BMI Vietnam Consumer Electronics Report Q2 2014

Q2 2014
www.businessmonitor.com
VIETNAM
CONSUMER ELECTRONICS REPORT
INCLUDES 5-YEAR FORECASTS TO 2018
ISSN 2040-9494
Published by:Business Monitor International
Vietnam Consumer Electronics

Report Q2 2014
INCLUDES 5-YEAR FORECASTS TO 2018
Part of BMIs Industry Report & Forecasts Series

Published by: Business Monitor International
Copy deadline: March 2014
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Vietnam Consumer Electronics Report Q2 2014
CONTENTS
BMI Industry View ............................................................................................................... 7
SWOT .................................................................................................................................... 9
Political ................................................................................................................................................. 11
Economic ............................................................................................................................................... 12
Business Environment .............................................................................................................................. 13
Industry Forecast .............................................................................................................. 14

Table: Consumer Electronics Overview, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Macroeconomic Forecasts ............................................................................................... 17

Table: Vietnam - Economic Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Industry Risk Reward Ratings .......................................................................................... 21

Asia Risk/Reward Ratings ......................................................................................................................... 21
Table: Asia-Pacific Consumer Electronics Risk/Reward Ratings, Q214 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Market Overview ............................................................................................................... 24

Computers ............................................................................................................................................ 24
Table: Computers Demand, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
AV Devices ........................................................................................................................................... 31
Table: AV Demand, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Mobile Handsets .................................................................................................................................... 36

Table: Mobile Handsets Demand, 2011-2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Competitive Landscape .................................................................................................... 43

International Companies ......................................................................................................................... 43
Table: Samsung Electronics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Table: Intel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Table: LG Electronics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Local Companies ................................................................................................................................... 46

Table: Q-Mobile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Demographic Forecast ..................................................................................................... 47

Table: Vietnam's Population By Age Group, 1990-2020 ('000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Table: Vietnam's Population By Age Group, 1990-2020 (% of total) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Table: Vietnam's Key Population Ratios, 1990-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Table: Vietnam's Rural And Urban Population, 1990-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Methodology ...................................................................................................................... 51
Industry Forecast Methodology ................................................................................................................
Sector-Specific Methodology ....................................................................................................................
Sources ................................................................................................................................................
Risk/Reward Rating Methodology .............................................................................................................
51
52
52
53
Page 4

Sector-Specific Methodology .................................................................................................................... 54
Table: Consumer Electronics Risk/Reward Ratings Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Table: Weighting Of Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
Page 5
BMI Industry View

BMI View: Vietnam's consumer electronics market has a bright outlook as rising incomes and falling
average device prices in key device categories catalyse strong growth in spending. We estimate spending
grew by 22.4% in US dollar terms in 2013 to US$4.5bn - and we have a positive outlook for the medium
term. The country's vast, underpenetrated rural market offers the greatest growth potential, while Hanoi
and Ho Chi Minh City accounted for most sales in 2013. Growth areas include smartphones, particularly
low-cost devices from Chinese and local brands, and LED TV sets. Vietnam is also rapidly becoming a key
destination in global consumer electronics supply chains, with large investments announced by Samsung
Electronics, Nokia and LG Electronics in 2013.
Headline Expenditure Projections
Computer Hardware Sales: US$1.5bn in 2013 to US$1.7bn in 2014, +13.8% in US dollar terms. The
low penetration of PCs means vendors can still tap the first-time buyer market, with low-cost tablets from
Chinese OEMs proving especially popular with consumers.
AV Sales: US$1.0bn in 2013 to US$1.2bn in 2014, +10.6% in US dollar terms. Rising incomes and state
subsidies for digital migration are driving strong growth in the TV market, with LED and smart TVs
proving especially popular.
Handset Sales: US$2.0bn in 2013 to US$2.1bn in 2014, +6.2% in US dollar terms. After booming
smartphone volumes saw value growth of 32% in 2013, we expect a gradual deceleration in value growth
due to diminished first-time buyer opportunities.
Key Trends And Developments
The smartphone market was the most dynamic segment of the consumer electronics market in Vietnam in
2013 as rapidly declining prices catalysed a boom in smartphone volume sales. The key area of growth was
the low-end of the market, with VND1.5-3.5mn smartphones accounting for around 60% of smartphone
sales, but only 20% of the value of the market. The growth in smartphone sales has been fuelled by the
popularity of Android-based models, with Samsung Electronics and LG faring well, along with local
brands such as Q-Mobile. Although Nokia's Lumia 520 is a notable success from the Windows ecosystem,
Android is expected to remain the dominant ecosystem. However, all vendors will have to contend with a
slowdown in smartphone growth from 2014 due to diminished first-time buyer opportunities and margin
maintenance prohibiting another round of heavy discounting by vendors.
One trend that could allow further price competition in Vietnam's handset market is its rapid development
as a location for production. Vendors are looking to take advantage of the low cost of labour, proximity to
Page 7
large markets, government tax incentives and transport links. In 2013 the trend accelerated, with LG
Electronics announcing plans to invest US$1.5bn over 10 years to build a production facility for consumer
goods, primarily for the domestic market. Samsung Electronics announced even larger plans for a US$2bn
facility to absorb its existing facility constructed in 2009, which will see about 40% of Samsung's global
smartphones produced in Vietnam by 2015. Nokia also opened a US$320mn featurephone production
facility in October 2013. BMI expects further investments from vendors looking to escape rising wages in
China and take advantage of the cost advantages offered by Vietnam.
Page 8
SWOT
SWOT Analysis
Strengths
With relatively low penetration in key device categories, the domestic market is still in
a rapid growth phase, with trade liberalisation and growing affordability driving
projected double-digit growth.
Rising incomes and GDP growth are increasing affordability, with a huge and
relatively untapped market in the rural and suburban areas.
Rapid development of local production facilities, with major investments from leading
global vendors such as Samsung Electronics and LG Electronics.
Weaknesses
Low incomes and digital inequalities mean high price sensitivity and low demand in
rural areas.
Large 'grey' market for illegal products.
Low broadband penetration continues to be a drag on demand for consumer

