E-Commerce in Vietnam_Vietnam ICT Reseller Channel Summit 2018_18124-6

Prepared for: GATES Date: 4 January 2019
Prepared for:
Prepared by: Spire Research & Consulting
Date: 4 January 2019
Danang, 4th -6th December 2018 WORKSHOP
Vietnam ICT Reseller Channel Summit 2018
By _______, Spire Research and Consulting
E-
COMMERCE
in VIETNAM

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Prepared for:
A. COUNTRY
OVERVIEW

Agriculture, forestry
and fishing
16%
Industry &
Construction
33%
Service
41%
Taxes less
subsidies on
production…
Source: Vietnam National Account, Vietnam Briefing, BMI
Breakdown of GDP by Industry (2017)
GDP Overview
2017
GDP
USD 220 bn
Growth rate (2016-17): 5.54%
Vietnam suffered from severe weather
conditions in 2016 which had strong impact
on agriculture. Nevertheless, the sector still
holds strong growth opportunities in terms
of production, exports and retail sales,
particularly with regard to the rice, coffee,
livestock and dairy sub sectors driven by
increasing integration in Southeast Asia
Vietnam’s fast-growing population will boost
domestic demand
Agriculture, Forestry and Fishing
Growth rate (2016-17): 14.4%
As labor costs of Chinese manufacturing
operations rise, Vietnam has benefited from
rising Foreign Direct Investment in the
manufacturing sector due to its low labor
costs
Industry & Construction
Growth rate (2016-17): 7.4%
One of the fastest growing retail sectors in
Asia, the Vietnam retail industry is driven by
rising consumer income and a burgeoning
middle class
Services

Vietnam Economic Overview
Real Gross Domestic Product (GDP)
Legend: “F” refers to Forecasted Data
Source: Economist Intelligence Unit (EIU) Database
185.8 191.3 204.4 222.2 244.5 269.4 297.3
6.…
6.7%
6.2% 6.2%
6.4% 6.3%
6.2%
6%
6%
6%
6%
6%
7%
7%
-
50.0
100.0
150.0
200.0
250.0
300.0
350.0
2014 2015 2016 2017F 2018F 2019F 2020F
RealGDPGrowth(%)
NominalGDP(USDBn)
Nominal GDP (USD Bn) Real GDP Growth (%)
FDI Inflow into Vietnam
Resilient Export Performance
Source: World Bank, Vietnam National Account, General Statistics Office of Vietnam, Business Times, Bloomberg, BGD Vietnam, Reuters
Vietnam has shown resilience amidst a
global trade slowdown and become one of
the best-performing countries in export in
the region. The country is expected to
continue to grow its export sector
supported by strong Foreign Direct
Investment inflow
Vietnam’s FDI reached USD 17.5 billion in 2017, up
10.7 percent from 2016. The Vietnam government will
redouble efforts in improving its investment
environment to facilitate FDI.
Most of FDI is realized in the manufacturing sector,
real estate activities, retail and automotive repair
sectors.
11,000 10,460
11,500
12,350
14,500
15,800
17,500
-4.9%
9.9%
7.4%
17.4%
9.0%
10.8%
2011 2012 2013 2014 2015 2016 2017
FDI implementation cap (USD Mil) y-o-y growth (%)

Income
Middle-class is rising in Vietnam with increasing income
1,273
1,517
1,749 1,933 2,052 2,109 2,200 2,38519.2%
15.3%
10.5%
6.2%
2.8%
4.3%
8.4%
2010 2011 2012 2013 2014 2015 2016 2017
(Est)
Income (USD) y-o-y growth (%)
Annual income per head 2010-2017
Vietnam is among countries with the biggest
increase in the amount of middle-class in the
region since 1991, just after Indonesia.
Vietnam middle class is expected to grow
from 12 million in 2012 to 33 million in 2020.
In 2015, the middle-class reached 14.7 million
people, accounting for 26.6% total workforce.
This number will increase to 17.7 million in
2018, more than 30% total workforce.
12
million
14.7
million
33 million
2012
2020
** Middle Class in VN: Monthly income $1,400-3,400
2015

