Vietnamese cross-border e-commerce market is booming. Vietnam calls for further Chinese investment in hi-tech projects
Still now the Asian startup scene remains somewhat of a mystery. Singapore and China have become key centers but Southeast Asia countries are roaring. Among them Vietnam is doing its ‘Great Leap’ in hi-tech world.
As one of Asia’s fastest growing economies, with a potential annual GDP growth rate of 5.1%, Vietnam carries the weight of expectations. A hub of manufacturing and dropshipping operations, Ho Chi Minh has a vast supply of young talented developers and designers. But, we all know that skills alone do not make a great startup scene.
What’s the startup culture like? Vietnam’s startup ecosystem has made progress in giant leaps and bounds, with startups raising $205 million in 2016, a 46 percent increase from 2015.
The star of the pack has been the fintech sector, which raised close to $129 million in 2016. On average there about 100,000 university graduates per year in engineering alone, but the startup activity is relatively smaller compared to other SE Asian countries, Vietnam certainly has some great potential. E-commerce is following this trend.
The Vietnamese market is drawing in global e-commerce giants like Alibaba. Hangzhou based company launched initiatives that enable Vietnamese merchants to make use of their global networks to spur international sales.
Recently, Alibaba just signed a deal with Vietnamese cross-border e-commerce platform Fado Vietnam, launching a new trading channel for small-and-medium enterprises (SMEs) to export their products globally via the alibaba.fado.vn. This gives Vietnamese companies the potential to sell their goods to as many as 260 million purchasing firms from 240 countries. According to data, currently, up to 32% of Vietnamese SMEs have established collaborative deals with foreign partners to spur cross-border sales, according to the Vietnamese e-commerce report for 2018.
Ho Chi Minh City is leading cross-border e-commerce sector. Vietnam calls for further Chinese investment in hi-tech projects
Vietnam is one of the most attractive eCommerce markets in the region for investors. With an explosive 33% compounded annual growth rate (CAGR) over the past two years, Vietnam ranks high among the fastest-growing e-commerce markets in the region. And China is helping to move forward on this trend. Chinese e-commerce giant JD.com completed its large-scale investment in tiki.vn last year while PRC online retailer behemoth Alibaba leads foreign ventures with Lazada, the largest digital marketplace in Southeast Asia, which reportedly has more than 31 million visits every month.
There are currently 35.4 million e-commerce users in Vietnam, with an additional 6.6 million users to be shopping online by 2021. These 42 million e-commerce users will represent 58% of the total population. Vietnam is a land of opportunity for foreign and domestic e-commerce companies because of its young population, high Internet penetration rate (ranked 17th in the world), and rising smartphone penetration rates.
According to data, Internet penetration in Vietnam is currently at 56%, and should reach 69% by 2021. Smartphone penetration is 31% and is projected to grow to 42% by 2021. Vietnamese online shoppers mainly divide their purchasing between smartphones and desktops. 18% made their most recent online purchase via smartphone, while 71% made their most recent purchase via desktop. The average user spends 62 USD online, which will grow to 96 USD by 2021.
And Ho Chi Minh City is leading country’s trend. The city recorded an aggregate score of 82.1 points, 3.5 points higher than in the 2017 index. Sub-indexes put the city much higher than the national average, in particular in Infrastructure and Human Resources and Business-to-Business (B2B) transactions. Hanoi was second, with 79.8 points, 4 points higher than last year, followed by northern Hai Phong city, central Da Nang city, and southern Binh Duong province.
The rise of e-commerce in Vietnam has also propelled industries such as Fintech. Because approximately 42% of the country’s consumers don’t have credit cards, cash-on-delivery has become extremely popular as 91% of Vietnamese online shoppers choose this method of payment.
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