electronics devices.
Opportunities
Smartphones, particularly low-cost Android devices are popular with consumers.
Low-cost tablet sales are also booming.
Further possible cuts in import tariffs would drive increases in demand for imported
electronic products.
Operator investments in data networks are boosting demand for connectivity devices,
particularly into underpenetrated rural and lower income areas.
Set-top boxes, with the Vietnamese government offering support to lower-income

families to purchase decoders as part of its digitalisation programme.
LED TV sets, with triple-digit growth in 2013 as Vietnamese consumers upgrade to

take advantage of the digital viewing experience. Low-cost tablets are expected to
provide a new market opportunity.
Page 9
SWOT Analysis - Continued
Threats
Concerns about unemployment and a potential economic slowdown in 2013 may

constrain household spending.
Lack of political will for economic and social reform may delay market development.
Relentless pressure for lower prices in key product categories like TV sets, tablets
and smartphones putting pressure on margins as Chinese OEMs achieve higher
standards.
Page 10
Political
SWOT Analysis
Strengths
The Communist Party of Vietnam remains committed to market-oriented reforms and

we do not expect major shifts in policy direction over the next five years. The oneparty system is generally conducive to short-term political stability.
Relations with the US have witnessed a marked improvement, and Washington sees
Hanoi as a potential geopolitical ally in South East Asia.
Weaknesses
Corruption among government officials poses a major threat to the legitimacy of the
ruling Communist Party.
There is increasing (albeit still limited) public dissatisfaction with the leadership's tight
control over political dissent.
Opportunities
The government recognises the threat corruption poses to its legitimacy, and has
acted to clamp down on graft among party officials.
Vietnam has allowed legislators to become more vocal in criticising government

policies. This is opening up opportunities for more checks and balances within the
one-party system.
Threats
Macroeconomic instabilities continue to weigh on public acceptance of the one-party

system, and street demonstrations to protest economic conditions could develop into
a full-on challenge of undemocractic rule.
Although strong domestic control will ensure little change to Vietnam's political scene
in the next few years, over the longer term, the one-party-state will probably be
unsustainable.
Relations with China have deteriorated over recent years due to Beijing's more
assertive stance over disputed islands in the South China Sea and domestic criticism
of a large Chinese investment into a bauxite mining project in the central highlands,
which could potentially cause wide-scale environmental damage.
Page 11
Economic
SWOT Analysis
Strengths
Vietnam has been one of the fastest-growing economies in Asia in recent years, with
GDP growth averaging 7.1% annually between 2000 and 2012.
The economic boom has lifted many Vietnamese out of poverty, with the official
poverty rate in the country falling from 58% in 1993 to 20.7% in 2012.
Weaknesses
Vietnam still suffers from substantial trade and fiscal deficits, leaving the economy
vulnerable to global economic uncertainties. The fiscal deficit is dominated by
substantial spending on social subsidies that could be difficult to withdraw.
The heavily-managed and weak currency reduces incentives to improve quality of