Spending on necessities is the main expenditure for Vietnamese consumers
In 2015, a survey on household consumption trend
showed that 53% of household income is used to
purchase products for daily necessities such as food,
household care products (see figure beside).
According to the National Economics University, total
spending on household goods grew rapidly from $70
billion In 2008 to $154 billion in 2015.
Until 2015, on average, apart from food and saving, local
consumers used 13.6% of their expenditure, equal to
$42.9 per person per year on clothing, which is much
lower than global average at $153 (see figure below).
53%
15%
12%
10%
9%
1% Others
Long-term investment (education, life
insurance)
Personal care and accessories (clothing,
footwear, cosmetics, sports activities)
Health and recreation (health care,
entertainment, tourism)
High value products (electronics, home
appliances, cars, interest payments)
Daily necessities
Household consumption trend in Vietnam 2015
32.2%
14.6%
13.6%
11.9%
9.9%
6.7%
11.2%
Food
Saving
Clothes
Transportation
Entertainment
Beauty products
Others
Individual spending in Vietnam 2015
Source: Spire’s primary data and estimation
** Household consumption study was run by VINASTAS in HCMC, HN, DN, Can Tho
** Vietnam General Statistics Office (GSO)
Year 2015
China $97
Thailand $108
Indonesia $85
Philippines $90
Vietnam $42.9
Global $153
Average spending on clothing per capita
Spending

Prepared for:
C. VIETNAM ICT
LANDSCAPE

Population: 96.02 M
Internet Users: 55 M (59%)
Social Media Users: 46 M (48%)
Mobile Phone
Penetration:
125 M (131%)
IT usage profile
Web Traffic By Device
Jan 2018
Laptop &
Desktop,
73%
Mobile ,
24%
Tablet, 3%
Connectivity
By Desktop OS
Oct 2017 - Oct 2018
Windows, 63.6% Android,
16.5%
iOS, 11.9%
OS X,
6.1%
Unknown
, 0.9%
Linux,
0.7%
Others,
0.4%
By Mobile OS
Nov 2017
Android, 67.0%
iOS,
29.0%
Others, 4.0%
By Mobile Brand
Nov 2017
Samsung, 46.5%
Oppo,
19.4%
Apple, 9.2%
Others
(Nokia,
Vivo,
Huawei,
Xiaomi,
etc.),
24.9%

ICT Sector
Telecommunication (6 months 2018)
According to data reported by the Ministry of
Information and Communications, in the first half
of this year, revenue from telecommunication
services was estimated at VND189,948 billion,
equivalent to 49.18% of the plan (up 4.83%
compared to the same period last year)
Information Technology (6 months 2018)
In 2018, the IT sector continued to grow at over 16%
over the same period last year. The total revenue in
the first 6 months of 2018 to reach VND 1,026,000
billion (an increase of 16.15% over the same period
of 2017).
In particular, hardware sales contributed over 90%
to total sector revenue.
VND
181,948 Bn
GR 4.83%
VND
1,026,000 Bn
GR 16.15%
7 Telecom service provider
71 Internet service provider
75
71
IT service provider30K
IT Zone4
BTS & Km optical cable
22.7
K
19.9
K
IT export (96.3% hardware)
VND
918.4 bn

ICT Trend
Cloud Computing
According to statistics, Vietnam is the fastest-growing country for cloud computing in the period
2010-2016 (64.4% / year), well above the ASEAN average (49.5%).
Spending on cloud computing in Vietnam was very low ($1.7 per year 2016), This showed a great
demand for this area in the future because of the great benefits it brings.
Vietnam:
64.4% ASEAN:
49.5%
Cloud Computing Growth Rate (2016-2017)
$1.7
$181.9
$11.05
$4.08
$2.21

