
Private Consumption: We expect private consumption to grow at a robust pace of 5.2% in 2013. However,
we note that the risk of further bankruptcies among SMEs could potentially lead to widespread job losses,
especially in export-driven sectors. Uncertainties over the outlook for employment could, in turn, prompt
households to cut back on spending.
Page 18
Gross Fixed Capital Formation: We foresee a significant pickup in private sector investment growth in
2013, partly led by increased foreign direct investment inflows. We believe lending rates will gradually ease
over the coming months as the effect of recent rate cuts by the SBV begins to kick in. We are also seeing
evidence that credit conditions are improving. Accordingly, we expect gross fixed capital formation growth
to accelerate from 4.3% in 2012 to 5.1% in 2013.
Public Spending: We expect total public spending to remain relatively resilient in 2013, expanding at a
respectable pace of 5.3%. However, there is limited room for the government to increase spending further
owing to concerns over the need to finance a potential bailout of ailing state-owned commercial banks.
Net Exports: Net exports remain the biggest downside risk to our outlook for the Vietnamese economy,
although we expect external demand to pick up through H213. Vietnam's trade account has fallen back into
deficits in recent months, but we see the case for a substantial pickup in external demand on the back of a
rebound in regional growth over the coming quarters. Accordingly, we still expect exports to expand at a
moderate pace of 6.3% in 2013.
Page 19
Table: Vietnam - Economic Activity
2010
2011
2012
2013f
2014f
2015f
2016f
2017f
Nominal GDP,
VNDbn 2
1,980,914
2,536,631
2,950,684
3,339,417
3,788,926
4,274,013
4,802,601
5,389,075
Nominal GDP,
US$bn 2
103.6
122.8
141.4
159.8
184.2
210.2
238.9
269.5
Real GDP
growth, %
change y-o-y 2
6.8
6.0
5.0
6.3
7.2
7.2
7.0
6.9
GDP per
capita, US$ 2
1,179
1,383
1,575
1,762
2,012
2,274
2,561
2,863
Population, mn
3
87.8
88.8
90.7
91.6
92.4
93.3
94.1
Industrial
production
index, % y-o-y,
ave 1,4
14.1
10.9
7.0
12.0
14.0
13.0
12.0
11.0
Unemployment
, % of labour
force, eop 4
4.3
4.5
6.0
4.8
4.7
4.6
4.5
4.4
89.7
Notes: e BMI estimates. f BMI forecasts. 1 at 1994 prices. Sources: 2 Asian Development Bank, General Statistics Office;
3 World Bank/UN/BMI; 4 General Statistics Office.
Page 20
Industry Risk Reward Ratings

