Most Vietnamese consumers favor made-in-Vietnam products over imported goods, thanks to evident improvements in quality and growing patriotism among local consumers.
Vietnamese goods currently account for more than 90% of products sold at domestic firms. The percentage of local product sales is similar at foreign-owned supermarkets, new data released by the Ministry of Trade shows.
According to the ministry’s report, the COVID-19 pandemic has pushed consumers to favor local products to help with economic recovery. More than 90% of consumers said they would prioritize Vietnamese goods when shopping, and 75% would recommend Vietnamese goods to families and friends, the ministry reported.
A few years ago, local businesses and manufacturers expressed concern about the decreasing confidence in domestic products. With the consumer market dominated by a younger population that’s more open to foreign influences, imported products became a star in every shopper’s list.
The High Quality Vietnamese Goods Business Association in 2018 said the rate of people who actually shop for local products regularly fell from 32 percentage points to 60%, pointing to fraud and lack of transparency as the main deterring factors.
It was also around that time when foreign-owned retail stores started to penetrate deeper into the Vietnamese market, opening new branches across the country and serving goods from Japan and South Korea.
This welcome change in Vietnamese consumers’ preferences and behavior is brought by the government’s efforts to promote and elevate local products.
In 2021, Prime Minister Pham Minh Chin gave the green light to strengthen the implementation of the “Vietnamese people give priority to using Vietnamese goods” campaign. The 10-year initiative aims to promote patriotism, build consumer culture and promote the development of domestic production.
The campaign is also considered necessary to ensure macroeconomic stability and social security amidst global inflation.
Le Viet Nga, Deputy Director of the Domestic Market Department of MOIT, said the campaign “has changed businesses and consumers’ awareness of domestically produced goods.”
With the number of consumers growing exponentially along with a new consumption power driven by rising incomes, businesses that used to focus on exports have now shifted their attention back to local consumers.
The growing confidence of both consumers and businesses will help “support the development of the domestic market in a sustainable way,” MOIT said.
Demand for quality
A study by McKinsey & Company last year found that over the next decade, 36 million more consumers may join Vietnam’s consuming class. This segment spends at least $11 a day. A higher tier of the consuming class spends $30 or more.
As consumers’ purchasing power strengthens, they also become more discerning about what they buy and the products they support – with quality being on top of their demands.
Local players have built successful brands in Vietnam, including VinFast in the automotive sector and Masan, Nutifood, and Vinamilk in FMCG, the McKinsey report noted.
Evidently, the quality of Vietnamese goods has seen remarkable improvement over the last few years. The application of technology in improving productivity and quality and the digital transformation of enterprises in terms of market distribution greatly contributed to the homegrown products’ visible upgrades.
MOIT’s campaign emphasized the importance of enhancing product quality to foster confidence among consumers. Relevant departments, including the ministries of information and communications and science and technology, have taken the task of prioritizing the procurement of technological products and services for Vietnamese enterprises.
“It is necessary to effectively implement programs and projects to promote trade, develop supporting industries, and enhance the application of science and technology to improve productivity and competitiveness for Vietnamese enterprises, and support them in digital transformation through e-commerce applications in modern distribution channels,” the ministry wrote.
The wide usage of electronic payments and digital wallets is also key to encouraging consumers to choose local goods. Keeping up with digital trends will be critical for businesses to thrive and meet the demands of Vietnamese consumers.
To sustain the momentum of greater preference for homegrown products, MOIT suggests local enterprises equip themselves with information on market trends to better communicate with their target market.