ICT Trend
Cybersecurity is critical
In 2017, Vietnam suffered
VND12.3 trillion lost because
of cyber attacks, far
exceeded VND10.4 trillion in
2015.
Early 2018, the project on
monitoring information
safety for IT systems and
services for e-Government
up to 2020 with orientation to
2025 has been approved by
the Prime Minister.
Rise of E-commerce
Trend in commercial sector
will be:
 Facebook - Website -
Stores continue to be the
top three sales channels
 E-commerce sales will
grow sharply
E-commerce corporates
are at the early stage of
exploring the benefit of
artificial intelligence (AI),
internet of things (IoT), big
data, block chain and
virtual currency.
Datacenters leasing
booms in Vietnam
Early 2017, The government
has officially allowed state-
owned enterprises to
outsource IT services.
In Vietnam, renting a server will
help companies save 50 - 70%
of building data center cost.

ICT Trend
Potential of ICT export with advantage in human resource capability
Potential areas and opportunities for technology enterprises in Vietnam are:
 Internet of Things (IoT)
 Virtual reality
 Artificial Intelligence (AI)
 Big data
In recent Japan ICT Day Event 2018 hold in Hanoi, the Japan External Trade Organization
(JETRO) commented that Vietnam companies wil see opportunities to export ICT to Japan.
• According to the OECD's international student assessment program (PISA), the academic
performance of Vietnamese students is in the World Top 20 and is exceptionally good at math
and science.
• Currently, there are 290 colleges and universities providing information technology training and
about 55,000 students studying information technology every year.
• As assessed by HackerRank - USA, regarding the the ability of the software developers, Vietnam is
ranked 1st in Southeast Asia and ranked 23rd in the world.

Prepared for:
D. E-COMMERCE
IN VIETNAM

1,754.3
2,269.4
2,848.6
3,399.5
3,864.6
4,222.9 4,476.2
29.4%
25.5%
19.3%
13.7%
9.3%
6.0%
2017 2018 2019 2020 2021 2022 2023
E-commerce Revenue (USD Million) Annual Growth (%)
E-commerce Landscape
Source: Statista Report 2018
According to Statista, The revenue in the Vietnam e-commerce market was amounts USD2,269 million in 2018 with
expected annual growth rate (CAGR 2018-2023) of 14.6%, resulting in a market volume of USD4,476 million by 2023.
With a population of more than 96 million, a median age of 30 years, and internet penetration standing at 55 million, or
just over 59% of local population, Vietnam is a young and dynamic market representing a huge commercial opportunity
for brands, marketers and investors.
Vietnam digital trends also emerge fast in this exciting consumer space.
Viet Nam e-commerce, although small, is believed to be among the fastest growing
globally
Revenue in the Vietnam E-commerce marketCountry
E-commerce
Revenue 2018
USA $504,582.1 m
China $636,086.8 m
Japan $ 81,693.2 m
Indonesia $9,536.4 m
Thailand $3,756.8 m
Malaysia $3,144.2 m
Vietnam $2,269.4 m
Philippines $840.0 m

Jan
2018 E-COMMERCE ACTIVITIES IN THE PAST 30 DAYS
57% 54% 33%47% 33%
Search online
for a product or
service to buy
Visited an
online store
Purchased a
product or
service online
Made an online
purchase via a
laptop or
desktop
computer
Made an
online
purchase via
mobile device
Source: Global Web Index, Q2 & 3, 2017. Based on a survey of internet user aged 16-64
Note: Data has been rebased to show total national penetration, regardless of age. Figures represent
respondents’ self-reported activity

Fashion &
Beauty
Electronics &
Physical media
Food &
Personal care
Furniture &
Appliances
Toy, Diy &
Hobbies
Travel (Including
accommodations)
Digital musicVideo games
358.3 M
840.7 M
232.7 M
367.9 M386.3 M541.1 M
9.3 M186.1 M
Jan
2018
E-COMMERCE MARKET VALUE/GROWTH BY
CATEGORY
Sources: Statista Digital Market Outlook, E-Commerce Industry, E-Travel Industry, And Digital Media Industry
Note: Figures Are Based On Estimates Of Full-Year Consumer Spend In 2017, And Do Not Include B2B Spend.