Industry Risk/Reward Ratings
BMI's Consumer Electronics (CE) Risk/Reward Ratings (RRR) provides a comparison of the potential of a
selection of Asia Pacific markets over our five-year forecast period through to 2017. The ratings reflect
market size and growth potential, as well as drawing on Country Risks and Rewards analysis to factor in
market openness and risks associated specifically with government policies. There were a number of
changes in the rankings in this quarter's update as we have again updated our macroeconomic and industryrelated data and forecasts.
Australia retained its first position with a CE Rating score of 71.8, slightly down from 71.9 the previous
quarter due to a downgrade in its Country Risks score. While Australia has the necessary factors such as a
large population and strong GDP per capita to remain a major market in the region, we have previously
highlighted downside risks due to the country's economy. The Australian economy maintained its pace of
expansion in Q412, growing 0.6% quarter-on-quarter (q-o-q) in seasonally adjusted terms. Much of the
growth was supported by the improvement in export performance in the last quarter. However, we do not
expect external demand to remain resilient in 2013, and believe that the soft domestic economy will also
weigh on headline growth, which we expect to slow to 2.1%. This could eventually trickle down to weaker
private consumption as we expect the job market remains soft with growing prospects of further job losses.
Singapore was ranked second with a CE Rating score of 71.3, unchanged from the previous quarter. Despite
the country's small population, consumers are receptive to new products such as smartphones, tablet
computers, internet-connected TVs. Consequently, this means that manufacturers should look to upgrade
opportunities instead of focusing on organic growth potential. Unlike Australia, the Singaporean consumer
is one of the bright spots for the city-state's economy, in line with rising wealth levels and incomes. We
forecast private consumption to grow by a solid 4.0% in 2013 following a 3.5% performance in 2012, and
expect the sector to be an outperformer over the coming decade.
Hong Kong rose to third position, although there was no change to its CE Rating score of 64.6. Hong Kong
shares many of Singapore's characteristics and it has a slightly larger consumer electronics market
compared to that of Singapore. However, the territory had lower scores across the four components, and this
can be partially attributed to its relationship with China. China's state investment-led growth model is
systemically unsustainable. Beijing's sanctioning of corporate China's first bond default, the breaking up the
Ministry of Railways and the tightening of non-traditional lending regulations form the premise that lead us
Page 21
to believe the central government could be shifting away from its current economic growth model. This
would inadvertently lead to a relapse in economic activity, at least in the near term.
In spite of our view that the Chinese economy could experience weakness in H213, we continue to believe
that the long-term growth outlook for China's CE market remains positive. This is reflected in China'
Industry Rewards score of 76.7. We believe that the Chinese consumers have developed a strong appetite
for consumer electronics and this is supported by anecdotal evidence such as the popularity of Apple's
iPhone devices. The demand extends to other products, and the CE market would benefit from a consumerled economy.
Taiwan's importance in the global CE supply chain as it houses many component manufacturers does not
translate into significant growth prospects for its own CE market. The country's ageing population, which is
one of the oldest in Asia Pacific, bodes poorly as it implies that consumers would be less receptive to new
products and technologies. Additionally, beginning in 2017, the active population will start to decline as the
aged dependency ratio rises sharply. From 2025 onwards, Taiwan's population is expected to start falling.
South Korea fell from third to sixth position due to a revision in its Country Rewards component. From the
CE market perspective, South Korea has a strong outlook given that two of the world's largest CE firms Samsung Electronics and LG Electronics - are based there. A testament of South Korea's global
leadership in the CE market is the start of pre-orders for a 55-inch OLED (organic light-emitting diode) TV
by LG Electronics in South Korea in early January 2013. South Korea's HSBC/Markit purchasing managers'
index (PMI) registered 52.0 in March, up from 50.9 in the previous and its strongest reading in almost a
year. However, the current state of the economy could also be gleaned from the country's consumer price
inflation, which reached a seven-month low of 1.2% year-on-year (y-o-y) in March. January witnessed the
second-lowest property transactions on record, while a 0.5% contraction in residential home prices in
February was the largest since September 2009. An enduring decline in the property market will
undoubtedly entail adverse ramifications for South Korea's economy, given the impact it will have on
private consumption and the country's all-important construction sector.
Malaysia saw its CE Rating decline from 62.5 to 59.4 this quarter due to a downgrade in its Industry
Rewards and Country Risks scores. However, Malaysia still has relatively strong growth opportunities,
especially considering that it is an emerging market. The government has recognised the importance of ICT,
and it is encouraging companies and consumers to adopt new products and services such as high-speed
broadband and e-healthcare, which in turn would bolster demand for CE products.
Page 22
India remained in eighth position with a CE Rating score of 48.5, slightly down from 49.0 the previous
quarter. The decline in score was due to a downgrade in India's Country Risks score. Like China, India's
long-term CE growth outlook is positive, although we believe that the country would take a longer time to
fulfil its potential, which explains its lower Industry Rewards score. Additionally, the government
announced in February that the excise tax on high-end mobile phones will be increased from 1% to 6% to
help fund welfare programmes as well as narrow the country's budget deficit. Recent economic data
continue to provide scope for cautious optimism with regards to the economy's near-term prospects. Having
said that, the massive amount of uncertainty fomented by the country's dogged structural twin deficits
suggests to us that any cyclical bounce is likely to be capped.
Thailand moved up to ninth position after its CE Rating score increased from 48.1 to 48.4. Again, the
improvement was driven by a change in its Country Risks component. The long-awaited successful auction
of 3G licences should kick start demand for mobile devices, and we have started to see healthy growth for
services reported by operators. Additionally, the regulator plans to give impetus to the TV digitalisation
process by subsidising the purchase of a new TV set or set-top box. We expect private consumption to grow
at a relatively robust pace of 5.9% in 2013 before slowing towards 4.7% in 2014. However, we note that the
risk of a sustained collapse in demand for manufacturing exports could potentially lead to widespread job
losses in export-driven sectors. Uncertainties over the outlook for employment could in turn, prompt
Indonesia's CE Rating score increased from 48.1 to 48.2 due to a slight increase in its Country Risks.
Indonesia's growth boom is built on solid foundations and we expect it to continue over the coming years.
Corporate profits (as measured by the companies on the Jakarta Composite Index) have grown by an
average annual rate of 22% over this period, even accounting for the 60% peak-to-trough decline seen in the
GFC. This has allowed Indonesia's GDP (in US dollar terms) to rise faster than any other country in the
region (with the exception of Myanmar) over this period. While the economy's growth outlook and
country's favourable demographics bode well for the CE market, we note that consumers generally still
prefer low-to-mid range CE products.
There were no changes in terms of rankings for the last three countries in our table. The Philippines
remained in 11th position with a CE Rating score of 47.9. We believe that the Philippines' CE Rating score
has significant upward risk due to strong remittance inflows, which has resulted in quarterly growth in
private consumption (in y-o-y terms) averaging 5.3% dating back to the beginning of 2010. Philippine
consumers are also among the most optimistic in Asia, with consumer confidence coming in at 78.8 (a score
above 50.0 indicates optimism about future economic conditions) in the recently released Mastercard
Page 23
Worldwide Index Of Consumer Confidence, and we believe that this optimism will translate into healthy
expenditure growth over the course of 2013. We have upgraded our forecast for private consumption
growth in 2013 to 5.5% from 4.8% previously, taking our overall GDP growth forecast to 5.5% from 5.0%
previously.
Vietnam had an Industry Rewards score of 46.7, which was higher than that of Philippines. However,
Vietnam also had the second-lowest Country Rewards (joint with India and Thailand), Industry Risks and
Country Risks scores. The Vietnamese consumers' limited purchasing power places a cap on its CE market
growth potential. While the country is a key manufacturing hub, end products are typically exported. We
expect private consumption to grow at a robust pace of 5.6% in 2013. However, we note that the risk of a
sustained collapse in exports and further bankruptcies among SMEs, could potentially lead to widespread
job losses in export-driven sectors. Uncertainties over the outlook for employment could in turn, prompt
Pakistan remained rooted at the bottom of the Asia Pacific CE Risk/Reward Ratings with a CE Rating score
of 32.5. While many countries in the region were benefiting from an increasing demand for consumer
electronics such as smartphones and tablet computers, progress in Pakistan has been held back by continued
delays in auctioning 3G licences. At the time of writing, political wrangles and regulatory uncertainties
continue to plague to process. Due in part to high base effects, we expect real private consumption growth
to moderate from the staggering 11.6% growth rate achieved in FY2011/12 to a still-healthy rate of 3.8%
this fiscal year.
Page 24
Table: Asia Pacific Consumer Electronics Risk/Reward Ratings, Q3 2013
Rewards
Risks
Country
Industry
Rewards
Country
Rewards
Industry
Risks
Country
Risks
CE Rating
Rank
Previous
Rank
Australia
65.0
75.0
85.0
75.8
71.8
Singapore
60.0
75.0
85.0
85.8
71.3
Hong Kong
56.7
72.5
75.0
67.2
64.6
China
76.7
25.0
55.0
74.4
61.0
Taiwan
58.3
42.5
70.0
85.5
60.7
South Korea
58.3
40.0
70.0
83.7
59.8
Malaysia
56.7
45.0
70.0
78.7
59.4
India
56.7
20.0
60.0
59.2
48.5
Thailand
53.3
20.0
55.0
70.4
48.4
10
Indonesia
50.0
25.0
60.0
67.5
48.2
10
Philippines
41.7
35.0
70.0
66.8
47.9
11
11
Vietnam
46.7
20.0
50.0
55.9
42.2
12
12
Pakistan
35.0
15.0
40.0
45.2
32.5
13
13
Regional
Average
55.0
39.2
65.0
70.5
55.1
Scores out of 100, with 100 highest. The Consumer Electronics (CE) Rating is the principal rating. It comprises two subratings 'Limits of potential returns' and 'Risks to realisation of returns', which have a 70% and 30% weighting
respectively. In turn, the 'Limits' rating comprises Consumer Electronics Market and Country Structure, which have a 65%
and 35% weighting and are based upon growth/size of the CE industry (Market) and the broader economic/sociodemographic environment (Country). The 'Risks' rating comprises Market Risks and Country Risk, which have a 40% and
60% weighting and are based on a subjective evaluation of barriers to entry and the regulatory environment (Market) and
the industry's broader Country Risk exposure (Country), which is based on BMI's proprietary Country Risk Ratings. The
ratings structure is aligned across the 16 Industries for which BMI provides Business Environment Ratings methodology,
and is designed to enable clients to consider each rating individually or as a composite, which depends on their exposure
to the industry in each particular state. For a list of the data/indicators used, please consult the appendix at the back of
the report. Source: BMI
Page 25
Market Overview
Vietnam's domestic consumer electronics devices market, defined to include computing devices, mobile
handsets, and video audio and gaming products, is projected to be worth about US$5.9bn in 2013 and is
expected to increase to US$10.4bn by 2017, driven by growing affordability of key products.
The country's south-east region contributes significantly to the retail sales of consumer electronics
goods. Ho Chi Minh City's retail market is growing rapidly amid increasing foreign investment and rising
personal income.
Computers
Table: Computers Demand, 2010-2017
2010
2011
2012e
2013f
2014f
2015f
2016f
2017f
Domestic Computer Hardware Sales (US$mn)
1,427
1,616
1,847
2,091
2,397
2,708
3,032
3,451
PC Sales Revenues (US$mn)
1,156
1,312
1,514
1,732
1,985
2,242
2,510
2,858
723
650
708
792
883
1,016
1,157
1,338
1,130
1,447
1,819
2,253
2,797
3,403
4,103
5,032
195
690
946
1,231
1,633
2,052
2,616
Desktop shipments ('000)

Notebook shipments ('000)
Tablets shipments ('000)
Page 26
BMI projects that sales in Vietnam's computer

hardware market will be worth around US$2.1bn in
Computers Demand (US$bn)
2013, up from an estimated US$1.8bn in 2012. The
2010-2017
main growth driver will be affordable notebooks.

BMI projects growth of around 13% in the Vietnam
PC market for 2013, slightly higher than the growth
rate estimated in 2012. There is a sizeable grey
market, but in 2012 the government tightened up on
this, introducing new restrictions on the import of
used PCs and tablets for 'R&D' purposes.
Solid Vietnam PC market growth continued into

