BMI Vietnam Consumer Electronics Report Q3 2012

www.businessmonitor.
com
Q3 2012
VietnAm
consumer electronics report

INCLUDES BMI'S FORECASTS
issn 2040-9494
published by Business monitor international ltd.
VIETNAM CONSUMER ELECTRONICS INDUSTRY REPORT Q3 2012

INCLUDES 5-YEAR FORECASTS TO 2016
Part of BMIs Industry Report & Forecasts Series

Published by: Business Monitor International Copy deadline: June 2012
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Vietnam Consumer Electronics Q3 2012
Business Monitor International Ltd
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CONTENTS
Executive Summary......................................................................................................................................... 5 SWOT Analysis ................................................................................................................................................ 7
Vietnam Consumer Electronics Market SWOT ...................................................................................................................................................... 7 Vietnam Electronics Industry SWOT...................................................................................................................................................................... 8 Vietnam Political SWOT ........................................................................................................................................................................................ 9 Vietnam Economic SWOT .................................................................................................................................................................................... 10 Vietnam Business Environment SWOT................................................................................................................................................................. 11
Asia Pacific Risk/Reward Ratings ................................................................................................................ 12

Table: Asia Pacific Consumer Electronics Risk/Reward Ratings, Q312 .............................................................................................................. 14
Consumer Electronics Market ...................................................................................................................... 15

Computers............................................................................................................................................................................................................ 16 Table: Computers: Demand, 2008-2016 .............................................................................................................................................................. 16 AV Devices........................................................................................................................................................................................................... 19 Table: AV Demand, 2009-2016 ......................................................................................................................................................................... 20 Mobile Handsets .................................................................................................................................................................................................. 21 Table: Mobile Handsets: Demand ....................................................................................................................................................................... 22
Consumer Electronics Industry ................................................................................................................... 27

Table: Electronics Output .................................................................................................................................................................................... 28 Electronics Trade................................................................................................................................................................................................. 28 Computers............................................................................................................................................................................................................ 32 Table: Vietnam Desktop Production (000 units)................................................................................................................................................. 32 Table: Computers: Production............................................................................................................................................................................. 32 AV And Communications ..................................................................................................................................................................................... 33 Table: Communications: Production ................................................................................................................................................................... 33 Handsets .............................................................................................................................................................................................................. 33
Industry Forecast Scenario .......................................................................................................................... 36

Table: Consumer Electronics Overview; 2009-2016 ........................................................................................................................................... 37
Industry Trends And Developments ............................................................................................................ 38

Government PC Programmes .............................................................................................................................................................................. 38 Government Authority .......................................................................................................................................................................................... 40
Macroeconomic Forecast ............................................................................................................................. 41

Vietnam - Economic Activity,2011-2016 .............................................................................................................................................................. 43
Competitive Landscape ................................................................................................................................ 44

Computers............................................................................................................................................................................................................ 44 AV Devices........................................................................................................................................................................................................... 46 Handsets .............................................................................................................................................................................................................. 47
Demographic Outlook ................................................................................................................................... 51

Table: Vietnam's Population By Age Group, 1990-2020 ('000) ........................................................................................................................... 52 Table: Vietnam's Population By Age Group, 1990-2020 (% of total) .................................................................................................................. 53 Table: Vietnam's Key Population Ratios, 1990-2020 ........................................................................................................................................... 54
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Table: Vietnam's Rural And Urban Population, 1990-2020 ................................................................................................................................ 54
BMI Methodology ........................................................................................................................................... 55

How We Generate Our Industry Forecasts .......................................................................................................................................................... 55 Electronics Industry ............................................................................................................................................................................................. 55 Sources ................................................................................................................................................................................................................ 56
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Executive Summary
BMI View: We project that Hong Kong consumer electronics spending will grow by about 19% in US dollar terms in 2012 to US$5.5bn, with vendors reporting healthy sales in the run-up to the 2012 Lunar New Year shopping season, as retailers launched new promotions. The countrys vast, underpenetrated rural market offers the most growth potential, with Hanoi and Ho Chi Minh City accounting for most sales. In 2011 Vietnamese retail demand for consumer electronics products grew robustly, despite pressure on consumer incomes from rising inflation. Growth areas include smartphones, where a surge in demand has been fuelled by lower prices, and flatscreen TV sets, which now comprise more than twothirds of TV set sales.
Headline Expenditure Projections Computer hardware sales: US$1.6bn in 2011 to US$1.8bn in 2012, +12% in US dollar terms. Forecast in US dollar terms unchanged, but due to lower prices, tablets are expected to provide a strong growth area in 2012. AV sales: US$1.2bn in 2011 to US$1.4bn in 2012, +15% 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$1.6bn in 2011 to US$2.0bn in 2012, +29% in US dollar terms. Forecast in US dollar terms unchanged, with smartphones the main revenue growth driver. Business Environment Rating: Vietnams score was 41.7 out of 100.0, which gave it twelfth 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
Handset market growth will be driven by smartphones as falling prices enhance affordability. The market growth rate moderated in Q411, but was still comfortably in double-digits due to strong sales of smartphones. The overall handset growth rate in 2011 was estimated at around 22%, while smartphones recorded triple-digit growth and comprised around one-quarter of the market. The average prices of smartphones have fallen significantly due to the release of more low-cost models.
Demand for LCD and plasma TV sets will drive AV growth. TV upgrades should be spurred by Vietnams gradual progress towards digital TV broadcasting, which is supposed be available nationally by 2020. In April 2010 the government published a draft plan for the digital
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migration, which set out a number of key targets, including assistance for people to buy digital TV equipment.
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.
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SWOT Analysis
Vietnam Consumer Electronics Market SWOT
Strengths
The domestic market is entering a rapid growth phase, with trade liberalisation and growing affordability driving projected double-digit growth of key products such as LCD TV sets, notebook computers and mobile handsets. Low rates of penetration for key products such as computers and mobile phones. Rising incomes and GDP growth are increasing affordability, with a huge and relatively untapped market in the rural and suburban areas. Weak domestic industry with local vendors lacking brand identity and distribution network to compete with foreign vendors.
Weaknesses
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. Economic instability and high inflation deflating potential demand.
Opportunities
Steep cuts in import tariffs in 2009 for ASEAN products from 0-5% will 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. LCD screen notebooks are forecast to grow at close to a triple-digit rate over the next year. Big opportunity for expansion in under-penetrated semi-urban and rural areas.
Threats
High inflation and global economic slowdown may affect business and consumer spending. Lack of political will for economic and social reform may delay market development. Relentless pressure for lower prices could erode margins.
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Vietnam Electronics Industry SWOT
Strengths
Low labour costs and a large emerging domestic market make Vietnam a potentially interesting location for global vendors. Rapid growth in the past few years, with electronics output rising from just US$3.0bn in 2008 to a projected US$15.1bn in 2016. Vietnam exports electronics products to nearly 40 countries about the world, with growing trade with the EU and total electronics exports expected to reach US$6.2bn by 2016. Tariffs on components cut from 9.41% to 6.36% in 2009. Government support and incentives for investment particularly in semiconductors.
Weaknesses
Intellectual property rights problem and piracy. Industry capabilities limited mainly to lack of a parts or components industry capable of supporting profitable manufacture of finished goods. Domestic companies are small and lack technological abilities and management skills. Domestic consumer electronics market dominated by foreign brands, with few Vietnamese brands competitive in most product categories.
Opportunities
State and reforms to encourage more investment into the sector and encourage domestic investment in research and development (R&D). Vietnam is an emerging location for semiconductors, with the market worth about US$5bn, and embedded software.
Threats
Slowdown in global computer and consumer electronics applications markets. Global vendors are closing fracturing facilities to focus on import. Government policy to stimulate the hardware sector having mixed results. Future progress will depend on government improvement in policy areas like intellectual property protection, IT infrastructure and tariffs regime.
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Vietnam Political SWOT
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 one-party 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 2010 and 2011 are likely to weigh on public acceptance of the one-party system, and street demonstrations to protest economic conditions could develop into a major challenge of undemocractic rule. Although strong domestic control will ensure little change to Vietnam's political scene in the next few years, over the long 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.
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Vietnam Economic SWOT
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 2011. 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 the 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.
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Vietnam Business Environment SWOT
Strengths
Vietnam has a large, skilled and low-cost workforce, that 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 Corruption Perceptions Index 2011 , Vietnam ranks 112th out of 183 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.
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Asia Pacific Risk/Reward Ratings

