If you know anything about Vietnam, you know that Vietnamese people are highly brand conscious. Brands are associated with status and status is everything. Vietnam is so brand conscious that a business person will not trust that you are successful unless you drive a nice Mercedes Benz. So it’s no surprise that Apple, which has been deemed the world’s number one brand, is seeing its iPhones and iPads flying off the shelves in Vietnam.
Apple (NASDAQ:AAPL) is experiencing a sales boom in Vietnam right now, according to Apple executives talking in the company’s earnings conference call this week. Reuters notes that in Apple’s fiscal first half of the year, Vietnam sales tripled – that’s five times faster than Apple’s sales growth in India. iPhone sales in Vietnam have doubled quarterly. Vietnam is now Apple’s fastest growing market.
This seems bizarre when you look at Vietnam’s overall economy. In 2013, the annual income of of an average Vietnamese person was just below US$2,000. Vietnam’s economy has been sluggish since 2009. But that hasn’t dampened demand for smartphones. As Reuters’ Nguyen Phuong Linh notes, Vietnamese people are willing to spend more than they can afford just to have the appearance of status. A smartphone is the cheapest luxury item out there and it also has the highest visibility.
Local partner boosts Apple in Vietnam
According to research group IDC, one of the key factors in Apple’s growth is its latest partnership with FPT, the tech juggernaut that does everything from manufacturing to internet services to outsourcing. FPT is an authorized distributor of Apple products and FPT Retail is an Apple Premium Reseller in the country. Retail channels in Vietnam accounted for 70 percent of the total iPhone shipments in the first quarter of 2014, while the telcos likes Viettel and Vinaphone accounted for the remaining 30 percent.
Overall, Vietnam’s smartphone shipments reached 7.6 million units in 2013. That’s an increase of 89 percent from 2012. This growth will likely continue for many years to come.
Growing in line with social
For folks in Vietnam, this growth for Apple will come as no surprise. It’s already obvious that Vietnamese are very bullish when it comes to spending. It’s also clear that Vietnam is one the most active web populations in Southeast Asia. Now, there’s a large population of young people in rural and urban areas that are quickly getting online. The biggest indicator of this is Facebook.
In October 2012, Facebook hit 8.5 million users in Vietnam; in March 2013 it was 12 million. Then in January 2014, Facebook reached 20 million users in the country. Vietnam is adding one million Facebook users per month. Given this rate of growth, Vietnam is at 24 million Facebook users this month and will hit 30 million by October this year. Vietnam is one of Facebook’s fastest growing countries. So Apple’s growth is no anomaly. In terms of the internet and mobile, Vietnam is growing very quickly in every space.