H113, despite earlier concerns about high inventory
levels causing a slowdown. Growth fell quarter-onquarter, due to seasonal factors, but was up by a lowdouble-digit factor compared with the same period
of the previous year. Despite high inventory levels in

some markets, sales were supported by retailer anticipation of growing demand in less penetrated secondtier markets. The low and mid-tier market has now emerged as a key focus for vendors in the Vietnam PC
market.
Sales had reported the usual seasonal surge in Q412, with 20% growth helping to provide a solid end to an
overall difficult year for PC vendors. Despite the sequential growth, Q4 sales were up only by a modest
single-digit factor compared with the same period of the previous year. The commercial market remained
weak while the expected boost from Microsoft Windows 8 upgrades did not fully materialise as consumers
preferred a wait-and-see approach. In H112, PC sales had stagnated, even as overall retail sales surged by
17.9% over the same period in 2011, to VND1,517tn (US$72.3bn) according to the General Statistics Office
(GSO). Sales in Q112 reported a sharp drop sequentially from the Q111. Both commercial and consumer
segment sales were affected, with double-digit drops. Meanwhile, the PC market managed only modest
single-digit growth compared with the equivalent quarter of 2011.
In 2013, migrations to Microsoft's Windows 8 operating system have the potential to trigger a new cycle of
hardware upgrades, although much will depend on business and consumer confidence. In 2012, retailers
claimed that many businesses and consumers were waiting for the October 2012 release of Microsoft's new
Page 27
operating system before investing in an upgrade. Q412 saw the release by Acer, Asus and other vendors of
a number of Windows 8 RT tablets on the Vietnam market. The Windows 8 tablets were priced at around
US$600. A number of parallel import versions were also available, with many presumably having been
carried over the border from China. The release of Windows 8 could also provide a fillip to the Ultrabook
market as tablet makers leverage its capability to offer devices with touch screens and convertible designs.
According to information from the Vietnam Government Statistics Office, in the first eight months of 2011,
the country spent US$3.91bn on imports in the category of computers, electronics products and spare parts.
This represented a rise of 28% on the same period of 2010. Imports in the category reached US$600mn in
August 2011, up from a revised figure of US$569mn in July. In the first 11 months of 2011, procurements
of PCs and other IT hardware comprised around 50% of total government ICT spending of VND856bn,
although this total also included fibre optic cables.
In 2013, sector procurements across a wide range of sectors, including education, healthcare and transport,
as well as growing demand from businesses in rural areas, will help maintain momentum. Seasonal
purchasing from the education sector usually provides a boost to the PC market in the second half of a
calendar year. However, a number of factors could potentially act as a check on the PC market, including
government cutbacks and continued caution in the business segment, despite growing awareness of the
strategic value of IT investments.
The business market remained weak in 2012, dragging down overall PC market sales. The uncertain
economic outlook encouraged businesses to delay non-essential upgrades. This situation looks unlikely to
be much different in 2013 as businesses are still facing financial constraints or even hardship. The SME
sector, which accounts for the overwhelming majority of Vietnamese enterprises, is particularly struggling,
with many bankruptcies.
PC penetration in Vietnam was estimated by BMI to be around 20% in 2012. Notebooks are owned by an
estimated 7% of the Vietnamese population, which points to significant growth potential for the local PC
market, with the most potential being in rural areas. Hanoi and Ho Chi Minh City are thought to account for
around 85% of notebook sales. The spread of fixed and mobile broadband services will spur purchases of
mobile PCs as connectivity devices. Like elsewhere, telecoms operators such as Viettel are emerging as
significant distribution channels for notebooks as vendors seek tie-ups.
Page 28
The main driver of sales is mobile computers, for
Computers: Shipments (US$mn)
which the addressable market was estimated at

around 1.8mn units in 2012. Demand for PC
2010-2017
mobility has grown very rapidly over the past few

years and in 2012 the share of notebooks and tablets
in overall PC sales is forecast at around 70%.
Further double-digit growth in sales is anticipated
over the five-year forecast period. In particular,
LCD-screen notebooks are forecast to grow at an
almost triple-digit rate.
Meanwhile, desktops have seen a corresponding

rapid decline in their PC market share, and were
expected to account for less than 30% of units sold
in 2012, down from above 70% five years
previously.
Tablet sales are expected to reach 2.6mn by 2017. The rate of growth is forecast to fall off after 2014 as
notebooks and smartphones evolve in ways that undermine the current unique value proposition of tablets.
The category distinction between notebooks and tablets has already blurred at the margins, resulting in the
emergence of the hybrid product of 'phablets'. Several Vietnamese enterprises have launched tablet PCs,
with the first such product, from Hanel, being introduced on the market in 2010. Tablets are being designed
to appeal to consumers who find a smartphone inconvenient for consuming video media or surfing the web,
but for whom a netbook is still too big or heavy. Tablets are generally significantly more expensive than
smartphones, but are seen as strong growth areas due to falling prices and a growing preference for
mobility.
However, local products are expected to find it hard to compete in this segment, with rival tablets from
multinational brands, such as Apple's iPad, having enjoyed growing recognition in Vietnam since
undertaking to release 6mn low-cost versions. Other vendors, such as Samsung with its Galaxy Tab, have
followed Apple in releasing tablet devices, which have a form factor between the size of a smartphone and a
netbook.
Page 29
Originally seen as mainly consumer devices, tablets are now enjoying increasing utility for business
purposes. One factor driving sales will be the growing popularity of the BYOD (bring-your-own-device-towork) model, which is seeing increasing use of mobile devices such as tablets in the workplace. Despite
some security issues, it is becoming more common in many Vietnamese companies for employees to use
their personal connectivity devices for work, therefore placing a premium on mobility. However, vendors
will still hope for another major cycle of corporate upgrades before BYOD establishes hegemony
In 2013, vendors will hope for a new growth area in the much-hyped product category of Ultrabooks as a
growth area. Ultrabooks are fully featured portable computers whose functionality compares favourably
with the scaled-down netbooks and tablets that have dominated PC sales in the past. However, the high
prices of Ultrabooks are likely to limit demand in the short term to below 10% of sales.
Page 30
AV Devices
AV Demand (US$mn)
Vietnam's AV market is projected at about US
$1.6bn in 2013. The market is expected to grow at a
2010-2017
CAGR of 13% between 2013 and 2017 to a value of

US$2.6bn in 2017, driven by growing affordability
due to steep import tariff cuts as well as rising
incomes and more flexible consumer financing.
In 2012, sales of AV devices, such as flat-panel TV

sets, continued to grow robustly, despite the pressure
on consumer incomes from rising inflation. The
main driver of AV sales continued to be the
transition from CRT to digital sets, with growth in
the digital category estimated at above 40%. LED
sets reported a particularly strong upwards demand
trajectory in 2013, with triple digit sales compared

with 2012. By the end of the year, it is estimated that
LED accounted for around two-thirds of Vietnam
flat-panel TV sales.
Prices of flat-panel sets have fallen and there is now
LCD And Flat-Screen TV Set

