Introduction about Vietnam
 

Dynamic environment and rapid economic growth
 

Vietnam is located in a highly attractive growth region (Asia and ASEAN). It enables Vietnam to act as a link between north and south in the Asia-Pacific region. The country is one of the fastest growing countries in Asia. In 2019, Vietnam's GDP expanded by 6.5%. In 2020, the country was one of the few Asian countries to achieve positive growth of 2.5% despite the Covid 19 pandemic. Vietnam's GDP is expected to increase by 6 to 7% pa in the coming years. The basis for growth is on the one hand the establishment of industrial production in the country, and on the other - as a result - an increase in the purchasing power of the Vietnamese population. The latter makes Vietnam an attractive market for consumer goods, such as food.

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Growing purchasing power and effects on food consumption

Vietnam has about 100 million inhabitants. The age group 15-24 years makes up 70% of the total population. As a result, the Vietnamese are relatively young, dynamic and open-minded. For the past ten years, Vietnam has been one of the fastest growing middle classes in the world. According to a study by the World Data Lab, 23.2 million more people would belong to the middle class in Vietnam by 2030. By then, Vietnam will rank third in the number of new middle-class populations in Southeast Asia, after Indonesia and the Philippines. According to a report published by Statista in March 2021, the annual growth rate of the middle class in Vietnam is 10.1% in 2016-2021;  the highest value in Southeast Asia. Research by World Data Lab also found that Vietnam will significantly improve its ranking in the top 30 consumer markets in the world. With a GDP per capita of almost $ 3,000, Vietnam is now a so-called "Lower Middle-Income Country".

The prosperity of the population is growing steadily and arouses consumer wishes that want to be satisfied. Status symbols are now used a lot in Vietnam. The corresponding expenditures for consumer goods, travel, luxury items, leisure activities, cars, branded clothing and smartphones are therefore growing rapidly.  A lot of money is also spent on food. Guests are often invited to exclusive food and drink, either away from home or at home, to show that "one can afford it". This phenomenon can be described as "outward-looking consumption" and goes beyond pure - highly valued - enjoyment.  Health is a high priority for consumers. Against this background, German products from the field of food products enjoy a high reputation and a good reputation. In urban areas, supermarkets and convenience stores are displacing traditional distribution channels in the wake of increasing health and hygiene standards. E-commerce in Vietnam is developing rapidly. The average growth rate is projected to be 29% in 2020-2025 and the size of e-commerce in the country is estimated at $ 52 billion by 2025.

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Free Trade Agreement between the EU and Vietnam (EVFTA)

The EVFTA came into force on August 1, 2020. This agreement is a so-called "next-generation FTA", which will both reduce tariffs and remove non-tariff trade barriers. Besides Singapore, Vietnam is the only Southeast Asian country that has entered into such a comprehensive agreement and the resulting adjustments to local legislation.

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The main advantages for German companies are better market access and legal security in the growth market of Vietnam. As soon as the agreement comes into force, 65% of Vietnamese tariffs will be attributable to EU exports, the remaining tariffs will be dismantled within 10 years. Many important EU export goods such as pharmaceuticals, chemicals or machines can be imported duty-free as soon as they come into force. Tariffs will no longer be levied on agricultural and food products such as beef or olive oil in three years, and on dairy products, fruit and vegetables in a maximum of five years.  

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In addition, the agreement will remove significant non-tariff trade barriers. For European foods, it is important that 169 traditional European foods and drinks (such as Roquefort cheese, port wine and sherry, Irish cream or the prosciutto di Parma ham) are protected as geographical indications.

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Further information on the EVFTA 👉 here in the "Access2Markets" database of the EU .

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German-Vietnamese economic relations

Germany and Vietnam are strategic partners and have intensive economic relationships. Germany enjoys an excellent reputation in Vietnam, which in this form is unique in ASEAN. Germany is Vietnam's most important trading partner in trade with the EU. In 2019 Vietnam's exports to Germany reached USD 11.6 billion (total to the EU: USD 41.5 billion) and imports from Germany USD 5.1 billion (total from the EU: USD 14.9 billion). With this trade volume, Vietnam is Germany's second most important trading partner in the ASEAN region. The German-Vietnamese trade has recorded a continuous increase in the double-digit percentage range in recent years. More than 4,000 German companies are already exporting to Vietnam and around 400 German companies have invested in Vietnam.  

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The two countries have had diplomatic relations for 45 years. With a good 120,000 people, the Vietnamese community in Germany is relatively large. 100,000 more Vietnamese were trained in Germany, live in Vietnam and often work in key positions in business, administration or politics. Around 2,000 Germans live in Vietnam.