BMI's Risk/Reward Ratings for Asia Pacific show little change this quarter with the top five unchanged, although Singapore's lead reduced considerably. With the exception of Taiwan swapping places with South Korea and Indonesia overtaking Thailand, countries remained largely in position this quarter. However, no market saw its score unchanged this quarter.
Singapore seemed to have an unassailable lead, but a fall in its Country Risks rating brought the country within just 0.4 points of its nearest rival Australia. Although the latter's Industry Rewards score is higher, Singapore benefits from political and economic stability, making it an attractive market. Both countries offer technologically advanced populations that demand the latest products and services, increasingly connected devices and new technologies. Smartphones in these markets are approaching ubiquity and the growth in tablets remains strong. Singapore's smaller market size does affect its Industry Rewards score, holding it back, but the stability of its Country Risks rating keeps it above Australia.
Nevertheless, Australia clearly has the potential to overtake Singapore, with its larger population helping to boost its position as a major market in the region. In GDP terms Australia offers greater potential, but Singaporean inhabitants have a strong spending capacity that keeps it at the top for the moment.
The Australian Consumer Electronics market size is only smaller than the region's largest two markets, China and India. Nevertheless, the markets taking third and fourth place in our Risk/Reward Ratings are Hong Kong and Malaysia. The former is a largely similar market to Singapore, having a small but affluent population with high demand for the latest devices. Although the higher tier markets such as Australia, Hong Kong, Taiwan, South Korea and Singapore are facing slower growth in 2012, they remain the largest and most dynamic markets in the region and will continue to generate strong growth for consumer electronics vendors.
Malaysia ranks well owing to its combination of strong Industry Rewards and Country Risks, giving it largely similar scores to Singapore. However, Malaysia does not benefit from such strong Industry Risks ratings, with weak scores for barriers to entry holding it back. Further, the population has lower disposable income compared with the other markets in the top four, and its population, while predominantly young, therefore has lower capacity for spending on new goods. However, we see considerable upside potential for Malaysia as the government seeks to revamp the ICT sector, which should, in turn, help drive demand for new devices.
Asia's largest market is China, with a large population, the highest GDP among the markets and the largest consumer electronics demand in the region. The desire for the latest products was highlighted in early 2012 when Apple had to suspend sales of its new iPhone 4S from its Beijing store after large
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crowds disrupted the store's opening. Demand for the product has been very high in the Chinese market, and, while smartphones may not be accessible to all Chinese consumers, the sheer size of China's population makes it an attractive market. The country is inevitably restricted by Industry Risks scores, which highlight the difficulties in doing business and restrictions that companies can face. Regardless, device manufacturers see China as a key market with a growing middle class offering considerable potential for expansion.
Both Taiwan and South Korea saw improvements to their scores this quarter, but a greater increase for Taiwan saw it leapfrog South Korea. The markets see very little difference in their scores with both markets offering similar market outlooks to Singapore, Australia and Hong Kong. Taiwan and South Korea also benefit from small but tech-savvy populations that are keen to get their hands on the latest products. It is worth noting that two of the largest smartphone manufacturers in the world are based in these markets, with handset market leader Samsung hailing from South Korea and Taiwan home to HTC.
While the two markets offer stability from a country risk point of view, the size of the addressable consumer electronics market in both holds them in the middle of our ratings table.
India and Indonesia, on the other hand, benefit from large populations, the second and third largest in the region. Nevertheless, the more limited spending power of consumers in these markets makes them greater challenges for consumer electronics vendors. Although high-end consumers in both countries will be avid consumers of the latest devices, the majority of the populations cannot afford the latest devices. That is not to suggest there are no opportunities for growth; as BMI's forecasts for the market show, both countries have sizeable consumer electronics markets. India ranks second only to China in terms of market size, but its less affluent population, large share of rural dwellers and lower Country Risks rating offer greater difficulties.
Thailand fell one place, allowing Indonesia to overtake it, with a falling Country Risks score reflecting the country's instability in the political scene. The announcement that former prime minister Thaksin Shinawatra intended to return to the country highlights ongoing political tensions. Devastating floods in Thailand in late 2011 also played their part in dampening economic growth, although the Thai economy continues to offer significant opportunities. The Philippines and Vietnam held their places at 11th and 12th respectively. However, both saw a decrease in overall ratings with Vietnam falling furthest. Although Vietnam has one of the most mature mobile sectors in the region, this does not translate to high spending on mobile devices. Low incomes mean that discretionary spending is likely to remain limited and big ticket items will not be on the horizon for many subscribers. The Philippine market is largely similar although a higher Industry Risks score highlights the importance of regulatory and government backing to the sector. Despite a potentially smaller market than
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Vietnam, the difference between the two market sizes is small, leaving Vietnam's greater growth potential over our five-year forecast period as a strong boost to its Industry Rewards rating.
Pakistan remains at the bottom of the table with a large gap between it and Vietnam. The market's Industry Rewards and Country Rewards scores are considerably lower than peer markets in the region. Pakistan is the smallest consumer electronics market in the region with less than half the size of Singapore. Although we forecast a good growth rate, the country has far to go to reach the levels seen in neighbouring countries such as India.
Table: Asia Pacific Consumer Electronics Risk/Reward Ratings, Q312
Rewards Country Singapore Australia Hong Kong Malaysia China Taiwan South Korea India Indonesia Thailand Philippines Vietnam Pakistan Average Industry rewards 61.7 65.0 56.7 63.3 76.7 58.3 60.0 58.4 51.7 51.7 38.3 46.7 25.0 54.9 Country rewards 75.0 75.0 72.5 45.0 25.0 42.5 40.0 20.0 25.0 20.0 35.0 20.0 15.0 39.2
Risks Industry risks 85.0 85.0 75.0 70.0 55.0 70.0 70.0 60.0 60.0 55.0 70.0 50.0 40.0 65.0 Country risks 87.8 77.1 73.9 79.3 74.4 85.5 83.7 62.5 68.8 74.4 68.1 53.3 45.2 71.8 IT rating 72.4 72.0 65.8 62.5 61.0 60.7 60.5 49.9 49.2 48.4 46.7 41.7 28.0 55.3
Overall rating Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 Previous rank 1 2 3 4 5 7 6 8 10 9 11 12 13
Scores are weighted as follows: 'Rewards': 70%, of which Industry Rewards 65% and Country Rewards 35%; 'Risks': 30%, of which Industry Risks 40% and Country Risks 60%. The 'Rewards' rating evaluates the size and growth potential of a telecoms market in any given state, and country's broader economic/socio-demographic characteristics that impact the industry's development; the 'Risks' rating evaluates industry specific dangers and those emanating from the state's political/economic profile, based on BMI's proprietary Country Risk Ratings that could affect the realisation of anticipated returns. Source: BMI
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Consumer Electronics Market

Vietnams 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$5.6bn in 2012 and is expected to increase to US$10.6bn by 2016, driven by growing affordability of key products.
The countrys south east region contributed significantly to the retail sales of consumer electronics goods in 2011. Ho Chi Minh Citys retail market is growing rapidly amid increasing foreign investment and rising personal income.
A reduction in tariffs on imported electronics products and components from January 2009 had less impact than expected on the market and led some suppliers to overestimate demand, leading to a situation of oversupply by the end of the year. Throughout the year, retailers launched a series of promotions to combat the economic downturn and cut prices of many products in a partially successful bid to stimulate demand.
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Computers
Table: Computers: Demand, 2008-2016
2008 Domestic Computer Hardware Sales (US$mn) PC Sales Revenues (US$mn) Desktop shipments ('000) Notebook shipments ('000) 1,128 959 1,042 666
2009 1,224 1,041 819 887
2010 1,427 1,213 758 1,186
2011e 1,644 1,398 692 1,541
2012f 1,849 1,572 734 1,888
2013f 2,097 1,782 815 2,319
2014f 2,398 2,039 907 2,873
2015f 2,695 2,291 1,038 3,477
2016f 3,055 2,597 1,197 4,244
e/f = BMI estimate/forecast. Source: BMI
BMI projects that sales in Vietnam's computer hardware market will be worth around US$1.8bn in 2012, up from an estimated US$1.6bn in 2011. The main growth driver will be affordable notebooks. BMI projects growth of around 12% in the Vietnam PC market in 2012, slightly below the growth rate estimated in 2011, and 2010 when the market bounced back from the effects of the economic slowdown.
18% 16% 14% 12% 10% 8% 6% 4% 2% 0%
Computers: Demand (US$ bn) 2009-2016

3,000 2,500 2,000 1,500 1,000 500 0 2011e 2009 2010 2012f 2013f 2014f 2015f 2016f
% Change LHS
PC Demand (US$mn) RHS
In Q311, vendors reported continued strong growth in PC sales, boosted by inventory restocking and back-to-school sales. However, following a robust performance in the first three quarters of the year, a deceleration was expected in Q412. The Thai floods led to reports of shortages of HDD supplies, while seasonal promotions placed further pressure on prices and margins. 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, up from a revised figure of US$569mn in July.
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In 2010, overall PC sales were similarly reported to have achieved double-digit growth, compared with 2009. The growth was driven mainly by imported laptops, with shipments up by around one-third in H110, both sequentially and y-o-y. Desktop sales, however, remained in negative growth territory. The depreciation of the dong restrained demand by leading to higher prices for imported laptops. Vendors reported the number of first-time buyers in the market was relatively limited, with most sales coming from purchases of typically lower-priced second computers. Going into H210, growth received a boost in August with back-to-school sales, and summer retail promotions. Sales of PCs picked up as new vendors entered the market, while others rolled out new models, allowing for double-digit growth in FY10.
In 2012, sector procurements across a wide range of sectors, including education, healthcare and transport, and growing demand from businesses in rural areas, will help maintain momentum. 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. 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.
PC penetration in Vietnam was estimated by BMI at around 18% in 2011. 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. Currently, 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. As elsewhere, telecoms operators such as Viettel are emerging as significant distribution channels for notebooks as vendors seek tie-ups.
Going forward, government programmes are expected to make a significant contribution to computer sales. In August 2009, the Vietnamese government announced a national programme to supply 1mn computers at favourable prices to Vietnamese schools by 2011. Multinational IT vendors such as Acer, Intel and Microsoft were all participating in the programme. Desktops will retail under the programme at around US$161, or about half the usual price. The computers will come loaded with educational software and with broadband connections..
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The programme received reinforcement with the launch in Ho Chi Minh City in January 2010 of a programme entitled One Teacher-One Computer. The programme, which has support from the VNPT and the Ministry of Education and Training, will provide laptops at a price that is VND800,000 below the market price. Discounts of up to 80% for schools and 30% for teachers will also be offered on VNPT's broadband service packages.
5,000 4,000 3,000 2,000 1,000 0 2009 2010 2011e 2012f 2013f 2014f 2015f 2016f
Computers: Shipments 2009-2016