Demand (US$mn)
2010-2017
a broad range of prices from VND3mn to

VND70mn. Despite the steep devaluation of the
Vietnamese dong, which led to increases in the
prices of some other imported consumer electronics
products, electronics retailers were offering have
continued to offer discounts of as much as 50% on
their products. The discounts were explained in part
by a drive to reduce stocks after heavy stockpiling of
electronics goods by stores ahead of the year-end
sales season. In addition, increased production and
assembly in Vietnam had helped to lessen the impact
of the devaluation.
Page 31
Video applications account for more than 70% of the total market and are expected to grow to US$2.0bn by
2017.The overall TV set market reported flat growth in 2012, with revenues growth coming from flat-panel
upgrades., particularly to LED As the market expands into lesser developed areas, TV sets adapted for local
conditions will be of use to vendors. Some regions of Vietnam still suffer from poor infrastructure
conditions, such as frequent power losses, or weak signal strengths. This has led to some vendors offering
TV sets with features such as rechargeable battery TV sets, and ones with audio-signal boosters.
Demand for flat-screen TV sets will drive growth, and now accounts for more than 70% of category sales.
TV upgrades should be spurred by Vietnam's gradual progress towards digital TV broadcasting, which is
supposed be available nationally by 2020. In 2010, the government published a draft plan for the digital
migration, which proposed an incremental launch. The draft plan set out a number of key targets, including
assistance for people to buy digital TV equipment. Funding of about VND1.3trn was been proposed.
TV set sales will be driven by the government's commitment, under the Vietnam TV digitalisation plan
through to 2020, to assist low-income families to buy set-top boxes to decode digital TV signals. It is
thought that around 10% of Vietnam's 20mn households could be eligible for the scheme. The government
has pledged to help these households to buy decoders, with the prices of these devices starting at around
VND500,000, according to government figures. The budget for the subsidy will come from the public
telecommunications fund.
Meanwhile starting from 2014, manufacturers will be required to integrate digital terrestrial signal receiving
functions in their TV sets sold in the Vietnamese market. The requirement will apply to TV sets with a
display of over 32 inches from April 1 2014, and to sets with a display smaller than 14 inches from April 1
2015. The regulation will not apply to TVs with a CRT display.
In 2013, overall Vietnam TV set demand was estimated at around 2.1mn units. LED sets accounted for
about one-third of this total, with more than 700,000 units sold. However, retailers reported that demand
grew strongly throughout the year, after LED sets had accounted for less than 15% of TV set sales at the
beginning of 2012. By the end of the year, the share had passed 60%, according to retailer and vendor
estimates. Lower prices were a major driver of higher LED set sales, with the average retail price of the
devices down by around one-third in 2012, compared with 2011. The average price of LED sets as of H113
was a little above US$500, while the average of LCD sets also continued to decline, although from a lower
base.
A proliferation of new model releases, resulting in greater consumer choice, has also been a major factor
driving sales of LED and other flat-screen TV models. As of December 2012, more than 250 different LED
Page 32
models were available on the Vietnamese market, compared with around 150 in 2011. LED sets therefore
appear on course to dominate flat-screen TV set sales in the near future, at the expense of regular LCD and
Plasma sets.
With falling prices and growing penetration of flat-panel TV sets, vendors have looked to product
innovation such as 3D TV sets and internet-enabled Smart TV sets to drive growth. The incorporation of
social media into TV broadcasting content has also got under way in Vietnam. Tweeting about TV shows
has become particularly popular. Smart TV sets appeal to consumers who increasingly demand that TV sets
should be entertainment devices able to deliver smart contents and services such as games and real time
information, rather than merely broadcasting. It is relatively inexpensive for vendors to add internet
capabilities to a digital TV set, meaning that by the end of BMI's five-year forecast period to 2017, a
majority of new TV models are likely to be internet-enabled. By 2017, BMI projects that around 40% of
TV sets sold in Vietnam will be smart models However, the development of this segment will depend on
domestic infrastructure of broadband accessibility and speed.
Meanwhile 3D TV sets, although still a relatively small segment of the market, are expected to be a growth
area as a wider range of products are imported. However, with the cheapest models retailing at about
VND20mn, while high-end products are priced in the VND100mn plus range, 3D TV sets are currently
beyond the reach of the mass market. Prices have fallen in all market segments compared to 2010, however,
and new models appeared with more competitive prices. Meanwhile, there is a niche market for expensive
3D TV sets from tier-one vendors. Retailers such as Audio Hoang Hai have said that high-end 3D TV sets
from vendors such as Sony had been selling well at their stores, even outside of the traditional holiday peak
shopping seasons. Gaming devices account for about 3% of total demand. Vietnam's rapidly growing
gaming market is being driven by rising internet and PC penetration, and the country's youthful
demographics. According to market research firm Pearl Research, top online games in Vietnam can attract
up to 200,000 gamers. Sony's official launch of its PlayStation in Vietnam in January 2010 is a sign of how
this opportunity has started to attract more attention from vendors.
The Vietnamese market has marked regional variations, with the Hanoi market outperforming other areas of
the country during the Lunar New Year shopping season, due largely to retailer promotions. The biggest
area of untapped demand is the rural market, whose vast potential is largely ignored by many businesses.
Despite the relatively low purchasing power of rural consumers, the rural market is understood to account
for about 60% of rural trade and a 2009 survey by market research firm TNS found 95% of rural residents
were ready to buy TV sets.
Page 33
Table: AV Demand, 2010-2017
2010
Domestic AV Devices sales
(US$mn)
2011
2012e
2013f
2014f
2015f
2016f
2017f
1,067
1,238
1,424
1,623
1,834
2,073
2,322
2,600
- Video applications (US$mn)
792
926
1,074
1,234
1,405
1,600
1,806
2,038
Flat-panel TV Sets (US$mn)
364
454
558
666
759
864
975
1,101
e/f = BMI estimate/forecast. BMI
The government is ramping up plans to launch digital broadcasting nationally by 2020. The country already
implemented digital TV in 43 cities and provinces and also launched a pilot project on installation of mobile
digital TV. According to the government's schedule, by 2014 all residents will have access to terrestrial TV
services and all provinces and city centres would have cable TV services. By 2020, all cable networks
would be using digital technology. Despite this, doubts have been raised about the practicality of the
government's schedule for analogue to digital switchover. A major concern is that rural residents and lower
income urban residents would be unable to afford the VND3mn (US$170) cost of a digital converter.
However, the government said most households in remote and isolate areas would be provided with
subsidised equipment.
Page 34
Mobile Handsets
Mobile Handsets Demand (US$mn)
Vietnamese market mobile handset sales are
projected by BMI at 17.8mn units in 2013. The
2010-2017
addressable market is expected to grow at a CAGR

of 15% to 35.1mn units in 2017, a rate of growth
greater than that of leading neighbour
China. Smartphone sales reported strong growth in
Vietnam in 2012, with sales up by more than 80% in
the first three quarters of the year, compared with the
same period of 2012. In Q312, smartphone sales
reached a record quarterly total for the Vietnam
market.
However, the strong demand for smartphones in part

masked a weakness in overall handset demand,
which was actually down by a single-digit factor

from Q1 to Q3 2012 compared to the equivalent quarters of 2011. Handset sales dipped sharply in Q112,
due to economic uncertainty as well as seasonal factors. According to retailers, shipments of by feature
phones and smartphones were down by a double-digit factor in the first quarter of the year, compared with
the final quarter of 2011. Economic difficulties have hit consumer purchasing power and exacerbated the
usual post New Year holiday slowdown, causing some vendors to exit the market.
Smartphone market revenues growth is therefore forecast to be constrained in 2013, as retailers target the
low-cost market. There were signs in Q113, that targeting of lower-tier consumers was replacing the
previous operator focus on high-end phones bundled with data plans. Vietnam's sixth mobile operator,
Vietnammobile was planning a major push to target the low-cost segment in 2013, with a series of
promotional events held in provinces and cities across Vietnam. The products associated with the campaign
were expected to be low-cost smartphones with price points at below VND4mn. R rival operator Viettel has
announced plans to launch dual-SIM integrated smartphones priced at belowVDN2mn.
Page 35
Table: Mobile Handsets Demand, 2010-2017
2010
Mobile comms subscribers (mn)
2011
2012e
2013f
2014f
2015f
2016f
2017f
111.6
127.3
139.6
147.3
151.7
154.7
157.8
161.0
7.8
8.4
19.3
25.1
29.1
32.0
33.7
35.3
Mobile penetration (%)
127%
143%
157%
163%
166%
167%
169%
171%
Domestic Handset Sales (US$mn)
1,199
1,580
2,044
2,232
2,599
3,109
3,686
4,370
11.5
14.0
17.1
17.8
20.0
23.0
26.2
29.8
Smartphone Sales (mn)
1.6
2.9
5.0
6.1
7.8
10.1
12.6
14.3
- 3G Handset Sales (mn)
7.5
8.4
16.0
20.8
24.1
26.6
27.9
29.3
3G subscribers (mn)
Domestic Handset Sales (mn)
Lower prices have negatively affected handset

market profitability and this trend continued in 2013.
Handset sales in Q113 were estimated to be down
Mobile Subscribers
2010-2017
compared with the same period of the previous year.