exports, and also keeps import costs high, contributing to inflationary pressures.
Opportunities
WTO membership and the upcoming ASEAN AEC in 2015 should give Vietnam
greater access to both foreign markets and capital, while making Vietnamese
enterprises stronger through increased competition.
The government will in spite of the current macroeconomic woes, continue to move
forward with market reforms, including privatisation of state-owned enterprises, and
liberalising the banking sector.
Urbanisation will continue to be a long-term growth driver. The UN forecasts the

urban population rising from 29% of the population to more than 50% by the early
2040s.
Threats
Inflation and deficit concerns have caused some investors to re-assess their hitherto
upbeat view of Vietnam. If the government focuses too much on stimulating growth
and fails to root out inflationary pressure, it risks prolonging macroeconomic
instability, which could lead to a potential crisis.
Prolonged macroeconomic instability could prompt the authorities to put reforms on

hold as they struggle to stabilise the economy.
Page 12
Business Environment
SWOT Analysis
Strengths
Vietnam has a large, skilled and low-cost workforce, which has made the country
attractive to foreign investors.
Vietnam's location - its proximity to China and South East Asia, and its good sea links
- makes it a good base for foreign companies to export to the rest of Asia, and
beyond.
Weaknesses
Vietnam's infrastructure is still weak. Roads, railways and ports are inadequate to
cope with the country's economic growth and links with the outside world.
Vietnam remains one of the world's most corrupt countries. According to

Transparency International's 2012 Corruption Perceptions Index, Vietnam ranks 123
out of 176 countries.
Opportunities
Vietnam is increasingly attracting investment from key Asian economies, such as

Japan, South Korea and Taiwan. This offers the possibility of the transfer of high-tech
skills and know-how.
Vietnam is pressing ahead with the privatisation of state-owned enterprises and the
liberalisation of the banking sector. This should offer foreign investors new entry
points.
Threats
Ongoing trade disputes with the US, and the general threat of American
protectionism, which will remain a concern.
Labour unrest remains a lingering threat. A failure by the authorities to boost skills
levels could leave Vietnam a second-rate economy for an indefinite period.
Page 13
Industry Forecast
Table: Consumer Electronics Overview, 2011-2018
2011
2012 2013e 2014f 2015f 2016f 2017f 2018f
Consumer Electronics Devices Total Demand (US$mn)
3,261
3,689
4,516
4,955
5,463
5,960
6,485
6,930
Computers (US$mn)
1,143
1,294
1,487
1,692
1,893
2,113
2,363
2,631
738
889
1,046
1,157
1,286
1,415
1,543
1,672
1,380
1,506
1,983
2,106
2,284
2,432
2,579
2,627
Video, Audio & Gaming (US$mn)

Communications (US$mn)
e/f = BMI estimate/forecast. Source: BMI
BMI forecast Vietnam's consumer electronics

devices market, defined as the addressable
computing devices, mobile handsets and video,
Consumer Electronics Demand

2011-2018
audio and gaming products, will grow by 9.7% in

US dollar terms to US$4.955bn in 2014. This is a
marked slowdown from 2013 when booming
smartphone volumes pushed market value growth to
22.4%.
We expect growth will decelerate over the medium

term as penetration in key device categories
increases, but nonetheless we forecast robust growth
as incomes in Vietnam continue to rise. We expect
the market will increase at a CAGR of 6.9% during
2014-2018 to US$6.9bn in 2018, driven by the
growing affordability of key products.
The Vietnamese market is divided between a rural market with low penetration of devices, but sales are
limited by lack of purchasing power and a more developed urban market in Hanoi and Ho Chi Minh City
that still accounts for most sales. Although big-ticket items are still out of reach of the majority of urban
consumers, the price of products such as tablets and smartphones are declining sharply in price due to
competition from Chinese OEMs producing Android powered devices, which are even gaining some
traction in rural areas.
Page 14
Vietnamese retail demand for consumer electronics products has grown despite pressure on consumers'
incomes from rising inflation. In 2012 inflation was brought under control and is expected to remain fairly
stable between 6-7% for the duration of our forecast period. Meanwhile, rising disposable incomes are
rapidly expanding the addressable market for devices such as smartphones, where a surge in demand has
been fuelled by lower prices, and flat-screen TV sets, which now comprise above two-thirds of TV set sales.
The China-ASEAN Free Trade Agreement also offers opportunities and challenges to vendors, especially
considering the growing presence of low-cost Chinese vendors in Vietnam. In January 2009, tariffs on
imported electronics products and components imported from other ASEAN countries were reduced to
between 0-5%. The new tariff regime led to a readjustment of multinational strategies for the Vietnamese
market, but many vendors overestimated demand, which led to oversupply.
There is, however, downside for the outlook in Vietnam as we note that the risk of a sustained collapse in
exports and further bankruptcies among SMEs could potentially lead to widespread job losses in exportdriven sectors. The most likely trigger for such retrenchment is a hard landing in China, but this not our core
scenario for 2014. Uncertainties over the outlook for employment could in turn prompt households to cut
back on spending on discretionary lifestyle products such as TV sets and smartphones.
Mobile handsets accounted for the largest part of