1,400 1,200 1,000 800 600 400 200 0
Notebook shipments ('000) LHS Desktop shipments ('000) RHS
The main driver of sales is notebooks,
for which the addressable market was estimated at around 1.5mn units in 2011. Notebooks' share of the total PC market has grown rapidly over the past five years and in 2012 is forecast at around 70%. Further double-digit growth in netbook sales is forecast over the forecast period. In particular, LCD-screen notebooks are forecast to grow at an almost triple-digit rate.
Meanwhile, desktop have seen a corresponding rapid decline in their PC market share and are expected to account for fewer than 30% of units sold in 2012, down from above 70% five years ago.
Netbooks saw a steep decline in popularity in 2011, with a number of leading vendors, such as former netbook segment leader Sony, withdrawing models from the market. Retailers such as home appliance chain Ideas reported that sales declined rapidly last year with the result that less shelf space was allocated to the devices. Other chains, such as Thien Hoa, said that netbook sales remained stable but this segment has faced strong competition from low-end notebooks with more features, as well as from smartphones, tablet notebooks, and specialist devices such as e-readers.
Tablet sales are expected to report another year of near triple-digit growth in 2012. Several Vietnamese enterprises has launched tablet PCs, with the first such product, from Hanel, being introduced on the market in October 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 due to falling prices and a growing preference for mobility are seen as a strong growth area.
However, local products are expected to find it hard to compete in this segment with tablets from multinational brands, like Apple's iPad, which has enjoyed growing recognition in Vietnam since undertaking to release 6mn low-cost versions. Other vendors, such as Samsung with its Galaxy Tab,
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have followed Apple in releasing tablet devices, which have a form factor between the size of a smartphone and a netbook.
Meanwhile, in 2012, vendors are pinning their hopes on the much-hyped new 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 recent past. However the current high prices of ultrabooks are likely to limit demand in the short term to below 10% of sales.
AV Devices
Vietnams AV market is projected at about US$1.4bn in 2012. The market is expected to grow at a CAGR of 13% between 2012 and 2016 to a value of almost US$2.3bn in 2016, driven by growing affordability due to steep import tariff cuts as well as rising incomes and more flexible consumer
500 2,500 2,000 1 ,500 1 ,000
Audio & Video Device Demand 2009-2016f
financing.
0
In 2011 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%. Prices of flat-panel sets have fallen and there is now 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, in 2010, electronics retailers were offering 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. Video applications account for more than 70% of the total market and are expected to grow to US$1.8bn by 2016. As the market expands into lesser developed areas, TV sets adapted for local conditions will be of use to vendors. Some regions of Vietnam still suffer from poor infrastructure conditions, such as
A udio A pplicatio ns (US$ mn) Video A pplicatio ns (US mn)
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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 LCD and plasma TV sets will drive growth, and accounted for around 70% of category sales in 2011. TV upgrades should be spurred by Vietnams gradual progress towards digital TV broadcasting, which is supposed be available nationally by 2020. In April 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 has been proposed.
Meanwhile 3D TV sets, although still a relatively small segment of the market, are expected to be a growth area in 2011 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. Retailer Audio Hoang Hai said in H111 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. Vietnams rapidly growing gaming market is being driven by rising internet and PC penetration, and the countrys youthful demographics. According to market research firm Pearl Research, top online games in Vietnam can attract up to 200,000 gamers. Sonys official launch of its PlayStation in Vietnam during 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.
Table: AV Demand, 2009-2016
2009 Domestic AV Devices sales (US$mn) - Video applications (US$mn) LCD & Plasma TV Sets (US$mn) 920 677 305
2010 1,067 792 364
2011e 1,238 926 454
2012f 1,424 1,074 558
2013f 1,623 1,234 666
2014f 1,834 1,405 759
2015f 2,073 1,600 864
2016f 2,322 1,806 975
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Sales of flat-panel TV sets were boosted in July 2009 when the finance ministry said it would cut import tariffs on LCD screens by two-thirds from 3% to 1%. The move was intended to benefit local TV set manufacturers that import the screens and was expected to feed through to lower prices in H209. The government is also 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 governments schedule, by 2014 all residents would 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 governments 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$170) cost of a digital converter. However, the government said most households in remote and isolate areas would be provided with subsidised equipment.
1,200 1,000 800 600 400 200 0 2011e 2009 2010 2012f 2013f 2014f 2015f 2016f 35% 30% 25% 20% 15% 10% 5% 0% 2009 2010 2011e 2012f 2013f 2014f 2015f 2016f 30% 25% 20% 15% 10% 5% 0%
LCD And Plasma TV Demand 2009-2016f
LCD & Plasma TV Sets (US$mn) % Change
Mobile Handsets
Vietnamese market mobile handset sales are projected by BMI at 17.1mn units in 2012. The addressable market is expected to grow at a CAGR of 16% to 30.7mn units in 2016, a rate of growth greater than that of leading neighbour China.
35 30 25 20 15 10 5 0
Mobile Handsets: Demand (US$ mn) 2009-2016
Growth in 2011 was driven by smartphones as falling prices enhanced affordability.The market growth rate moderated in Q411, but was still comfortably in double-digits due to strong sales of smartphones. The trend
Mobile Handset Demand (US$mn) LHS % Change RHS
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was fuelled as vendors launched a series of promotions and and aggressive discounts on smartphones. In Q112, the mobile market was reported to be picking up with stronger sales in the pre-Lunar New Year peak shopping season.
Table: Mobile Handsets: Demand
2008 Mobile comms subscribers (mn) 3G subscribers (mn) Mobile penetration (%) Domestic Handset Sales (US$mn) Domestic Handset Sales (mn) 74.9 0.0 87% 905 8.2
2009 98.2 1.5 113% 880 8.8
2010 111.6 7.8 127% 1,199 11.5
2011e 117.6 98.4 132% 1,580 14.0
2012f 122.3 16.8 136% 2,044 17.1
2013f 126.0 21.8 139% 2,532 20.2
2014f 128.5 25.3 140% 3,055 23.5
2015f 131.1 27.9 142% 3,653 27.0
2016f 132.4 29.3 142% 4,332 30.7
The overall handset growth rate in 2011 was estimated at around 22%, while smartphones recorded tripledigit growth and comprised around one-quarter of the market. However, the average prices of smartphones have fallen significantly due to the release of more low-cost models. Average prices reportedly increased slightly in 2010, due to the availability of high-priced 3G and smartphone models. The average handset price is now estimated at around US$100. In 2010 the steep devaluation of the dong had an impact on the price of imported handsets, some of which increased.
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%. In 2010 the Ministry of Industry and Trade estimated Vietnam would import US$1bn worth of mobile handsets in that 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.
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.
However, by Q111 imports of high-end mobile handsets were still reported by the government to be increasing. The Sai Gon Port customs said 266,000 handsets with a value of nearly US$7mn were
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imported in the first two months of 2011. This was a 200% increase in volume and a 177.4% increase in turnover.
According to the Ministry of Industry and Trade, Vietnam imported 17mn mobile phones in 2010, with 80% having a sales price of less than VND2mn. Estimates of the total addressable market vary, but it was generally agreed that the market share of Vietnamese brand phones increased in 2010. The price rises mainly affected higher tier imported handsets, such as the Apple iPhone and some Nokia models. By December 2010, the price of the iPhone4 had increased by about VND1mn, compared with the price in late September. Operators such as VinaPhone also increased the price of their iPhone packages. Meanwhile, some Nokia handset models increased by VND20,000-100,000, or about 2-5% on average, because of the dollar appreciation.
BMI estimated at least one in seven Vietnamese purchased a mobile handset in 2011. The underlying handset market driver is the fast growth rate of mobile subscribers. By the end of 2011, we believe there were 118mn subscribers, with a nominal penetration rate of 132%. BMI revised its mobile forecast for the end of 2012 to 122.3mn, lower than before. 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 including the increase in mobile handset prices during mid-2008, and again in 2010, and the suspension of HT Mobile (Vietnamobile)s CDMA service and registration of prepaid customers using text messages and websites. 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 total sales in this segment increased in 2011, boosted by expanding local production of low-cost handsets. 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 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. Average handset prices reportedly increased in 2011, due to the growing popularity of more expensive 3G phones and smartphones. However, low-cost handsets continue to dominate the market. 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
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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.
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 2010 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.
140 120 100 80 60 40 20 0
Mobile Subscribers 2009-2016

30,000 25,000 20,000 1 5,000 1 0,000 5,000 0
M o bile Subscribers (mn) LHS
While most growth potential is in rural areas, vendors will target higher demand among urban consumers for
3G Subscribers ('000) RHS
more sophisticated mobile services and handsets to drive revenues growth. In July 2009 Mobifone launched an email service over its GPRS platform, which was available to enterprise and individual users through a partnership with Nokia. Smartphones are becoming more affordable, stimulating increased demand as Vietnamese operators such as Viettel cut prices of imported devices such as the iPhone.
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BMI estimates at least 15% of handsets sales in H111 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, 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. Meanwhile, smartphones reported strong growth in 2011, driven by the popularity of devices from vendors such as Samsung and HTC. Smartphones were expected to comprise up to 30% of the handset market in 2011, with high double-digit growth. According to mobile service provider Vinaphone, by Q211 smartphone users accounted for 29% of its total customer base. This proportion compares favourably with the metric for more developed mobile markets and represents rapid growth over the past year.
The smartphone market was initially slow to take off due to high prices, but has received a boost as prices dropped. In 2011 double-digit growth was reported and BMI forecasts a volume CAGR of 31% over our five-year forecast period to 2016. The growth in smartphone sales has been fuelled by the popularity of Android-based models, which reportedly accounted for around 26% of Vietnams smartphones as of April 2011, up from just 21% a year earlier. Strong performances from Samsung and Apple helped to maintain Androids positive trajectory through H212. Although the operating system landscape is becoming increasingly competitive, we expect Android to retain its top position over our forecast period. Apples iPhone has also increased its share over the same period at the expense of Nokias Symbianbased devices yet its share fell from above 70% to below 40%, although this is still the largest share. Meanwhile in July 2011, Canadian smartphone vendor RIM, maker of the BlackBerry, reached an agreement to enter the Vietnam phone market. Vietnams largest operators Viettel, VinaPhone and MobiFone will 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. The Vietnamese telecoms ministry MIC said in mid-June 2010 that its survey showed Viettel and Vinaphone had 1.5mn subscribers each, while MobiFone had 4mn. This is a significant difference as Vinaphone claimed it had 7mn subscribers in March 2010, while MobiFone had 6mn subscribers. Such discrepancy in 3G subscriber figures makes it difficult to gauge how large the market is. However, Viettel deputy general director, Nguyen Manh Hung, announced in May 2010 that about 95% of mobile users did not own a 3G handset, while usage of 3G USB laptops remains modest. Such statements would also query Vinaphone and MobiFones figures, which based on this, would appear over-inflated. Further, Hung believes that
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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.
Meanwhile, in June 2010 EVN Telecom, the final and fourth 3G licensed operator, launched commercial services. The operator targeted the launch of its service in highly populated cities such as Hanoi, Ho Chi Minh City, Hai Phong, Da Nang and Can Tho in its first phase. The operator expected to register 1mn 3G subscribers within one year of the launch of its services. 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.
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Consumer Electronics Industry