The mixed economic outlook and rapid discounting
of new models were among the factors behind the
slower growth. In 2013, vendors are pinning their
hopes of increasing the share of their sales which
comes from smartphones, as profit margins for the
devices still remain attractive, despite the lower than
average prices.
The overall handset growth rate in 2012 was

estimated at around 4%, with negative growth in Q1
to Q3 followed by an upturn during the final quarter.
However, smartphones were estimated to have

reported volume sales growth of above 80%. Overall
handset market growth rate was down sharply from the 22% estimated in 2011, when smartphones recorded
around 40% growth and comprised around one-third of the market. However, the average prices of
smartphones have fallen significantly due to the release of more low-cost models. The average handset price
is now estimated at around US$100. The recent steep devaluation of the dong had an impact on the price of
imported handsets, some of which increased.
Page 36
Although the exact size of the market is hard to quantify, due to the Chinese handset factor, imported
handsets are believed to account for a substantial share of total Vietnamese handset sales, of at least 50%.
The Ministry of Industry and Trade has estimated that Vietnam handset imports are running at around US
$1bn worth a year. As this represents a big portion of total imports, the government has launched a drive to
restrict imports, particularly of expensive or luxury items. In 2012, a major factor underpinning the strong
growth in smartphone sales was the rapidly increasing number of local brands available on the market.
Meanwhile, sales of low-priced knock-off versions of top handset brands such as Apple, BlackBerry and
HTC are ubiquitously displayed. A fake iPhone can be bought for just VND1.5-2mn, with other high-end
brands available from a few VND100,000. Distributors will often provide warranties and after-sales service
for fake brand products. However, purchasers of such devices have often reported dissatisfaction with
quality and service issues.
BMI estimates at least one in seven Vietnamese purchased a mobile handset in 2012. The underlying
handset market driver is the fast growth rate of mobile subscribers. By end-2012, we believe there were
139.6mn subscribers, with a nominal penetration rate of 157%. BMI has revised its mobile forecast for the
end of 2013 to 147.3mn. As mobile penetration grows, the contribution of replacement sales to total handset
sales will also increase. The number of Vietnamese owning two or more handsets, and buying a
replacement handset at least once a year, if not more often, has increased steadily.
The rate of growth of the mobile sector has been impressive, despite the recent global economic downturn
and other factors. Figures for the number of Vietnamese mobile customers are based on the assumption that
the market contains a certain number of inactive prepaid users.
The market is dominated by demand for low-cost phones and despite the popularity of smartphones, total
sales in this segment continue to grow, boosted by expanding local production of low-cost handsets. Nearly
half of all handsets sold in Vietnam retail for less than one million dong, with about 70% costing less than
VND2mn. Even among imported phones, handsets retailing for less than US$50 were estimated to account
for about 72% of total imported handsets in 2011. During the past few years, average prices have fallen to
US$150. The expansion of local production and the introduction of local mobile operator own-brand
handsets will stimulate this trend, despite an expected growing share for 3G phones.
Competition and growth in the telecoms market has also been driven by mobile service tariff cuts, which
have characterised recent operator strategies. As a result, revenues have grown at a slower rate than
shipments. Further cuts may follow in future, possibly resulting in a price war, and this has emerged as a
Page 37
major driver of the handset market. As the market has grown, there has been an increasing focus by foreign
and local vendors on customisation of handsets for the local market. One popular feature is water-resistance,
with a variety of water-resistant products released by major brands, or imported across the border from
China. High-end water-resistant products retail for as much as 16mn dong, although less expensive products
are also available in the 4mn dong or less range. .
Mobile service providers have driven the low-price trend by providing service packages for lower income
customers. Lower prices have also helped to drive the trend for people to buy more than one mobile phone.
Lower mobile service prices are expected to stimulate the growth of dual SIM ownership, as mobile users
increasingly take advantage of special offers. Low prices have also increased customer churn and led to a
higher number of inactive prepaid users. In 2012 high growth continued. Demand for mobile phones is
growing fastest in provincial cities beyond the major hubs of Hanoi and Ho Chi Minh City. The investment
in network expansion and improvement had a positive impact on service quality and coverage in rural areas,
where three-quarters of Vietnamese live. However, Ho-Chi Minh City and Hanoi still comprise more than
40% of total handsets sold, with Ho-Chi Minh City accounting for more than 25% of sales.
The Vietnam market is dominated by the prepaid segment, with postpaid accounting for only about 10% of
subscribers. However, operators were attempting to attract more postpaid users through promotions. The
share of handset sales accounted for by retail chains dropped to about 30%, from about 36% two years ago,
despite the continued physical expansion of many such chains.
Vietnam has a high rate of mobile phone ownership compared with other countries in emerging Asia.
According to research by Nielsen, exactly 58% of urban residents and 37% of suburbanites have a mobile
phone. The figure for Hanoi and Ho Chi Minh City is 74%. This compares with country figures of 46% for
China and 30% for India.
While most growth potential is in rural areas, vendors will target higher demand among urban consumers
for more sophisticated mobile services and handsets to drive revenues growth. Smartphones are becoming
more affordable, stimulating increased demand as Vietnamese operators such as Viettel cut prices of
imported devices such as the iPhone.
BMI estimates at least 20% of handsets sales in 2012 were 3G models and this is expected to rise. There has
been an explosion in the availability of 3G handsets, which has accompanied a surge in demand. An
expanding range of 3G models from leading vendors such as Nokia and Samsung are available, with prices
ranging from about VND1.7mn to more than VND10mn. Hanel, a local brand, introduced a 3G model,
Page 38
priced at about VND2.45mn. Q-Mobile, a newcomer to the mobile market, also marketed its first 3G
phones in 2010, with most prices in the VND2mn range. The company said it has ambitions to become the
leading 3G phone retailer in Vietnam.
The smartphone market was initially slow to take off due to high prices, but has received a boost as prices
dropped. However the Vietnamese market remains price sensitive, and although 2012 overall saw rapid
growth in smartphone sales, during the slowdown of Q112 smartphone sales declined more sharply than
those of feature phones. Continued growth will depend on the release of more affordable products. The
growth in smartphone sales has been fuelled by the popularity of Android-based models, which continued to
be popular in 2012, and according to vendor estimates, accounted for above 70% of smartphone sales in
H112. Strong performances from Samsung and other vendors helped to maintain Android's positive
trajectory. Although the operating system landscape is becoming increasingly competitive, we expect
Android to retain its top position over our forecast period. Meanwhile rival operating systems, such as
Windows Phones, have not performed so well, due to a more restricted choice of affordable models.
Q412 saw the release of the first Windows 8 based smartphones, and Microsoft and Nokia, with their
Lumia range of Windows-based smartphones, have committed to a significant marketing effort. Nokia is
also targeting the corporate segment and in Q113 the vendor announced that Lumia smartphones would be
used by selected salesforces of the Coca-Cola Corporation in Vietnam. Apple's iPhone has also increased
its market share at the expense of Nokia's Symbian-based devices, yet its share fell from above 70% to
below 40% in H112, although this is still the largest share. Meanwhile in 2011, Canadian smartphone
vendor RIM, maker of the BlackBerry, reached an agreement to enter the Vietnam phone market. Vietnam's
largest operators Viettel, VinaPhone and MobiFone now offer BlackBerry services.
However, smartphones and 3G handsets face competition from laptops and other alternative connectivity
devices. According to computer distributors, a 3G USB modem priced at VND700,000-800,000 is the most
popularly used device to access the internet from laptops.
Figures relating to the number of 3G subscribers in the market vary according to sources. Viettel deputy
general director, Nguyen Manh Hung believes that until 3G service tariffs fall to US$5 per 1Gbps and
laptop prices to US$200 a unit, 3G subscriber growth is unlike to rise significantly.
The cost and availability of 3G-compatible handsets are expected to be the main obstacles to 3G growth in