consumer electronics spending in 2013, at 43.9% of
total spending. Handset unit sales remained
Demand By CE Market Segment

2011-2018
relatively stable, but smartphone sales grew robustly,

boosted by the expanded availability of low-cost
Android smartphones. The boom in smartphone
volumes raised the average selling price of the
handset market as a whole - driving increases in
market value. The handset market is expected to
continue growing for the duration of our forecast
period to 2018. However, we expect growth to
decelerate as a consequence of rising smartphone
penetration. As a result we expect computer
hardware spending to overtake handset spending in
2018.
Page 15
Government Electronics Industry Plan
The government has outlined a strategy to raise the technology level of Vietnam's manufacturing. The plan
focuses on six hi-tech industries, with the first being electronics-information technology. The government
has set a target of increasing investment in scientific research for these industries to 3.5-5.0% of revenues
by 2015 and 8-10% by 2020. The current level is 0.2-0.3% of revenues. Investment in technological
upgrades will be raised from the current 8-10% to 10-15% by 2015 and 20% by 2020.
The government will also prioritise technology skills and training. The aim is to enable the high-tech sector
to meet domestic demand while at the same time integrating Vietnam into the global electronics industry
chain. The government has identified a number of barriers to high-tech development. These include slow
progress in building high-tech industrial zones.
Another government policy that may boost demand for computers is a two-year plan to enhance IT use by
government agencies. The plan, outlined by Vietnam Prime Minister Nguyen Tan Dung, requires basic
public services such as information exchange, sending and receiving documents as well as making
payments online to be provided to citizens and enterprises. By 2010, about 50% of directives from central,
municipal and province governments are to be published online, according to the target.
The Ministry of Information and Communications is the policymaking and regulatory body in the fields of
press, publishing, post, telecommunications and internet, transmission, radio frequency, information
technology, electronics, broadcasting and national information infrastructure.
In the areas of electronics and IT, the ministry's specific functions include issuing policies and regulations
on IT and electronics products, granting licences and organising government projects.
Page 16
Macroeconomic Forecasts
BMI View: Vietnam's latest real GDP reading, which showed that the economy expanded by 6.0% year-onyear (y-o-y) in Q413, has reaffirmed our conviction that the Vietnamese economy will begin 2014 on a
strong note. Not only are we witnessing more evidence of a sustained pick-up in production activity and
employment in the manufacturing sector, but we also expect foreign direct investment (FDI) inflows to
accelerate as the economic recovery gathers pace over the coming quarters. We forecast real GDP growth
to come in at 5.9% in 2014, versus Bloomberg consensus of 5.5%.
In line with our view that the Vietnamese economy would accelerate forcefully into the final months of the
year (see 'Economy Picking Up Pace', October 4 2013), latest data released by the General Statistics Office
(GSO) showed that the economy expanded by 6.0% year-on-year (y-o-y) in Q413. This translates into fullyear growth of 5.4% for 2013, just slightly above our forecast of 5.3%. The latest GDP reading, combined
with the strong set of economic data we have seen in recent weeks (accelerating foreign direct investment
inflows, remittances, and merchandise trade exports), have reaffirmed our conviction that the Vietnamese
economy will begin 2014 on a strong note.
Page 17
Looking At A Strong Start For 2014