According to Vietnams General Statistics Office, Vietnam has more than 100 enterprises specialising in manufacturing electronic products. Top sector players include Viettronics, Sieu Thanh Joint Stock Company, Sam Cuong Material Electronic and Telecom, and Sai Gon Cable.
2010 2011e 2012f 2013f 2014f 2015f 2016f 20,000 15,000 10,000 5,000 0 8% 7% 6% 5% 4% 3% 2% 1% 0%
Electronics Industry Output 2010-2016
Activities are mostly limited to assembly and most local enterprises are small- and medium-sized. The industry lacks a support sector that would provide components and, as a result, local companies find it difficult to
Electronics Industry Output (US$mn) LHS Electronics as % of GDP RHS
achieve cost-competitiveness with foreign brands. Vietnams electronics industry output is estimated to be worth about US$7.1bn in 2012 and is projected to increase to about US$15.1bn by 2016. As a proportion of GDP, electronics output is projected to grow from 5.3% in 2012 to about 7.3% by 2016. The rapid growth of electronics export turnover in H211 has attracted ever more foreign investment into the sector in 2012. However, much will depend on the success of government efforts to reform tariffs and regulation structures to support the development of the local industry.
At a conference in July 2009 the government said it was determined to make Vietnam one of the worlds leading IT producers in the next seven years. The government has set ambitious goals for IT turnover to reach 17-20% of the countrys GDP by 2014 and 20-30% by 2020. This would imply a 35-40% growth rate.
In 2010 it was reported the government was targeting IT revenues for Vietnam of about US$50bn by 2020. The telecoms sector was expected to contribute half of this sum, or US$25bn. Hardware was forecast to contribute about US$15bn, software US$5bn and the digital content industry US$5.2bn.
Many commentators criticised these targets as unrealistic. However, the education and training ministry is now working on a plan to develop the required skilled human resource base to support this objective. Meanwhile, the information and communications ministry said, in addition to a focus on skills, Vietnam will also need to take measures in areas such as research and development (R&D), domestic market expansion and legal framework improvement. The government plans to spend about VDN900bn on IT training, in partnership with local universities. The IT sector as a whole, including software and IT
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services, achieved 49% average growth in 2008, with turnover of US$4.74bn. The sector employs about 30,000 people. About 390 Vietnamese universities, colleges and vocational centres run courses on computer sciences, with an annual output of about 10,000 graduates, but work is still needed to raise standards.
Table: Electronics Output
2008 Electronics Industry Output (US$mn) Electronics Industry Output % of GDP 3,000 3
2009 3,562 4
2010 4,474 4
2011e 5,849 5
2012f 7,260 5
2013f 9,001 6
2014f 11,178 6
2015f 13,747 7
2016f 16,827 7
e/f = estimate/forecast. Source: BMI
Electronics Trade
Electronics exports were forecast to be US$3.2bn in 2012 and were projected to rise to US$6.2bn by 2016. Electronics exports CAGR was forecast at about 18%, with the main products including computer and mobile phone parts, circuit boards and so on.
Electronics exports to the US were forecast to increase 18% in 2011 as the US market continued to recover from the financial crisis. According to the General Department of Customs, in H211, turnover of mobile phone and electronics part exports soared in H211, to around US$1.3bn. After September 2011, this made electronics Vietnams second biggest export turnover product. The previous monthly value of exports
2010 2011e 2012f 2013f 2014f 2015f 2016f
Electronics Exports 2010-2016f

7,000 6,000 5,000 4,000 3,000 2,000 1,000 0
in this category had been around US$300-400mn. The contribution of foreign investment to the sectors
performance was shown in that Samsungs facility in Bac Ninh exported US$6bn worth of electronics in 2011, a figure which it plans to double to US$12bn in 2012.
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However, the continuing threat of a double-dip recession in the US and major EU economies, if realised, would have an effect on demand for Vietnamese electronics products. In 2009 Vietnamese exports were hit by the global economic downturn and fell 14% y-o-y in the first eight months of the year. Electronics fared slightly better. Total exports to the US were down 5.81% in the same period. However, computers and electronics exports to the US market rose 41.87%, although the total was only US$397mn.
Electronics exports have increased steadily from about US$166mn in 2002, but remain at a small scale compared with many neighbouring countries. Vietnam exports to nearly 40 countries worldwide, with exports to the EU up 38.6% in the first five months of 2008.
In 2009 China was the top country of origin for Vietnams imports in the computer and electronic components category, accounting for US$1.9bn, followed by Japan. Taiwan, South Korea and Malaysia completed the top five, with 8%, 7.4% and 7.31% respectively of total import value in this category.
Vietnamese exports in the category of computer electrical goods and components were reported at about US$147,000 in January 2009, rising to US$216,000 in February. The main destination countries were the US, Japan and Thailand. Meanwhile, imports in the same category were US$170,000 in January 2009, rising to US$216,000 in February 2009 and the main countries of origin were China, Japan and Malaysia.
Challenges The industry was presented with a critical challenge in 2009, as tariffs on electronics products imported from ASEAN countries were reduced to between 0-5%. This was a result of Vietnams entry into the ASEAN free trade area agreement (AFTA) in 2006 and WTO entry in January 2007. The Vietnamese industry may struggle to find a place in the global industry chain. Foreign investors have already started to close down manufacturing operations in Vietnam, finding it cheaper to import from other ASEAN countries such as Thailand and Malaysia.
By some assessments, the local electronics industry has made little progress in the last 10 years and limited mainly to assembly and packaging. Most Vietnamese brands, such as VTB, Belco, Hanel and Tien Dat, lack a distinct identity or wide distribution outside rural areas. However, those companies that do manufacture will find it hard to compete with a wave of cheaper imports and some have already announced plans to switch to being mainly distributors for products made abroad.
Foreign Investment And Components Industry Foreign investment in Vietnams electronics sector has continued, despite a former prediction that the ASEAN tariff reductions in 2009 would have a significant impact. Some manufacturers such as Toshiba relocated local production. In Toshibas case it moved to Indonesia, but others have increased their presence. By H111 Taiwan companies alone had invested USD22.78bn into 2,132 projects in Vietnam. While not all of these projects can be attributed to the electronics sector, Taiwanese firms, such as
Page 29
Compal Electronics, the worlds largest contract manufacturer of PCs, and Foxconn Group, the worlds leading electronics provider, have a major presence in Vietnam.
The popularity of Vietnam as an investment destination for consumer electronics vendors has continued in 2012. In H112, Taiwans Wintek, which makes touchscreens for iPad and iPhone, announced that it would invest US$870mn in its venture in Quang Chau Industrial Zone in northern Bac Giang. After just one year of operations, Wintek has therefore raised its total investment capital in Vietnam to US$112bn. Meanwhile, handset giant Nokia is due to open its new plant in Vietnam in 2012, with an investment estimated at USD276.3mn. The factory, located in the VSIP Industrial Zone in Bac Ninh, has investment capital of EUR200mn and is expected to become operational in 2013 and create 10,000 jobs. Japanese firm Kyocera is also scheduled to open an electronic parts and mobile phone manufacturing facility in 2012 in the AThang Long 2 Industrial Zone in Hung Yen province. The factory has investment capital of US$55mn for the first phase, which would become operational by August 2013. Despite the inflow of investment, many observers believe the future for Vietnams electronics industry depends on developing a parts and components industry to supply the global marketplace and also support local companies. Samsungs recent US$670mn investment to build a handset plant in is regarded as significant because it could boost the development of Vietnams supporting electronics industries. The plant will be Samsungs second largest after its facility in China. Seventeen satellite enterprises of Samsung have been set up in Vietnam with a total additional investment of US$300mn.
In the last decade or more, Vietnam has tried various methods to stimulate its electronics industry, including directives on localisation as well tax incentives, but progress had been limited. However, in the past five years, enthusiasm of foreign electronics manufacturers to produce in Vietnam has provided an opportunity. Manufacturers such as Sanyo and Canon from Japan, and other manufacturers such as Intel from the US and Foxconn from Taiwan, established production in Vietnam and attracted components makers to follow them. Japans Meiko runs a US$300mn electronics components facility. The trend is likely to continue with companies such as NEC, HP and Acer also reporting plans to establish chip design and computer assembly centres in Vietnam.
Geography Most electronics producers favour factory locations in the north, such as Bac Ninh, Hanoi and Vinh Phuc, or in the south at Ho Chi Minh City, Dong Nai and Binh Duong.
In 2009 companies in the IT sector in Hanoi were estimated to have revenues of US$2.1bn, rising 18% from the previous year, and accounting for 30% of Vietnams IT revenues. According to data from Vietnams Department of Information and Communication, the citys hardware and electronics segment had estimated revenues of US$1.6bn. More than 1,000 companies are classified by the government as operating in the sector. The local government is building a plan for the citys IT development through to
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2015, which involves building new software and digital content industrial parks, and a centralised IT park.
Government Plans The government outlined a plan to move local manufacturers away from simple assembly to research, design and manufacture. One area where the government enjoyed success has been semiconductors, which attracted increasing amounts of investment. However, the long-term future of the industry will depend on the governments success in tackling issues as intellectual property protection as well as logistics and ICT infrastructure.
Another concern is that rising labour costs and shortages of skilled workers could make Vietnam less attractive to foreign investors. A 2009 survey by the Ministry of Labour, War Invalids and Social Affairs showed there was a 6.5% hike in Vietnamese workers average monthly salaries in 2009 compared with the previous year. Wages at foreign-invested firms increased the most, up 7.8% to VND2.6mn. Meanwhile, salaries at private firms were up 5% to VND2.35mn. In 2009 Vietnamese Prime Minister Nguyen Tan Dung, approved a plan to add VND16.9bn to the programme to develop the software and digital content industry in Vietnam by 2012. The government had previously set a target for the digital content and online services industry to have revenues of US$700mn in 2009, up 58% y-o-y.
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Computers
Table: Vietnam Desktop Production (000 units)
Jan 2007 2008 2009 60 48 45
Feb 21 45 56
Mar 43 49 49
Apr 54 46 45
May 95 52 48
Jun 77 54 51
Jul 62 60 50
Aug 60 65 56
Sept 49 70 53
Oct 76 60 45
Nov 46 51 47
Dec 56 46 na
na = not available. Source: BMI, government statistics
In 2011 several Vietnamese enterprises announced plans to manufacture tablet PCs and the first such product from Hanel was launched in Vietnam during October 2010. In 2012, military controlled group Viettel announced plans to release a low-priced tablet, expected to retail for around US$192. Further tablet products from rival Vietnamese manufacturer CMC Corporation, the second largest IT company in Vietnam with revenues of VND5trn in 2010, were launched in 2011. However, local manufacturers are likely to find it difficult to compete with their multinational rivals such as Samsung with its Galaxy Tab and Apple with its iPad.
Few computers are manufactured in Vietnam and the market relies on imports, which were about 1.4mn units in 2008. Domestic production of desktops was estimated at 545,000 units in the first 11 months of 2009, compared with 646,000 in the whole of 2008.
Table: Computers: Production
2008 Office, Accounting & Computing Machinery Manufacture (US$mn)
2009
2010
2011e
2012f
2013f
2014f
2015f
2016f
1,481
1,528
1,697
1,989
2,236
2,535
2,900
3,305
3,769
e/f = estimate/forecast. Source: BMI
There is a sizeable grey sector of second-hand and refurbished PCs as well as illegal imports, which are aimed mainly at the household market due to lower prices.
In the first seven months of 2009, Vietnamese exports in the computers, electronics and spare parts category were down 3.7% y-o-y to US$1.369bn, according to government figures. However, imports in this category were also down 9.5% to US$1.9bn.
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AV And Communications
Table: Communications: Production
2008 Radio & Telecommunications Equipment Manufacture (US$mn) 1,978
2009 2,042
2010 2,267
2011e 2,657
2012f 2,988
2013f 3,387
2014f 3,872
2015f 4,413
2016f 5,033
There are about 10 local companies assembling TV sets in Vietnam, but few are well known to consumers. Vietnamese TV set brands such as Darling, Belco, Favi and SAM target mainly low income consumers in remote and rural areas where choices are limited. One of the more respected local brands is Belco. However, even this company, which manufactures DVD players and flat-screen TVs, distributes mainly in the suburbs and not in the heart of big cities.
These local brands are held back by the underdeveloped state of the electronics manufacturing industry in Vietnam, which is mainly about assembly. A lack of components means it is almost impossible for local brands to compete on price with foreign brands. The reduction of tariffs on electronic products on components in January 2009 resulted in some multinationals switching to an import-based strategy for the market. It is also likely to have a significant impact on the viability of some local manufacturers. In Q109 troubled CRT producer Orion-Hanel filed for bankruptcy and became the second foreign-invested firm to cease production in Vietnam after Sony. The global downturn was also having an impact on local operations of some multinationals. Panasonic said in February 2009 it would reduce its workforce of about 3,000 workers in Vietnam because of decreasing global demand for optic drives. Investment should continue to increase, and Foxconn announced plans to invest US$5bn in high-tech projects across Vietnam. In 2008 the company opened two plants in Bac Ninh province, which make camera modules, main boards and connectors. Meanwhile, Foxconn will invest about US$1bn in Ho Chi Minh City to make high-tech products and set up a centre in the Thu Thiem urban area. Vietnam-based facilities will produce Nokia phones, iPods, PlayStations and Sony laptops.
Handsets
Vietnam also continues to attract substantial investment in handset manufacturing. Mobile handset exports grew rapidly in 2011, from a total of US$2.1bn in 2010. In the first eight months of 2011, from January to August, mobile handset and component exports generated revenues of USD3.2bn. This was triple-digit growth compared with the same period of 2010. In August the monthly figure was USD710mn, up from 59.5% from July. The figures were worked out according to data from the Vietnam
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Customs. In 2012, the government projects that handset exports could reach around US$12bn. Thanks to this growth, mobile phones and parts became the third largest forex earner for Vietnam during this period. The largest export destination for Vietnam handsets and components in 2011 was the EU, which accounted for over 50%, followed by Russia and India. Imports of handsets and components also increased, at an annualised rate of 63.4%. Vietnam mainly imports handsets and components from China and South Korea.
A large part of the explosive growth in handset exports has been driven by Samsung, which launched mobile phone manufacturing in the northern Vietnamese province of Bac Ninh in Oxtober 2009, with an initial capacity of 1.5mn units a year. In 2012, Samsung Vietnam is expected to generate export earnings of between US$11bn and US$12bn, with shipments to more than 50 markets worldwide. Meanwhile in 2012, Samsung is planning to build a new research and development centre in Hanoi, as part of its drive to expand its operations in Vietnam. The R&D centre is expected to cost around US$20mn and will employ between 1,500 to 2,000 engineers by 2015 with a mandate to develop new products for the local market. In H111, another electronics giant Sony revealed it would enjoy new tax incentives for its manufacturing facility in northern Bac Ninh province. The Vietnamese government provided Sony with an amended investment certificate, allowing the company to enjoy a preferential 10% corporate income tax rate for all products manufactured at its US$670mn plant. The 10% rate is much lower compared with the standard corporate tax rate of 25%. Moreover, for the first four years of operations, the firm will receive a total exemption from the tax and will only be eligible to pay half of the 10% rate in the nine years that follow. Samsung announced it will invest US$1.5bn by 2020 to produce mobile phones, laptops and other electronics products, at what will become one of its largest manufacturing bases in the world. The company will also benefit from zero tariffs until 2014 on imported mobile phone components, according to the investment certificate. Nokia, which remains the largest brand market player, announced plans in 2010 to establish a major mobile phone factory in Vietnam. Nokia will become the second multinational handset vendor after Samsung to establish a major facility in Vietnam. However, the Vietnamese government refused to recognise Nokias proposed mobile phone project, also in Bac Ninh province, as having high-tech classification. This would entitle it to similar tax incentives given to Samsung. Instead, Nokias proposed facility has been certified as an export-processing enterprise. Samsungs plant, in Yen Phony Industrial Park in Bac Ninh province, was founded in 2009 and was initially to produce about 18mn handsets a year initially, with capacity rising to about 100mn units after one year. Most of the factorys products are exported, particularly to other South East Asian countries. Samsungs large investment in the plant reflects its drive to improve price competiveness and awareness of the growing market in South East Asia.
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In June 2009 Samsung announced it shipped its first batch of 20,000 Vietnam-made mobile phones abroad. Samsungs Vietnamese phone plant is one of seven the company has worldwide and has a production capacity of 60mn cell phones a year. The plant is located at the Yen Phong Industrial Estate in Bac Ninh province. About 600 workers are employed at the plant, which uses materials and components from 32 suppliers, including 15 local ones. The first batch of handsets was exported to the UAE, Thailand and Singapore. In Q210 Taiwan original equipment manufacturing (OEM) company Foxconn also said it would build a mobile phone plant with an investment of US$200mn. The plant will be in the northern province of Vinh Phuc and will have a planned annual output capacity of 89mn handsets.
Meanwhile, there has been an explosion of locally made handsets, which by some estimates account for as much as 50% of the market. Local brands such as Q-Mobile, Wellcom, Malata, Bavapen, MobiStar and F-Mobile entered the original equipment manufacturer space by engaging in a customisation and repackaging of cheap Chinese mobile phones, which have a bad reputation in Vietnam due to perceived inferior quality and lack of service. The image problems and service issues associated with Chinese phones have stalled their advance in the Vietnam market and increased the opportunity for Vietnamese brands, which often place orders in China and order additional components in Japan and South Korea.
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Industry Forecast Scenario