the early years of our forecast. However, the government has made 3G development a priority and we
believe this will encourage stronger consumer demand in the latter years of our forecast.
Page 39
Competitive Landscape
Computers
Multinational brands dominate the Vietnamese PC market, with Acer, HP and Asus among the top-selling
brands. In Q412, Taiwanese vendor Asus retained top position in the market with a 17.8% market share,
according to an estimate by research firm IDC. Dell ranked second with 15% of the market and Acer third
with 10.2%.
The Vietnamese PC market is surprisingly competitive, with most of the major laptop vendor players below
the top three having a local market share of less than 10%. This is also indicated by the fact that the
rankings of the top three vendors were different as between Q412 and Q112, when Acer had ranked first in
the market with a 17.6% share, ahead of HP with 13% and Asus with 10.7%. By Q412, previously secondplaced HP had fallen to fourth spot in the market with 9.1% share, while Chinese PC giant Lenovo had to
settled for fifth place with a market share of 6.2%.
The PC market decelerated sharply in early 2012. However, several multinational vendors, including Dell,
Toshiba and Lenovo have enjoyed strong growth in the booming market. Korean consumer electronics
giant Samsung hopes to leverage its distribution network and strong brand recognition into a 10% share of
the Vietnamese notebook PC market.
In 2013, vendors will hope that upgrades to PC devices based on Microsoft's new Windows 8 operating
system will spur a new cycle of procurements. The final quarter of 2012 saw the release of a number of
tablets based on Windows 8 on the Vietnam market. Acer released two Windows 8 tablets, the Inconia Tab
W700 and W511, while fellow Taiwanese giant Asus introduced its Asus Vivo Tab. The devices were not
cheap, with prices for the products being set at over US$600.
To ramp up its challenge to Acer and other vendors, Asus, which ranked first in the Vietnamese PC market
in Q412, and finishing third in 2011, has benefited from efforts to strengthen its distribution channel. In
2011, Asus launched a new partnership with local company FTP Distribution, which has a nationwide
network of 400 dealers. FTP, a member of FTP Trading Group, will distribute Asus products, with Asus
planning to introduce the full range of its new products in Vietnam during Q211. FTP also distributes a
portfolio of other leading PC brands, including Dell, Lenovo and Acer.
Asus, which first entered the Vietnam market only three years ago, is also focusing on service as a
competitive differentiator. FTP will provide warranty services for Asus laptops at its four new service
Page 40
centres in Hanoi, HCMC, Danang and Can Tho. Asus planned to open between 13 and 15 service centres in
Vietnam in 2011.
While foreign vendors dominate sales of notebook, local manufacturers have a strong position in the, albeit
declining, desktop market. Vietnam's top five computer companies, as selected by the Ho Chi Minh City
Computer Association in 2011, were FTP, CMS, Robo, Viettronics Tan Binh and the Khai Tri
Technology Trading Co. The total turnover of these top five companies was around VND1tn in 2011 (US
$48.1mn), down 25% from the previous year.
Vietnamese vendors have sought to compensate for declining desktop sales by an expansion into the laptop
and tablet segments. However, the tablet market remains controlled by major foreign brands, such as Apple,
Samsung and Acer. Tablets made by domestic vendors, such as FTP and CMS, have not proven a hit with
local distributors and have claimed less than 1% of the market. However, Viettel has announced that it
plans to enter the tablet market with a device expected to retail at around US$190.
Dell has also focused on channel management as its looks to consolidate its standing as a top-tier vendor.
As in many other markets, telecoms carriers have emerged as a significant channel option for PC vendors.
Dell has launched a partnership with Viettel, which will distribute Dell PCs. Viettel has a substantial
presence in rural areas, which have big PC market growth potential, as PC penetration is currently low.
Meanwhile, Dell has also partnered with local retail giant Teh Gioi Di Dong to sell both online and through
the company's 40 retail outlets.
HP's Vietnam market sales have been boosted by government and education sector projects, as well as by
its strategy to target the consumer segment. However, the vendor has suffered from aggressive price
competition from some of its multinational rivals. As a result, the company has increased its focus on low to
mid-price point notebooks.
2010-2011 saw the emergence in Vietnam of tablet PCs, spearheaded by Apple's iPad, which surveys
indicate enjoys a high brand recognition in the Vietnamese market. Around 120,000 tablets were thought to
have been sold in the Vietnam market over 2011. Several Vietnamese enterprises have now launched tablet
PCs, with the first such product, from Hanel, having its Vietnam release in October 2010. However, local
manufacturers have found it hard to compete with their multinational rivals, with their vendors, such as
Samsung with its Galaxy Tab, following Apple in releasing tablet devices,
Page 41
The reduction of import tariffs from January 2009 was a key moment in the evolution of the Vietnam
market which encouraged multinational vendors to focus more imports of high-end devices. Sony
announced that it was starting to sell its VAIO notebook in Vietnam, as it started to shift to importing for
domestic sales. Sony already has 180 distributors nationwide. Meanwhile, working with its partner
DigiWorld Corp, Dell launched a campaign to target the local consumer segment, which is fuelling much
of the current growth.
AV Devices
Foreign brands dominate the video and audio segments in Vietnam. Underlining the popularity of foreign
brands in this category, surveys by Nielsen Vietnam found Samsung and Sony were Vietnamese consumers'
favourite brands. Multinational vendors continue to regard Vietnam as a growth opportunity, with LG and
Sony launching new high-end flat-screen TV sets. Samsung has a strong position in the Vietnamese LCD
TV set market and in H112, the company opened a second brand shop in Ho Chi Minh City. The South
Korean giant has a market share of around one-third, 10% ahead of the nearest competitor. One of
Samsung's major Vietnam market distribution partners, Pico, announced that it planned to increase its share
of Vietnam's LCD TV market to 10% in 2011. The company has particular strength in the capital, Hanoi,
where it planned to raise share to 30%, from 27%. Pico also partners other major consumer electronics
vendors such as LG, Sony, Panasonic and Sharp.
Meanwhile, Toshiba said that it was aiming for a 20% share of the ASEAN TV sets market in 2012,
including Vietnam. Toshiba is hoping to build this with product innovation and new product releases to
enhance its local market presence. Toshiba forecast Vietnam market revenues growth across all product
lines of 20%. The company has already introduced a broad line-up of LCD TVs in Vietnam, which it
believes is a key regional opportunity.
Fellow Japanese consumer electronics giant Sony has introduced new collections of its Bravia TV sets for
the Vietnamese market, including its LX900 model that uses 3D technology. Meanwhile, domestic brands,
mainly of TV sets, are weak and account for only about 10% of the market. The inability of the domestic
electronics industry to supply components makes it difficult for companies such as Darling, Belco, Favi
and SAM to compete on level terms. Belco's 21-inch flat-screen TVs are priced at more thanVND2mn per
unit, which is 5-25% higher than comparable products from Samsung, LG and TCL. The same goes for
other local vendors, such as East Asia Company and Chau Electronics, whose TVs, DVD players and
other products are also unable to compete with those of leading foreign vendors.
Page 42
The cut in import tariffs from January 2009 placed additional pressure on local companies. Some local
manufactures may have to diversify into other product areas in order to survive. Tan Binh Electronics
Company plans to move away from production of TV sets to other products such as refrigerators, or to
provide electronics manufacturing services. Nguyen Vinh, a loudspeaker producer, has said it will cease
production altogether and shift to being a distributor of foreign-made products.
Meanwhile, in another sign of the times, Sony announced that it would end its TV JV with Tan Binh-based
company Viettronics and switch solely to importing. Sony and other Japanese and South Korean companies
started to assemble in Vietnam in the 1990s when import taxes were about 50%; however, most applied
only for 10-year licences with the expectation that tariffs would fall after Vietnam's entry into ASEAN. In
the event, these manufactures continued operations in Vietnam for a couple of years longer than expected
due to some uncertainty about the prospects for imports.
Page 43
Mobile Devices
Nokia retained leadership in the Vietnam handset market by volume in Q113, according to retailer
information. Nokia was attributed a 35% share, narrowly ahead of Samsung with 33%> However Samsung
was the leader in terms of value of sales, according to data from Hon Chi Minh City retailers. No other
vendor had a share of more than 10%.
One year previously, Nokia had been the leading handset vendor in the Vietnamese market in Q112, ahead
