Vietnam's home appliance industry 2022-2031: A young population, large labor force and low costs
In terms of economic growth, Vietnam's home appliance industry as well as its economy has maintained rapid growth for many years since the 1986 reform. In 2020, Vietnam's GDP grew by 2.91%. In 2021, Vietnam's GDP has risen to 362.619 billion USD, a real growth of 2.58%. Despite the decline in growth due to the New Crown Pneumonia epidemic, it is still one of the countries in the world that have achieved positive has growth.
Foreign investment is also increasingly favorable to Vietnam. The processing and manufacturing industry has become the most attractive area for foreign investment. This indicates that foreign investors have placed a high trust in Vietnam in the global supply chain. 2021 yearly Vietnam attracted a total of $30 billion in foreign investment, up 2% year-on-year.
According to this analysis, with the rapid growth of Vietnam's economy, the demand for home appliances in Vietnam's domestic market has also increased. Vietnam has a low penetration rate of domestic home appliances. Since the opening up of the country, its national economy has developed rapidly and the per capita income level has been increasing, making it one of the world's most promising home appliance consumer markets. Vietnam residents have a strong consumer consciousness. In addition to daily necessities, the products that ordinary residents spend more on are mainly motorcycles, home appliances and consumer electronics.
|The demand for home appliances in Vietnam's domestic market has increased.|
Currently, Vietnam's major advantage in attracting foreign investment is the demographic dividend and population cost. The median age of Vietnam's population is about 30 years old, and the population under 35 years old accounts for about 55.6% of the total population.
According to this analysis, the current minimum wage level in Vietnam is lower than in Thailand and Indonesia, and is at a lower level among Southeast Asian countries. Apart from labor costs, Vietnam is one of the lowest countries in its neighborhood in terms of cost of doing business, second only to Cambodia and Myanmar.
At the same time, Vietnam actively pursues an all-round diplomatic course, developing friendly cooperation with ASEAN countries, while establishing ties with large economies such as China, the US, Russia, Japan and the EU, as well as the World Bank and the Asian Development Bank, and participating in multilateral trade. With the entry into force of the Regional Comprehensive Economic Partnership (RCEP), investments in Vietnam from South Korea, Japan and Singapore have maintained a relatively rapid growth.
Vietnam has signed several new free trade agreements, especially the Vietnam-EU Free Trade Agreement (EVFTA) and the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). So far, Vietnam has maintained economic and trade relations with 220 countries and regions and signed more than 80 double taxation avoidance agreements with foreign countries, which helps Vietnam integrate into the global economy, improve the business environment and effectively attract Foreign direct investment.
To increase the attractiveness of foreign investment, the Vietnamese government has introduced a series of tax incentives, including but not limited to preferential taxes for domestic companies, such as lower corporate income tax rates, exemption or reduction of import taxes on fixed assets and raw materials, exemption or reduction of land taxes, etc. According to the analysis, Vietnam's home appliance market is expected to continue to grow from 2022-2031. On the one hand, the export volume of Vietnamese home appliances will continue to rise. Meanwhile, with the development of the economy and population growth, the demand for home appliances in Vietnam's domestic market is also on the rise.