Vietnams consumer electronics devices market, defined as the addressable computing devices, mobile handsets and video, audio and gaming products, is projected to be worth about US$5.5bn in 2012. This is expected to increase to US$10bn by 2016, driven by growing affordability of key products.
2010 2011e 2012f 2013f 2014f 2015f 2016f 12,000 10,000 8,000 6,000 4,000 2,000 0
Consumer Electronics Demand 2010-2016f (US$mn)
The countrys vast, underpenetrated rural market offers the most growth potential, with Hanoi and Ho Chi Minh City accounting for most sales. In Q112 vendors reported healthy sales in the run-up to the peak Lunar New Year shopping season, as retailers launched new promotions. In 2011 Vietnamese retail demand for consumer electronics products grew robustly despite pressure on consumer 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.
Computing Consumer Electronics Communications
In 2012, our view that manufacturing sector growth will continue to cool will be negative for private consumption growth. In terms of the agricultural sector, which remains the largest source of employment in Vietnam (40.0% of the labour force), we believe that falling crop prices will have a negative impact on rural incomes. This presents further downside risks to our outlook for private consumption growth.
The electronics devices market is forecast to grow at an overall CAGR of 16% through 2016 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.
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Mobile handsets accounted for the largest part of consumer electronics spending in 2011, at about 35%. 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 20% of sales in 2011, while according to mobile operator Vinaphone, by April 2011, 29% of its subscribers were smartphone users.
Table: Consumer Electronics Overview; 2009-2016
2009 Consumer Electronics Devices Total Demand (US$mn) Computers (US$mn) Video, Audio & Gaming (US$mn) Communications (US$mn) 3,025 1,224 920 880
2010 3,694 1,427 1,067 1,199
2011e 4,590 1,616 1,238 1,736
2012f 5,486 1,817 1,424 2,245
2013f 6,447 2,043 1,623 2,781
2014f 7,506 2,316 1,834 3,355
2015f 8,689 2,603 2,073 4,013
2016f 9,978 2,899 2,322 4,758
Computers were the second largest consumer electronics spending category in 2010 at 37%. Spending on computer hardware will grow at a CAGR of 13% through to 2016. The main growth driver will be affordable notebooks, while government-driven PC for education programmes will also support growth.
Consumer Electronics Demand 2009-2016f

12,000 10,000 8,000 6,000 4,000 2,000 0 2011e 2009 2010 2012f 2013f 2014f 2015f 2016f 30% 25% 20% 15% 10% 5% 0%
The AV segment will account for about 28% of consumer electronics revenues over the forecast period. The main driver is video, which will account
Consumer Electronics Demand (US$mn) % Change

from 77% of revenue in this segment by 2016, up from 74% in 2010. TV will be the core product in this category, with demand for high-end LCD and plasma TV sets nearly doubling by 2011. The governments plan for digital TV broadcasting migration by 2020 will help to encourage replacement TV purchases.
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Industry Trends And Developments