of rival multinational brands such as Samsung, LG, Sony Ericsson and Motorola, as well as Chinese and
local brands. In contrast to many other global markets, where its share has declined more sharply, Nokia
retains a lead of Vietnam mobile handset sales. However, the company's share has declined from around
50% in Q112 to 35% in Q113. Nokia has defended its share based on the popularity of its dual-SIM models,
and a range of lower-cost phones such as the 101 and C2-00.
Meanwhile the share of Vietnamese producers in their local market slid to around 20%, largely due to the
increased available of lower-priced smartphones from leading vendors.According to retailer data, there are
around 20 smartphones available from leading vendors with a price of less than VND3mn on the Vietnam
market. The local phone sector also suffers from overcrowding, and further rationalisation is expected in
2013.
Samsung was the leader in the Vietnam smartphone segment in Q113 and had held onto its position
throughout 2012, although ranking second in Q113 in terms of overall handset sales. Replicating its global
success, Samsung took top spot in Vietnam smartphone sales in the first three quarters of 2012, ahead of
Taiwanese vendor HTC and fellow Korean vendor LG, while Nokia ranked fourth. According to data from
the Saigon Times Daily News, the highest-ranked Vietnamese brand was the fifth-placed Q-Smart, a
subsidiary of Vietnamese firm Q-Mobile.
Samsung planned to maintain the initiative in 2013, with the release of its Galaxy S4 smartphone in March,
which was expected to repeat the success of earlier models in the Galaxy series. Samsung has also targeted
the low-cost dual core segment, with models that retail at price points of less than seven million dong.
However, Apple is expected to fight back in June 2013, with the Vietnamese release of its iPhone 5S, seen
as a direct rival to the Galaxy S4. Meanwhile other top-tier vendors have also brought their flagship
products to Vietnam, including Nokia's Windows-based Lumia smartphones, LG's Optimus, and HTC's
One. Along with HTC's Desire smartphone series, the One has sold well in Vietnam, and helped to elevate
HTC in the local smartphone market rankings in 2012, at the expense of LG and other vendors.
Page 44
According to data from research firm GfK, in January 2013, Samsung retained its dominance in the
Vietnam smartphone market, with a share of 43.1%, well ahead of Nokia with 19.8%. Apple was in third
place. Samsung's market share fell slightly compared with its position in November 2012, when according
to GfK it managed a 48.4% share, while Nokia's share rose slightly over the same period,
The smartphone explosion has given foreign vendors an advantage in this segment. Several local vendors
such as Q-Mobile and FTP have launched Android smartphones, at price-points below VND5mn (US$238)
per unit; however, these prices are not really competitive, given the perceived superiority of foreign brands.
Meanwhile leading Chinese vendors are continuing their march on the Vietnamese market. Shenzhen-based
mobile communications giant Huawei has set a target of selling 400,000 smartphones in the Vietnamese
market in 2013. Huawei is already the largest telecoms equipment vendor in Vietnam and handsets only
contribute about 25% of its local revenues. However, in 2013 Huawei expects to expand through opening
shops and maintenance centres in Vietnam to complement official distribution channels. Huawei will also
launch its Acend D2 smartphone which runs on Android 4.1.
The growing acceptance of Vietnamese brands has attracted large number of local vendors into the market.
Q-Mobile was estimated to have taken about a 20% share of local handset sales in 2010, and it ambitiously
announced a target of overtaking Nokia in 2011 to achieve a 50% market share. The company said it would
expand in the 3G and smartphone segments, while also rolling out low-cost phones in partnership with
Indian companies.
In addition to the Q-Mobile brand owned by ABTel, there is also the F-Mobile brand of FPT, VinaPone's
Avio, Viettel's Zik 3G, and FPT's F-Mobile. The Vu Huy Hoang company owns three Vietnamese brands:
Mobell, Cayon and K-Touch. Meanwhile, CMC launched its Bluefone cellphone and has ambitions to
become another leading Vietnamese mobile phone brand. Leading electronics vendor Hanel launched
handset products, as did HiPT and CMC while Digiworld launched Mobistar phones.
Many local brands now offer three-year warranties and trial periods.
Meanwhile, network operators have also entered the market with their own-brand handsets. These include
S-Fone's Eco handset, VinaPhone's Alo and Viettel's VT handset brand. The main driver of this trend has
been price, with about 70% of phones in the market now priced below VND2mn.
Page 45
On disruptive element in the local market in 2012 was the emergence of military-run telecoms group Viettel
as a player in the mobile handset sector. Viettel plans to launch mobile phones made entirely in Vietnam. In
H112, the company revealed plans to release a tablet, which was priced in the US$192 range. Currently
most Vietnamese brand mobiles are made in China and imported into Vietnam for sales. Viettel established
a handset manufacturing centre in late 2011 with a potential capacity of three million units a year.
Other smartphone platforms such as BlackBerry (2% and Windows Mobile (1%) had low single-digit
shares. In 2011, BlackBerry reached an agreement with three of Vietnam's largest network operators, which
launched BlackBerry services. The three operators Viettel, VinaPhone and MobiFone were expected to
launch services by September 2011 have priced services lower for the local market. Viettel, the first
network operator in Vietnam to offer BlackBerry services, announced a nearly 50% discount to monthly
BlackBerry service subscribers. Subscriptions have fallen from VND450,000 - VND550,000 a month to
VND250,000 a month. Subscriptions are available on either a monthly or a weekly prepaid basis. Prices of
smartphones have been decreasing, stimulating increased demand. Growing demand for low-cost handsets
priced below VND1mn should give local companies a potential opportunity. The problem is that most local
phone brands have to outsource processor manufacture to Chinese and Taiwanese manufacturers, which
means that these Vietnamese brands have lacked the ability to customize their products for the Vietnamese
market. Some brands are now attempting to rectify this.
Page 46
Demographic Forecast
Demographic analysis is a key pillar of BMI's macroeconomic and industry forecasting model. Not only is
the total population of a country a key variable in consumer demand, but an understanding of the
demographic profile is key to understanding issues ranging from future population trends to productivity
growth and government spending requirements.
The accompanying charts detail Vietnam's population pyramid for 2011, the change in the structure of the
population between 2011 and 2050 and the total population between 1990 and 2050, as well as life
expectancy. The tables show key datapoints from all of these charts, in addition to important metrics
including the dependency ratio and the urban/rural split.
Source: World Bank, UN, BMI
Page 47
Table: Vietnam's Population By Age Group, 1990-2020 ('000)
1990
1995
2000
2005
2010
2012e
2015f
2020f
67,102
74,008
78,758
83,161
87,848
89,730
92,443
96,355
0-4 years
9,340
9,212
7,002
6,776
7,186
7,186
7,026
6,529
5-9 years
8,685
9,193
9,124
6,921
6,703
6,885
7,143
6,982
10-14 years
7,504
8,604
9,142
9,038
6,844
6,539
6,668
7,104
15-19 years
7,127
7,408
8,535
9,064
8,963
8,161
6,806
6,628
20-24 years
6,492
7,003
7,305
8,420
8,954
9,115
8,892
6,745
25-29 years
5,893
6,361
6,879
7,167
8,284
8,602
8,862
8,803
30-34 years
4,884
5,779
6,250
6,765
7,058
7,475
8,202
8,779
35-39 years
3,965
4,794
5,688
6,163
6,677
6,770
6,991
8,131
40-44 years
2,420
3,884
4,710
5,614
6,086
6,304
6,609
6,925
45-49 years
2,039
2,358
3,802
4,653
5,548
5,761
6,012
6,536
50-54 years
1,933
1,968
2,287
3,739
4,580
4,936
5,449
5,914
55-59 years
1,946
1,843
1,887
2,201
3,617
4,001
4,446
5,305
60-64 years
1,544
1,822
1,737
1,767
2,076
2,573
3,455
4,268
65-69 years
1,283
1,391
1,659
1,582
1,621
1,649
1,927
3,233
70-74 years
919
1,084
1,194
1,439
1,389
1,384
1,438
1,729
1,127
1,305
1,559
1,852
2,264
2,388
2,516
2,743
Total
75+ years
f = BMI forecast. Source: World Bank, UN, BMI
Page 48
Table: Vietnam's Population By Age Group, 1990-2020 (% of total)
1990
1995
2000
2005
2010
2012
2015f
2020f
0-4 years
13.92
12.45
8.89
8.15
8.18
8.01
7.60
6.78
5-9 years
12.94
12.42
11.58
8.32
7.63
7.67
7.73
7.25
10-14 years
11.18
11.63
11.61
10.87
7.79
7.29
7.21
7.37
15-19 years
10.62
10.01
10.84
10.90
10.20
9.10
7.36
6.88
20-24 years
9.68
9.46
9.27
10.13
10.19
10.16
9.62
7.00
25-29 years
8.78
8.60
8.73
8.62
9.43
9.59
9.59
9.14
30-34 years
7.28
7.81
7.94
8.14
8.03
8.33
8.87
9.11
35-39 years
5.91
6.48
7.22
7.41
7.60
7.55
7.56
8.44
40-44 years
3.61
5.25
5.98
6.75
6.93
7.03
7.15
7.19
45-49 years
3.04
3.19
4.83
5.59
6.32
6.42
6.50
6.78
50-54 years
2.88
2.66
2.90
4.50
5.21
5.50
5.89
6.14
55-59 years
2.90
2.49
2.40
2.65
4.12
4.46
4.81
5.51
60-64 years
2.30
2.46
2.21
2.12
2.36
2.87
3.74
4.43
65-69 years
1.91
1.88
2.11
1.90
1.85
1.84
2.08
3.36
70-74 years
1.37
1.46
1.52
1.73
1.58
1.54
1.56
1.79
75+ years
1.68
1.76
1.98
2.23
2.58
2.66
2.72
2.85
Page 49
Table: Vietnam's Key Population Ratios, 1990-2020
Dependent ratio, % of total working age 1