Viet Nam e-commerce, although small, is among the fastest growing globally
E-commerce percentage of FMCG online value share per markets,
excluding fresh produce
E-commerce value
share globally
12 month to Mar
2016
12 month to Mar
2017
South Korea 14.1% 19.7%
UK 7.0% 7.5%
Mainland China 4.1% 6.2%
Taiwan 4.8% 5.8%
France 5.2% 5.6%
Spain 1.4% 1.8%
Portugal 0.9% 0.9%
Malaysia 0.4% 0.8%
Argentina 0.9% 0.8%
Thailand 0.4% 0.7%
Vietnam 0.3% 0.5%
Brazil 0.1% 0.1%
According to Kantar Worldpanel, a global
expert in shoppers’ behavior, Viet Nam e-
commerce, although small, is among the
fastest growing globally.
In Viet Nam, the e-commerce market has
evolved due to booming internet usage and
smartphone ownership, together with massive
investment of key retail players. In 2017, it
took 0.5% of the fast-moving consumer goods
(FMCG) market in four key urban cities of Viet
Nam, which are HCM City, Ha Noi, Da Nang
and Can Tho.
The percentage of e-commerce shoppers grew
from 5.4% to 8.8% in four cities in the last year
alone.
Although the size of Viet Nam e-commerce
market is still small compared to other
formats, it holds a strong potential because
the value growth of e-commerce within FMCG
is up to 69%.
Viet Nam e-commerce specifically, is expected
to expand from 0.5% to 2.2% share in 2025
coupled with the rise of digitization.
Source: Kantar Worldpanel

Prepared for:
E. VIETNAM E-PAY
LANDSCAPE

Financial Inclusion
Source: World Bank Global Financial Inclusion Data (2015).
Jan
2018
POPULATION AGED 15+ THAT REPORTS OWNING OR
USING EACH FINANCIAL PRODUCT OR SERVICE
Having a bank
account
Having a credit
card
Makes And / Or
Receives Mobile
Payments Via GSMA
Makes Online
Purchases And / Or
Pays Bills Online
Percentage Of
Women
With A Credit Card
Percentage Of
Men
With A Credit Card
Percentage Of
Women
Making Internet
Payments
Percentage Of
Men
Making Internet
Payments
31% 2% 9%0.5%
2% 2% 11%8%

88%
6%
5% 1%
2017
Cash on Delivery
(COD)
Credit Card/
Debit Card
Bank Transfer
E-Wallet (ex.
Momo, Ngan
Luong, Bao Kim)
Landscape of E-payment in Vietnam
Customers in Vietnam prefer cash on delivery the most
The participation of banks as well as many e-commerce
pioneers like VNG, Momo, Alibab, Lazada and Sendo is
contributing to rising e-payments as online shoppers,
many of whom do not have credit cards, can avoid paying
cash on delivery, a practice that encourages theft by
delivery workers.
Payment Method 2017
GR 2016-17:
22%
Country
ATM/Bank
transfer
COD
Credit
Card
Credit Debit
Card
Paypal E-wallet
Thailand 62% 38% 1%
Indonesia 44% 54% 2%
Philippines 42% 47% 10.5% 0.5%
Singapore 0-10% 90-100%
Vietnam 5% 88% 6% 1%
PaymentMethodinSEA(Dec
2017)