Digital TV Switchover In March 2010, a draft plan for digital TV and radio broadcasting migration was published by the Vietnamese Ministry of Information and Communications. A budget of about VND4.4trn (US$231mn) has been proposed for the project. Key elements of the plan include to improve public knowledge about digital broadcasting and to assist people to buy digital TV equipment.
By 2020, all cable networks should be using digital technology, according to the governments schedule. Despite this, doubts have been raised about the practicality of the governments timetable. 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 has said that most households in remote and isolate areas would be provided with subsidised equipment.
3G Mobile Service Launch Vietnams Ministry of Information and Communications has licensed operators to provide 3G services: VinaPhone, the military-owned mobile operator Viettel, MobiFone (which is also state-run) and a joint venture between Hanoi Telecom and EVN Telecom. In October 2009, VinaPhone became the first operator to officially launch 3G services in Vietnam. The services are available in 13 major cities and provinces including Hanoi, Hai Phong, Quang Ninh, Thanh Hoa, Nghe An, Thua Thien Hue, Da Nang, Khanh Hoa, Ho Chi Minh City, Can Tho, Dong Nai, Binh Duong and Vung Tau. A national expansion was planned for 2010.
Government PC Programmes
Vietnamese government ICT programmes are expected to boost PC sales. In 2011, the Ministry of Education and Training was implementing a national programme to supply 1mn affordable computers to Vietnamese schools. The computers come loaded with educational software and broadband connections. Multinational vendors Acer, Intel and Microsoft are participating in the programme. The desktops sell for about US$161, about half the normal price.
In January 2010, VNPT in Ho Chi Minh City launched a local version of the programme that will provide teachers and students in the city with low-priced laptops and DSL broadband connections. The discounts will be available through VNPTs 30 retail outlets and 200 agents in the city.
Meanwhile, the rollout of e-government infrastructure and services should also be a driver of PC sales during BMIs forecast period. In September 2009, the government launched an e-procurement pilot system. The system will be used by the Hanoi Peoples Committee, the Electricity Group of Vietnam
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and the Telecommunications Post Group in the initial trail phase from 2009-2011. In the second phase, from 2011-2015, the system will be gradually expanded to all public agencies and state-owned enterprises across all economic sectors.
Lower Import Tariffs Import taxes on electronic products and components were lowered from January 2009, in accordance with the governments commitments under the AFTA, which Vietnam entered in 2006. Vietnams admission into the WTO in January 2007 provided additional momentum for market liberalisation. As of January 2009, duty on complete build units (CBUs) electronic products from ASEAN countries were reduced to 0-5%. Eligible products must have an ASEAN content of at least 40%. Meanwhile, the average import tax on components will also be reduced from 9.41% to 6.36%.
Meanwhile, another development set to reduce tariffs on some high-end electronic products was the Vietnam-Japan Economic Partnership agreement, which came into effect at the beginning of 2009. Under the agreement, import taxes on electronics goods imported directly from Japan have been reduced by 2.54.5%. The lower tariffs for AV products such as TV sets, laptops and cameras will be in force in five to 10 years, with the tax reductions gradually being lowered year by year. Impact is likely to be limited as only about 1% of Japanese electronics products sold on the Japan market are directly imported from Japan. The majority are imported from Thailand, Malaysia and Singapore.
Impact On Local Manufacturing The tariff reductions had an effect on the development of the local market, and on that of Vietnams electronics industry. Foreign manufactures such as Sony immediately signalled their intentions to roll back or to cease their assembly operations in Vietnam and to rely on imports from neighbouring ASEAN countries.
Meanwhile, local electronics producers are faced with a difficult situation. Due to a lack of a large scale parts and components industry in Vietnam, it is difficult for local producers to compete on price with foreign manufacturer. Import taxes on components and other expenses continue to add to the problem. The government must decide how to react in this situation to promote the development of Vietnams electronics industry, which after a history of about twenty years, is still mainly concerned with assembly.
Government Electronics Industry Plan The Ministry of Industry and Trade is preparing a report that will outline a strategy to raise the technology level of Vietnams manufacturing. The report will focus on six hi-tech industries, with the first being electronics-information technology. The government reportedly plans to set a target of increasing investment in scientific research for these industries to 3.5-5.0% of revenues by 2015 and 810% 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.
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The government will also prioritise technology skills and training. The aim of the plan 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 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.
Focus On Semiconductors One area where the government has had some success is in facilitating Vietnams status as an emerging semiconductor hotspot in Asia Pacific. Recently the Ho Chi Minh City National University launched a manufacturing scheme for a microprocessor called SG 8V1, which was billed as the first of its kind in Vietnam. The Universitys Integrated Circuit R&D Centre (ICRDC) will oversee the VND12bn project to perfect the Sigma K3 chip for commercial production. According to the ICRDC, the microprocessor will be priced 30% lower than similar chips from other countries. It is planned for the chip to have industrial applications in area such as electronic products and defence.
Government Authority
Government authority Minister Ministry of Information and Communications (MIC) Le Doan Hop
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 ministrys specific functions include issuing policies and regulations on IT and electronics products, granting licences and organising government projects.
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Macroeconomic Forecast
Deteriorating Economic Data Prompts Growth Downgrade BMI View: Recent economic data suggest that the outlook for Vietnam's economic growth has deteriorated significantly in recent months. Furthermore, the State Bank of Vietnam (SBV)'s indication that it will normalise interest rates only by Q412 (we were expecting that the monetary easing cycle would be fully completed by Q312), means that credit conditions will remain tight throughout the year. Consequently, we have downgraded our real GDP growth forecast from 5.8% to 5.2% for 2012.
Recent data suggest that economic activity will continue to moderate over the coming quarters, presenting significant downside risks to our already below consensus forecast of 5.8% for real GDP growth in 2012. The State Bank of Vietnam (SBV)'s monetary easing cycle is also turning out to be less aggressive than we have anticipated. SBV governor Nguyen Van Binh announced during a press conference on April 11 that the central bank is planning to cut its policy rate (refinancing rate) by 100 basis points (bps) every quarter towards the end of the year. Although this is largely in line with our core view that the SBV will normalise interest rates by introducing 400bps of rate cuts in 2012 (the SBV has already introduced 200bps worth of rate cuts since the beginning of the year), we were previously expecting that the monetary easing cycle would be fully completed by Q312. Given the SBV's latest indication to gradually unwind its tight monetary policy and to normalise interest rates only by Q412, we are revising down our expectations for Vietnam's economic growth. We now expect real GDP growth to come in at a slightly more subdued 5.2% for 2012 (down from our previous forecast of 5.8%).
Industrial Production And Manufacturing Sector Growth Slow Looking at industrial production data, we note that there is conclusive evidence of a sustained slowdown in production activity since the SBV introduced a wave of aggressive monetary policy measures aimed at cooling the economy in 2011. Industrial production expanded at just 6.5% year-on-year (y-o-y) in March, compared with an average 8.8% over the past six months and average 10.4% over the past 12 months. The slowdown in industrial activity since the beginning of the year has also been confirmed by a significant decline in manufacturing sector growth, which came in at a weak 4.9% y-o-y in Q112, compared to 10.0% in Q411. We believe that this is partly due to cooling external demand for new manufacturing orders, a trend that is also evident in neighbouring manufacturing export-oriented economies such as Thailand and Malaysia. Given that the manufacturing sector makes up a significant 21.7% share of Vietnam's GDP and that tight credit conditions (average lending rates remain exceptionally high at around 14-16%) will continue to be a major drag on manufacturing sector growth, we believe that headline growth will come in significantly below Bloomberg consensus of 6.0%.
Outlook For Private Consumption Looking Weak Turning to other economic indicators, we note that latest retail sales and domestic vehicle sales data
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remain relatively weak. While retail sales grew at a 27-month low of 21.8% y-o-y in March, domestic vehicle sales contracted for the sixth consecutive month at -21.4% y-o-y. These figures reinforce our view that uncertainties over unemployment in the manufacturing sector and corporate earnings will prompt households and businesses to cut back on spending and investment, resulting in overall weak domestic demand growth over the coming months. We also note that according to figures published by the Ministry of Planning and Investment (MPI), around 12,000 enterprises in Vietnam have either declared bankruptcy or completely went out of business as of Q112. We expect this surge in bankruptcies to result in a higher unemployment rate over the coming months, which should put further downside pressure on household spending.
Corporate Tax Cut Unlikely To Boost Investment In terms of our outlook on Gross Fixed Capital Formation (GFCF) growth, we believe that the government's plan to slash corporate income tax by 30% for small- and medium-sized enterprises (SMEs) is unlikely to have a significant impact on private sector investment. Given an abundant stock of spare capacity due to the large number of bankruptcies in recent months and a much more moderate outlook for economic growth ahead, we believe that large companies will delay investing in new projects over the coming months. Furthermore, the government's newly announced tax cut will only apply to SMEs, which tend to be more conservative towards expanding production during periods of economic uncertainties due to their relatively weak balance sheets and cash flows in comparison to multi-national companies. Accordingly, we expect GFCF growth to remain at a relatively subdued 5.0% in 2012.
Public Spending To Increase In Bid To Support Economy There is increasing evidence that total public expenditure will exceed the government's allocated budget this year. According to a statement published by the Ministry of Planning and Investment, the National Assembly is expected to approve an additional VND4.5trn (US$0.2bn) in funds to be spent on five new infrastructure projects including two bridges, a university dormitory and an oncology hospital. We note that that this will add to a healthy pipeline of infrastructure projects that already in the construction phase and are expected to be completed over the coming years. The government has also pledged to maintain welfare subsidies in response to a challenging economic outlook in 2012. These factors suggest to us that public spending will still grow at a robust pace of 5.6% this year, albeit lower in comparison with 5.9% in 2011. Nonetheless, this should provide some support for overall headline growth in 2012.
Still Expecting A Trade Deficit The latest figures published by the General Statistics Office showed a mild trade surplus of US$0.4mn in March, compared with an average monthly trade deficit of US$0.7mn in 2011. We expect trade import growth to cool further in 2012 as Vietnamese manufacturers cut back on intermediate goods imports, in line with our outlook for subdued production activity and moderating economic growth throughout the year. However, we continue to see external demand remaining subdued in the months ahead and we expect new exports orders to remain stagnant in 2012. This should in turn lead to an overall slowdown in
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net exports. Accordingly, we see net exports growing at just 6.0% in 2012, significantly lower compared with 16.9% in 2011.
Scope For Early Rate Cuts Recent economic data reinforce our core view of a moderation in Vietnam's real GDP growth from 5.9% in 2011 to 5.2% in 2012 and that inflationary pressure should continue to wane on the back of cooling economic activity. The recent round of weak economic data should, however, give the SBV more scope for early rate cuts in Q312 rather than taking its monetary easing cycle late into the final quarter. Nonetheless, given that it will take around six to eight months for the effects of the SBV's monetary policy to fully feed through to the economy, this means that we will only see a pickup in economic activity in H113. Accordingly, we would consider revising our real GDP growth for 2013 upwards should we see signs of a robust economic recovery taking place towards the end of the year. Over the longer term, we remain bullish on Vietnam's attractive growth story and we believe that the government's renewed focus on maintaining macroeconomic stability will be positive for investor confidence and economic growth.
Vietnam - Economic Activity,2011-2016
2011 Nominal GDP, VNDbn Nominal GDP, US$bn Real GDP growth, % 2 change y-o-y GDP per capita, US$ Population, mn
3 2 2 2
2012f 2,847,455.0 135.4 5.2 1,509 89.7 8.0 5.0