Dependent population, total, '000 2
Active population, % of total 3
Active population, total, '000
Youth population, % of total working age
Youth population, total, '000 6
1990
1995
2000
2005
2010
2012
2015f
2020f
75.5
71.2
60.5
49.7
42.1
40.9
40.6
41.6
28,859
30,790
29,679
27,609
26,006
26,031
26,717
28,321
57.0
58.4
62.3
66.8
70.4
71.0
71.1
70.6
38,243
43,218
49,079
55,552
61,842
63,699
65,725
68,034
66.8
62.5
51.5
40.9
33.5
32.4
31.7
30.3
25,529
27,009
25,268
22,735
20,732
20,610
20,837
20,615
8.7
8.7
9.0
8.8
8.5
8.5
8.9
11.3
3,330
3,780
4,411
4,874
5,274
5,421
5,881
7,706
Pensionable population, % of total working

age 7
Pensionable population, '000
f = BMI forecast; 1 0>15 plus 65+, as % of total working age population; 2 0>15 plus 65+; 3 15-64, as % of total
population; 4 15-64; 5 0>15, % of total working age population; 6 0>15; 7 65+, % of total working age population; 8 65+.
Source: World Bank, UN, BMI
Table: Vietnam's Rural And Urban Population, 1990-2020
1990
1995
2000
2005
2010
2012
2015f
2020f
Urban population, % of
total
20.3
22.2
24.3
26.4
28.7
29.7
31.2
33.9
Rural population, % of total
79.7
77.8
75.7
73.6
71.3
70.3
68.8
66.1
Urban population, '000
13,438.6
16,201.6
18,865.4
21,940.1
25,212.5
26,649.9
28,842.1
32,664.4
Rural population, '000
52,761.4
56,778.4
58,770.0
61,166.2
62,635.9
63,080.4
63,600.5
63,690.7
Page 50
Methodology
Methodology
BMI's industry forecasts are generated using the best-practice techniques of time-series modelling. The
precise form of time-series model we use varies from industry to industry, in each case being determined, as
per standard practice, by the prevailing features of the industry data being examined. For example, data for
some industries may be particularly prone to seasonality, ie seasonal trends. In other industries, there may
be pronounced non-linearity, whereby large recessions, for example, may occur more frequently than
cyclical booms.
Our approach varies from industry to industry. Common to our analysis of every industry, however, is the
use of vector autoregressions. Vector autoregressions allow us to forecast a variable using more than the
variable's own history as explanatory information. For example, when forecasting oil prices, we can include
information about oil consumption, supply and capacity.
When forecasting for some of our industry sub-component variables, however, using a variable's own
history is often the most desirable method of analysis. Such single-variable analysis is called univariate
modelling. We use the most common and versatile form of univariate models: the autoregressive moving
average model (ARMA).
In some cases, ARMA techniques are inappropriate because there is insufficient historic data or data quality
is poor. In such cases, we use either traditional decomposition methods or smoothing methods as a basis for
analysis and forecasting.
It must be remembered that human intervention plays a necessary and desirable part in all of our industry
forecasting techniques. Intimate knowledge of the data and industry ensures we spot structural breaks,
anomalous data, turning points and seasonal features where a purely mechanical forecasting process would
not.
Electronics Industry
Forecasts
There are a number of criteria that drive our forecasts for each industry variable.
IT, consumer electronics, and semiconductor forecasting is complicated due to the fragmented nature of the
market, with little transparency of vendor data and low apparent agreement between many sets of figures in
Page 51
terms of market definition, base and methodology. In addition, forecasts are naturally affected by
consideration of a variety of internal and external political and economic factors.
Within best-practice techniques of time-series modelling, BMI's quarterly updated forecasts are improved
substantially by intimate knowledge of the prevailing features of each local market.
Individual variables taken into account in creating each forecast include:
Economic context, and GDP and demographic trends;
Technological developments, and diffusion rates;
Underlying demand trends;
Projected GDP share of industry;
Maturity of market structure;
Regulatory developments and government policies;
Exogenous events.
Estimates for each industry segment are calculated using government statistics, where available, and BMI's
own macroeconomic and demographic forecasts.
Sources
Sources used in electronics reports include national ministries, statistics agencies, and ICT regulatory
bodies, national industry associations, officially released company results and figures, and international and
national industry news agencies.
Page 52

BMI Vietnam Consumer Electronics Report Q3 2013

Uploaded by

Copyright:

Available Formats

BMI Vietnam Consumer Electronics Report Q3 2013

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

BMI Vietnam Consumer Electronics Report Q3 2013

Uploaded by

Copyright:

Available Formats

Q3 2013

Vietnam Consumer Electronics

Part of BMIs Industry Report & Forecasts Series

Business Monitor International

2013 Business Monitor International

Vietnam Consumer Electronics Report Q3 2013

Industry Forecast .............................................................................................................. 12

Macroeconomic Forecasts ............................................................................................... 16

Industry Risk Reward Ratings .......................................................................................... 21

Market Overview ............................................................................................................... 26

Mobile Handsets .................................................................................................................................... 35

Competitive Landscape .................................................................................................... 40

Demographic Forecast ..................................................................................................... 47

Business Monitor International

Vietnam Consumer Electronics Report Q3 2013

BMI Industry View

Headline Expenditure Projections

Risk Reward Rating

Key Trends & Developments

Business Monitor International

Vietnam Consumer Electronics Report Q3 2013

Business Monitor International

Vietnam Consumer Electronics Report Q3 2013

Large 'grey' market for illegal products.

Relatively low level of demand for higher end products.

Infrastructure deficiencies, with only a small number of Vietnamese houses capable of

Economic instability and high inflation deflating potential demand.

Set-top boxes, with the Vietnamese government offering support to lower-income

Business Monitor International

Vietnam Consumer Electronics Report Q3 2013

SWOT Analysis - Continued

LED TV sets, with triple-digit growth in 2013 as Vietnamese consumers upgrade to

Substantial opportunity for expansion in under-penetrated semi-urban and rural

Concerns about unemployment and a potential economic slowdown in 2 013 may

Business Monitor International

Vietnam Consumer Electronics Report Q3 2013

The Communist Party of Vietnam remains committed to market-oriented reforms and

Vietnam has allowed legislators to become more vocal in criticising government

Macroeconomic instabilities in 2012 are likely to weigh on public acceptance of the

Business Monitor International

Vietnam Consumer Electronics Report Q3 2013

The heavily-managed and weak currency reduces incentives to improve quality of

Urbanisation will continue to be a long-term growth driver. The UN forecasts the

Prolonged macroeconomic instability could prompt the authorities to put reforms on

Business Monitor International

Vietnam Consumer Electronics Report Q3 2013

Vietnam remains one of the world's most corrupt countries. According to

Vietnam is increasingly attracting investment from key Asian economies, such as

Business Monitor International

Vietnam Consumer Electronics Report Q3 2013

Consumer Electronics Demand

mobile handsets and video, audio and gaming

products, is estimated to have been worth about US

e/f = BMI estimate/forecast. Source: BMI

Business Monitor International

Vietnam Consumer Electronics Report Q3 2013

The country's vast, underpenetrated rural market

Consumer Electronics Demand

Ho Chi Minh City account for most sales. In Q113

e/f = BMI estimate/forecast. Source: BMI