Prepared for:
F.
GOVERNMENT’S
POLICIES for ICT

Legal Framework
1
Law on Information Security
Protecting the legitimate rights and interests of organizations and individuals participating in ICT
Supervising and preventing of the risk of ICT security
Expanding international cooperation in the field of ICT
2
3
Regulation on importing ICT equipment and devices
Prohibiting the import of outdated (10 yeas or more) ICT equipment and devices
Regulation on taxation for ICT investors
The corporate income tax rate from 32% in 1997 was reduced to 28% in 2003 and further reduced to
25% from 2009.
Tax incentives were given to FDI companies (10% up to 15 years and 20% up to 10 years); tax
exemption and reduction for a definite term (up to 9 years); allow loss transfer (within 5 years);
exemption from tax on transfer of profits abroad; tax refund for reinvestment profits; allow for quick
depreciation
In order to attract investment, especially foreign investment, in recent years, Vietnam
has implemented a policy of "spreading the red carpet" calling for attracting foreign
investment through many policies and investment incentives.

Legal Framework
4
Participation in international agreement
Finished:
ASEAN - AEC / India / Australia / New Zealand / Korea / Japan / China
Vietnam - Japan / Chile / Korea / Eurasian Economic Coalition
On-progress:
RCEP (ASEAN + 6)
ASEAN - Hong Kong
5
6
Incentive for hi-tech companies
Terms that strongly support the development of high technology for both corporate and individuals
including land, tax, and other financial incentives are available for the development, search, transfer,
application, training and use of human resources.
Land policy and incentive within the period 3-15 year
Exemption of land rent or water surface rent from the date the project is completed and put into
operation.
Vietnam – EU
Vietnam – EFTA
Vietnam - Israel

Prepared for:
G. Conclusion

8 Driving Forces for the Vietnam ICT sector
ICT Investments
growing at 16%
Cloud services
growing at 64%
Vietnam’s ICT
Talent- best in
ASEAN
(Key driver for future
investments)
Government
promoting data
localization
(will drive
datacenters)
Growing middle
class, expected to
double from 2015-
2020
E-commerce is
booming
(2018 growth
expected @30%)
E-Payment is
still small by
rapidly growing
Focus on
Cybersecurity
Retail sector is
organizing

Tel: (65) 6838 5355
Fax: (65) 6838 5855
78 Shenton Way #20-01
Singapore 079120
sg.info@spireresearch.com
www.spireresearch.com

Prepared for:
B. RETAIL
INDUSTRY IN
VIETNAM

8.36%
Retail Market in Vietnam
Source: Spire’s Secondary Data
Vietnam retail market is considered a high potential market in the region.
According to statistics from the General Statistics Office, Vietnam retail sales in 2017 reached 2.9 trillion dong,
equivalent to 130 billion US dollars, up 10.6% over 2016. This’s been the highest figure ever recorded in Vietnam.
According to the GSO, the size of the local retail market can reach $ 179 billion by 2020.
In addition, 70% of foreign retailers are focusing on expanding their modern retail channel. This is proof to the new
trend as more blooming model of convenience stores, which is shaping a new look for the market.
10.09%
Expected
11.9%
Growth rate of retail market in Vietnam
179 Billion
130 Billion
102 Billion
88 Billion
2010
Value of retail market in Vietnam
over the years

Government Policy in 2011 is driving the organized retail sector
Source: Spire’s primary data and Decision No. 6184 / QD-BCT
Since 2011, The Ministry of Industry and Trade has
approved the master plan for the development of the
supermarket network, commercial center and shopping
mall nationwide to 2020 with a vision to 2030 in Decision
No. 6184 / QD-BCT.
The growth rate of total retail sales through supermarkets
and trade centers is expected to reach average 26-27% per
year by 2015 and 29-30% per year in 2016-2020.
Retail sales through supermarkets and shopping centers
accounted for about 27-30% of total retail sales in 2015. By
2020, this proportion is planned to reach 43-45% of total
retail sales in the country.
According to the plan, the total demand for land for
supermarkets and shopping centers to 2020 is estimated at
5,751-6,183 ha, of which the demand for land for
supermarkets will account for 44-49% and shopping center
account for 51-56%.
Year 2011 2020
Supermarket 605 - 615 1,200 -1,300
Shopping malls N/a 157
Commercial
center
82 180
Country’s planning on the retail sector
2020
Red River Delta 372 - 403
Southeast 360 - 369
North and South Central Coast 194 - 211
Northwest 118 -127
Mekong River Delta 114 – 124
Central Highland 42 - 46
Planning on the number of supermarket by
area
Retail Market in Vietnam