2
2013f 3,192,260.2 153.5 6.5 1,693 90.7 12.0 4.8
2014f 3,609,813.5 175.5 7.2 1,917 91.6 14.0 4.7
2015f 4,068,807.3 200.1 7.3 2,165 92.4 13.0 4.6

3
2016f 4,588,126.0 228.3 7.4 2,447 93.3 12.0 4.5
2,487,631.9 120.4 5.9 1,357 88.8 10.9 4.5

1
Industrial production 1,4 index, % y-o-y, ave Unemployment, % of 4 labour force, eop
e/f = BMI estimate/forecast. at 1994 prices; Sources: Asian Development Bank, General Statistics Office. BMI, 4 World Bank, UN, General Statistics Office.
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Competitive Landscape
Computers
Multinational brands dominated PC sales as vendors expand distribution in rural areas.
Dell moves into poll position in the laptop market in Q311.
Multinational brands dominate the Vietnamese PC market, with Dell, HP and Asus among the topselling brands. Other multinational vendors including Toshiba and Lenovo have enjoyed strong recent growth in the booming market. Meanwhile, Korean consumer electronics giantSamsung hoped to leverage its distribution network and strong brand recognition into a 10% share of the Vietnamese notebook PC market.
The Vietnamese PC market is also surprisingly competitive, with most of the major laptop vendor players having below a 10% local market share. According to figures from market research firm IDC, Dell was the laptop segment leader in Q311 with a 14% share, with Asus second at around 12%. HP, Acer and Lenovo all had market shares of around 10% or below.
Asus had targeted third place in the overall PC market in 2011, and its good performance was in part due to efforts to strengthen its distribution channel. In April 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 centres in Hanoi, HCMC, Danang and Can Tho. Meanwhile 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, include FTP, CMS, Robo, Viettronics Tan Binh, and the Khai Tri Technology Trading Co. The total turnover of these top five comapnies was around VND1tn in 2011 (US$48.1mn), down 25% over the previous year.
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Vietnamese vendors have sought to compensate for declining desktop sales by expanding 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, in 2012, the militaryrun Viettel group announced that it planned to enter the tablet market with a device expected to retail at around US$190.
As in many other markets, telecoms carriers have also emerged as a significant channel option for PC vendors. Dell has launched a partnership with military-run telecoms company 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. HP was ranked by market research firm AC Nielsen as the leading laptop and PC market brand in Vietnam in 2010. HP is also the leader in the printer segment. Vendors continued to roll out new models during the economic slowdown, with the popularity of the small form factor netbooks a significant focus. In May 2009, Intel said Vietnam was the leading consumer of its net-top product in the Asia Pacific region, with demand up some 400% compared with the last quarter of 2008. Intel expected total Vietnamese net-top sales of 120,000 this year.
2011 saw a steep decline in the popularity of netbooks, with former segment leader Sony withdrawing its products from the local market. Sony's P-series models, considered pioneers in the market, as well as the high-end Vaio W product, have both been withdrawn. Sony, like rival vendors Acer, Asus and Lenovo is now focusing on tablets and ultrabooks.
2010-2011 saw the emergence 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 last year. In 2010, several Vietnamese enterprises announced plans to tablet PCs, and the first such product, from Hanel, was launched in Vietnam 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,
The reduction of import tariffs from January 2009 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 current growth.
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AV Devices
Foreign brands dominate the AV segment in Vietnam;
Major LCD TV distributor Pico aimed to increase Vietnam market share to 10% in 2010.
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 LCD TV sets from their Scarlet and Bravia series respectively.
Samsung has a strong position in the Vietnamese LCD TV set market. The company has a market share of around one-third, 10% ahead of the nearest competitor. One of Samsungs major Vietnam market distribution partners, Pico, announced that it planned to increase its share of Vietnams 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. Before the 2020 FIFA World Cup in June/July 2010, the company launched promotions on more than 10,000 LCD TV sets, offering big discounts.
Meanwhile, Toshiba said that it was aiming for a 20% share of the ASEAN TV sets market in 2012, including Vietnam. In 2011 Toshiba said that its Vietnam market share was around 12%. Toshiba hoped that it could build from 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.
In 2010 fellow Japanese consumer electronics giant Sony introduced a new collection 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. Belcos 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.
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
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provide electronics manufacturing services. Nguyen Vinh, a loudspeaker producer, has said that it will cease production altogether and shift to being a distributor of foreign-made products.
In early 2009, CRT producer Orion-Hanel finally filed for bankruptcy, after seeing its market undermined by the growing preference for LCD TV sets. Orion Hanel Picture Tube Company, set up in 1993 as a joint venture (JV) between South Koreas Orion and Vietnams Hanoi Electronics Company, was one of the first electronics JV in Vietnam. At one stage, the company had two factories for production of CRTs, with about 2,500 workers in Hanoi.
Meanwhile, in another sign of the times, Sony announced that it would end its TV JV with Tan Binhbased 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 Vietnams 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.
Following the implementation of the ASEAN Free Trade Agreement in 2006 and WTO commitments in 2007, finished products can now be imported with only a 0-5% tax. This has led to Sonys decision to shut down its TV assembly plant in Vietnam, despite the fact that Sonys LCD TV sales in Vietnam soared 10 times in 2007 y-o-y. While Sonys decision has attracted most attention, other Japanese and South Korean companies are likely to follow.
Handsets
Android devices account for about one-quarter of smartphone sales;
Growing demand for 3G handsets is a potential opportunity for multinationals, but local brands are also pursuing this opportunity.
Nokia was the leading handset vendor in the Vietnamese market in 2011, ahead of rival multinational brands such as Samsung, LG, Sony Ericsson and Motorola, as well as Chinese and local brands. In 2011, the share of Vietnamese producers in their local market slid to around 20%, largely due to the increased popularity of smartphones. The local phone sector also suffers from overcrowding, and rationalisation is expected in 2012.
Samsung is the current leader in the Vietnam smartphone segment, Nokia did at least regain some overall handset market share in H211, due to a renewed focus on the low-end feature phone segment. Nokias gains were largely at the expense of local vendors. During 2010 Vietnamese brands had claimed a growing share of sales in their domestic market, partly at the expense of Chinese brands. This was a
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continuation of the trend established in 2009 when multinational vendors collectively lost market share to growing sales of smaller locally produced brands. Leading retailer Gioi Di Dong reported that the share of major brands such as Nokia, Samsung and Sony Ericsson had shrunk from about 90% in 2007 to 70% in 2009.
However the smartphone explosion reversed this trend in 2011, as foreign vendors still have an advantage in this segment. In 2011, some local vendors such as Q-Mobile and FTP 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.
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, second behind Nokia, 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 lowcost 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, VinaPones Avio, Viettels Zik 3G, and FPTs 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. The Thuan Phat Group launched its P-Phone brand products into the market during mid-2010, as the company attempted to transition from being a distributor of brands such as Nokia, Motorola and Sony Ericsson to a brand player. According to retailer reports, many of the major brands lost 30-50% of their market shares in 2009. Nokia reportedly dropped from about 60% in 2008 to 40% in 2009, while in the same period Samsung dropped from 18% to 12% and Motorola and Sony Ericsson from about 6% to 3%. LG was the only major vendor to buck this trend, mirroring a strong global handset market performance in 2009 by increasing is local share to about 6% from 3%.
The main beneficiaries were the local brands such as Q-Mobile, Wellcom, Malata, Bavapen, MobiStar and F-Mobile. Many local brands are now offering three-year warranties and trial periods. Another leading mobile phone retailer, Vien Thong A, said in 2009 that these small brands now accounted for up to 15% of its sales.
The main driver of this trend has been price, with about 70% of phones in the market now priced below VND2mn. In 2009, Q-Mobile was reported to have overtaken Samsung as the second highest-selling brand in the market, behind Nokia. Meanwhile, network operators have also entered the market with their
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own-brand handsets. These include S-Fones Eco handset, VinaPhones Alo and Viettels VT handset brand.
On disruptive element in the local market in 2012 is expected to be the emergence of military-run telecoms group Viettel as a player in the mobile handset sector. Viettel plans to launch mobile phohnes made entirely in Vietnam. In H112, the company revealed plans to release a tablet which is expected to be 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 late2 011 with a potential capacity of 3mn units a year. The expansion of 3G services in 2010 provided a new opportunity for foreign vendors. In 2010 Nokia was the manufacturer offering the broadest range of 3G models. Nokia devices available in Vietnam included the Nokia 2730 Classic, which retailed for VND1.68mn dong, the Nokia 7230 (VND2mn,) and the Nokia 3G3 (VND3.7mn.) Meanwhile, Nokia, which remains the largest brand market player, announced plans in 2010 to establish a major mobile phone factory in Vietnam.
South Korean vendor Samsung also has a factory in Vietnam, which was created in 2009 at a cost of US$1bn and which the company proposes to expand over the coming years. Like Nokia, Samsung offered a wide range of high-end products in 2010, from the S5350 Shark (VND3mn) to the Samsung B7320 Omnia Pro (VND4.27mn) and the Samsung M5650 (VND4mn).
The smartphone market has surged due to lower prices and the rise of Android-based devices. According to data from mobile operator VinaPhone, by April 2011, Android models accounted for 26% of smartphones, up from just 2% in the same period of 2011. Samsung was the leading Android vendor in Vietnam during April 2011, with a 28% share. This was followed by Taiwans HTC with 22%, Sony Ericsson with 11% and LG with 10%. Strong perforemances from Samsung and Apple helped to maintain Androids positive trajectory through H212. Although the operating system landscape is becoming increasingly competitive, we expect Android to retain its top position over our forecast period.
Meanwhile, Apples iPhone had also increased its share over the same period from 21% to 30%. This growth had largely taken place at the expense of Symbian-based devices from Nokia. Its share of smartphone sales fell from 75% in March 2010 to just 39% in April 2011, although they marginally remained the largest segment.
Other smartphone platforms such as RIMs BlackBerry (2% and Windows Mobile (1%) had low singledigit shares. However, in July 2011, Canadian vendor RIM, maker of the BlackBerry, announced that it had reached an agreement with three of Vietnams largest network operators, which will now launch BlackBerry services. The three operators Viettel, VinaPhone and MobiFone were expected to launch services by September 2011, and after negotiations with RIM, services should be priced lower for the local market. Viettel, the first network operator in Vietnam to offer BlackBerry services, has announced a nearly 50% discount to monthly BlackBerry service subscribers. Subscriptions have fallen from
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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. Vietnamese mobile operators reduced the price of Apples iPhone from US$197 to below US$100 in 2010, in line with falling prices of the product in the US market. Viettel reduced the price of its iPhone to VDN1mn (US$54) in an attempt to boost sales. However, official sales of the device had been limited, with fellow operator VinaPhone saying in H110 that the company had imported only about 5,000 iPhones. Local manufacturers are also entering the 3G segment, with leading electronics player Hanel launching its Hanel H1000 3G model at a price point of VND2.45mn.
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. AbTel and Q-mobile have integrated some Vietnamese contents and images into their mobile phones, with Q-Mobiles Z23 model containing a collection of photos of Vietnamese landscapes.
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Demographic Outlook
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: BMI, World Bank, UN
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Table: Vietnam's Population By Age Group, 1990-2020 ('000)
1990 Total 0-4 years 5-9 years 10-14 years 15-19 years 20-24 years 25-29 years 30-34 years 35-39 years 40-44 years 45-49 years 50-54 years 55-59 years 60-64 years 65-69 years 70-74 years 75+ years 67,102 9,340 8,685 7,504 7,127 6,492 5,893 4,884 3,965 2,420 2,039 1,933 1,946 1,544 1,283 919 1,127
1995 74,008 9,212 9,193 8,604 7,408 7,003 6,361 5,779 4,794 3,884 2,358 1,968 1,843 1,822 1,391 1,084 1,305
2000 78,758 7,002 9,124 9,142 8,535 7,305 6,879 6,250 5,688 4,710 3,802 2,287 1,887 1,737 1,659 1,194 1,559
2005 83,161 6,776 6,921 9,038 9,064 8,420 7,167 6,765 6,163 5,614 4,653 3,739 2,201 1,767 1,582 1,439 1,852
2010 87,848 7,186 6,703 6,844 8,963 8,954 8,284 7,058 6,677 6,086 5,548 4,580 3,617 2,076 1,621 1,389 2,264
2012f 89,730 7,186 6,885 6,539 8,161 9,115 8,602 7,475 6,770 6,304 5,761 4,936 4,001 2,573 1,649 1,384 2,388
2015f 92,443 7,026 7,143 6,668 6,806 8,892 8,862 8,202 6,991 6,609 6,012 5,449 4,446 3,455 1,927 1,438 2,516
2020f 96,355 6,529 6,982 7,104 6,628 6,745 8,803 8,779 8,131 6,925 6,536 5,914 5,305 4,268 3,233 1,729 2,743
f = BMI forecast. Source: BMI, World Bank, UN
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Table: Vietnam's Population By Age Group, 1990-2020 (% of total)
1990 0-4 years 5-9 years 10-14 years 15-19 years 20-24 years 25-29 years 30-34 years 35-39 years 40-44 years 45-49 years 50-54 years 55-59 years 60-64 years 65-69 years 70-74 years 75+ years 13.92 12.94 11.18 10.62 9.68 8.78 7.28 5.91 3.61 3.04 2.88 2.90 2.30 1.91 1.37 1.68
1995 12.45 12.42 11.63 10.01 9.46 8.60 7.81 6.48 5.25 3.19 2.66 2.49 2.46 1.88 1.46 1.76
2000 8.89 11.58 11.61 10.84 9.27 8.73 7.94 7.22 5.98 4.83 2.90 2.40 2.21 2.11 1.52 1.98
2005 8.15 8.32 10.87 10.90 10.13 8.62 8.14 7.41 6.75 5.59 4.50 2.65 2.12 1.90 1.73 2.23
2010 8.18 7.63 7.79 10.20 10.19 9.43 8.03 7.60 6.93 6.32 5.21 4.12 2.36 1.85 1.58 2.58
2012f 8.01 7.67 7.29 9.10 10.16 9.59 8.33 7.55 7.03 6.42 5.50 4.46 2.87 1.84 1.54 2.66
2015f 7.60 7.73 7.21 7.36 9.62 9.59 8.87 7.56 7.15 6.50 5.89 4.81 3.74 2.08 1.56 2.72
2020f 6.78 7.25 7.37 6.88 7.00 9.14 9.11 8.44 7.19 6.78 6.14 5.51 4.43 3.36 1.79 2.85
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Table: Vietnam's Key Population Ratios, 1990-2020
1990 Dependent ratio, % of 1 total working age Dependent population, 2 total, '000 Active population, % of 3 total Active population, total, 4 '000 Youth population, % of 5 total working age Youth population, total, 6 '000 Pensionable population, 7 % of total working age Pensionable population, 8 '000
1
1995 71.2 30,790 58.4 43,218 62.5 27,009 8.7 3,780
2000 60.5 29,679 62.3 49,079 51.5 25,268 9.0 4,411
2005 49.7 27,609 66.8 55,552 40.9 22,735 8.8 4,874

2
2010 42.1 26,006 70.4 61,842 33.5 20,732 8.5 5,274
2012f 40.9 26,031 71.0 63,699 32.4 20,610 8.5 5,421

3
2015f 40.6 26,717 71.1 65,725 31.7 20,837 8.9 5,881
2020f 41.6 28,321 70.6 68,034 30.3 20,615 11.3 7,706
75.5 28,859 57.0 38,243 66.8 25,529 8.7 3,330
f = BMI forecast; 0>15 plus 65+, as % of total working age population; 0>15 plus 65+; 15-64, as % of total 4 5 6 7 8 population; 15-64; 0>15, % of total working age population; 0>15; 65+, % of total working age population; 65+. Source: BMI, World Bank, UN
Table: Vietnam's Rural And Urban Population, 1990-2020
1990 Urban population, % of total Rural population, % of total Urban population, '000 Rural population, '000 20.3 79.7 13,438.6 52,761.4
1995 22.2 77.8 16,201.6 56,778.4
2000 24.3 75.7 18,865.4 58,770.0
2005 26.4 73.6 21,940.1 61,166.2
2010 28.7 71.3 25,212.5 62,635.9
2012f 29.7 70.3 26,649.9 63,080.4
2015f 31.2 68.8 28,842.1 63,600.5
2020f 33.9 66.1 32,664.4 63,690.7
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BMI Methodology
How We Generate Our Industry Forecasts
BMIs 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, i.e. 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 variables 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 variables 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 and consumer electronics 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 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.
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Within best-practice techniques of time-series modelling, BMIs 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; and Exogenous events. Estimates for each industry segment are calculated using national statistics, where available, as well as trade association and company data, and BMIs 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, and BMI international IT and electronics research.
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BMI Vietnam Consumer Electronics Report Q3 2012

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VIETNAM CONSUMER ELECTRONICS INDUSTRY REPORT Q3 2012

Part of BMIs Industry Report & Forecasts Series

Vietnam Consumer Electronics Q3 2012

Business Monitor International Ltd

Vietnam Consumer Electronics Q3 2012

Asia Pacific Risk/Reward Ratings ................................................................................................................ 12

Consumer Electronics Market ...................................................................................................................... 15

Consumer Electronics Industry ................................................................................................................... 27

Industry Forecast Scenario .......................................................................................................................... 36

Industry Trends And Developments ............................................................................................................ 38

Macroeconomic Forecast ............................................................................................................................. 41

Competitive Landscape ................................................................................................................................ 44

Demographic Outlook ................................................................................................................................... 51

Business Monitor International Ltd

Vietnam Consumer Electronics Q3 2012

Table: Vietnam's Rural And Urban Population, 1990-2020 ................................................................................................................................ 54

BMI Methodology ........................................................................................................................................... 55

Business Monitor International Ltd

Vietnam Consumer Electronics Q3 2012

Business Monitor International Ltd

Vietnam Consumer Electronics Q3 2012

Business Monitor International Ltd

Vietnam Consumer Electronics Q3 2012

Business Monitor International Ltd

Vietnam Consumer Electronics Q3 2012

Vietnam Electronics Industry SWOT

Business Monitor International Ltd

Vietnam Consumer Electronics Q3 2012

Vietnam Political SWOT

Business Monitor International Ltd

Vietnam Consumer Electronics Q3 2012

Vietnam Economic SWOT

Business Monitor International Ltd

Vietnam Consumer Electronics Q3 2012

Vietnam Business Environment SWOT

Business Monitor International Ltd

Vietnam Consumer Electronics Q3 2012

Asia Pacific Risk/Reward Ratings

Business Monitor International Ltd

Vietnam Consumer Electronics Q3 2012

Business Monitor International Ltd

Vietnam Consumer Electronics Q3 2012

Table: Asia Pacific Consumer Electronics Risk/Reward Ratings, Q312

Overall rating Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 Previous rank 1 2 3 4 5 7 6 8 10 9 11 12 13

Business Monitor International Ltd

Vietnam Consumer Electronics Q3 2012

Consumer Electronics Market

Business Monitor International Ltd

Vietnam Consumer Electronics Q3 2012

2009 1,224 1,041 819 887

2010 1,427 1,213 758 1,186

2011e 1,644 1,398 692 1,541

2012f 1,849 1,572 734 1,888

2013f 2,097 1,782 815 2,319

2014f 2,398 2,039 907 2,873

2015f 2,695 2,291 1,038 3,477

2016f 3,055 2,597 1,197 4,244

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

Computers: Demand (US$ bn) 2009-2016

PC Demand (US$mn) RHS

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