ICT Retail
Source: Spire’s Secondary Data
43%
18%
19%
20%
The Gioi Di Dong
FPT Shop
Other chains
(Viettel Store, Vien
Thong A, etc.)
Other individual
stores
2017 Revenue
VND ~21.9
Trillion
Mobile phone distribution market (2017)
30%
10%
20%
40%
Dien May Xanh (The
Gioi Di Dong)
Nguyen Kim
Other chains
Other individual
stores
2017 Revenue
VND ~100.8
Trillion
Electronics distribution market (2017)
In the context of fierce competition, the distribution of ICT products has gradually gotten more fragmented and major
manufacturers tended to sell directly to retailers, or through its online channel. The size of Vietnam online retail market
is expected to reach $10 billion by 2020.
Experts believed that the ICT retail market in Vietnam is getting more attractive in upcoming years, especially for
smartphone segment.
The Vietnam ICT retail became increasingly competitive
eg. Dien May Cho Lon,

Country Profile
Official Name: Socialist Republic of Vietnam
Short Name: Vietnam.
Ethnic groups: 85.7% Vietnamese
Total area: 331,212 km2
Population: 96.842 million residents (2018)
Capital City: Hanoi (8.215 million residents) – 2018.
Other major Cities - 2018 :
Ho Chi Minh City (9.5975 million)
Hai Phong (2.352 million)
Can Tho (1.52 million)
Da Nang (1.215 million)
GDP: 223.9 billion USD (2017)
GDP growth: 6.81% (2017 against 2016)
Inflation: 1.41% (2017)
Geographical Location: in South East of Asia, bordering the Gulf of Thailand,
Gulf of Tokin, South China Sea, next to China, Laos and Cambodia.
Official language: Vietnamese, English (increasingly favored as a second language).
Currency: Vietnam Dong (VND).
Time zone: (UTC+7)
Source: The World Bank Website
General Statistics Office of Vietnam

Key Takeaway
Country Retail Sector
Population: 96.8m
2017 GDP $220 bn
GR (2016-2020) 6.71%
Middle Class (2012-2020)
12m rises to 33m
Revenue (2010-2020)
$88bn rises
to $179bn
Mobile Retail Electronics Retail
2017 Revenue
~VND21.9 trn
2017 Revenue
~VND100.8 trn

Key Takeaway
ICT E-commerce
Revenue (2018-2023)
$2.3trn rises
to $4.5trn
2017 Revenue
~$6.14bn
Telecom IT
Half 2018 Revenue
~VND181.9 trn
GR 4.83%
Half 2018 Revenue
~VND1,026 trn
GR 16.15%
ICT Trend
Cloud Computing
E-commerce
Cyber Security Data Center
IT export
E-payment

Jan
2018 CONSUMER GOODS
35.08 M 37% 622.186 Bn
"Total number of
people purchasing
consumer goods via
e-commerce"
Penetration of
consumer goods e-
commerce
(Total population)
Value of the consumer
goods e-commerce
market
(Total Annual Sales
Revenue)
Average annual revenue
per user of consumer
goods e-commerce (Arpu)
Source: Statista Digital Market Outlook, E-Commerce Industry
Notes: Figures Represent Sales Of Physical Goods Via Digital Channels On Any Device To Private End Users, And Do Not Include Digital Media,
Digital Services Such As Travel Or Software, B2B Products And Services, Resale Of Used Goods, Or Sales Between Private Persons (P2P
Commerce). Penetration Figure Represents Percentage Of Total Population, Regardless Of Age.

E-Commerce in Vietnam_Vietnam ICT Reseller Channel Summit 2018_18124-6

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