Vietnam - Real GDP Growth, % (LHS) & Contribution By GFCF & Private Consumption, pp (RHS)
Source: BMI, General Statistics Office. (e = estimates, f = BMI forecasts)
Signs Of Improvement
Despite the lack of progress with regards to banking sector reforms and efforts to ease lending conditions
(credit growth is estimated to have expanded by around 9% in 2013, well under the State Bank of Vietnam's
initial target of 12%), the economy appears to be holding up well. Not only are we witnessing more
evidence of a sustained pick-up in production activity and employment in the manufacturing sector (see
'Strong PMI Reading Reinforces Outlook On Growth', November 5 2013), but we also expect foreign direct
investment (FDI) inflows into the export sector to accelerate as the economic recovery gathers pace over the
coming quarters.
Private Sector Investment To Drive Recovery
According to figures published by GSO, FDI-related exports made up an estimated 67% of the country's
total exports for the first 11 months of the year. Thus, although increased FDI inflows could potentially
result in a temporary deterioration in the country's trade and current account dynamics due to a burst of
Page 18
capital goods imports in the near term, we believe that this is a long-term positive for the economy.
Furthermore, we view FDI inflows as a crucial source of economic growth over the coming quarters given
that the Vietnamese government is struggling to unlock domestic lending. We forecast real gross fixed
capital formation (GFCF) growth to come in at around 10% in 2014, contributing around 2.7 percentage
points (pp) to our real GDP growth forecast of 5.9%.
Expenditure Breakdown
Private Consumption: We expect private consumption to grow at a relatively resilient pace of 6.5% in
2014. However, we note that the risk of further bankruptcies among SMEs could potentially lead to
widespread job losses, especially in export-driven sectors. Uncertainties over the outlook for employment
could, in turn, prompt households to cut back on spending.
Gross Fixed Capital Formation: We foresee a pickup in private sector investment growth in 2014, partly
led by increased foreign direct investment inflows. We believe lending rates will gradually ease over the
coming months as the effect of rate cuts in 2013 by the SBV begins to kick in. We are also seeing evidence
that credit conditions are improving. Accordingly, we expect gross fixed capital formation growth to
accelerate substantially from 4.1% in 2013 to 10.0% in 2014.
Public Spending: We expect total public spending to remain relatively resilient in 2014, expanding at a
respectable pace of 6.5%. However, there is limited room for the government to increase spending further
owing to concerns over the need to finance a potential bailout of ailing state-owned commercial banks.
Net Exports: Net exports remain the biggest downside risk to our outlook for the Vietnamese economy,
although we expect external demand to pick up in 2014. Vietnam's trade account has fallen back into
deficits in recent months, but we see the case for a substantial pickup in external demand on the back of a
rebound in regional growth over the coming quarters. Accordingly, we still expect exports to expand at a
moderate pace of 5.6% in 2014.
Page 19
Table: Vietnam - Economic Activity
2011
Nominal GDP,
VNDbn 3
Nominal GDP,
US$bn 3
2012
2013e
2014f
2015f
2016f
2017f
2018f
2,779,880.2 3,245,419.2 3,584,261.0 4,012,847.7 4,494,844.6 5,033,219.9 5,616,365.8 6,269,265.3

134.6
155.6
170.6
195.1
221.1
249
280.8
316.6
6.2
5.2
5.4
5.9
6.4
6.6
6.4
6.4
GDP per capita,

US$ 3
1,497
1,713
1,860
2,108
2,368
2,643
2,957
3,309
Population, mn 4
89.9
90.8
91.7e
92.5
93.4
94.2
95
95.7
Industrial
production, %yo-y, ave 1,5
10.9
7.0
5.9
7.7
8.4
8.6
8.6
8.5
Unemployment,
% of labour
force, eop 2,6
3.6
3.2
3.7e
3.5
3.5
3.6
3.5
3.5
Real GDP
growth, %y-o-y 3
Notes: e BMI estimates. f BMI forecasts. 1 at 1994 prices; 2 Urban Area Only. Sources: 3 Asian Development Bank,
General Statistics Office; 4 World Bank/UN/BMI; 5 General Statistics Office; 6 General Statistics Office/BMI.
Page 20
Industry Risk Reward Ratings

Asia Risk/Reward Ratings
BMI View: Markets with high consumer spending ability stand out in BMI's Consumer Electronics Risk/
Reward Ratings, as the ability to upgrade to a new generation release is key to maintaining a market's
buoyancy. The next most important markets are those with large populations that can offer huge sales
opportunities, although replacement rates are much slower. All markets have benefited from the ever
greater connectivity that new devices demand and the greater awareness of new developments in
technology that drive consumer purchases.
As we have extended our forecasts out to 2018, the impact of the five-year average growth has moved
certain markets around in our forecasts. The top two markets moved closer together, with Singapore within
touching distance of the top spot, while Thailand moved closer to the middle of the table, leapfrogging
Indonesia and India, owing to a more positive outlook for the market. Increasing levels of connectivity
across the region are supporting the growing demand for connected electronics devices.
Australia holds on to the top spot in our ratings with its large population allowing it to stay ahead of
Singapore, although the gap between the two countries is just 0.4 points. As new products are launched
across the consumer electronics market, such as high definition (HD) TVs and smartphones, there is a core
group of consumers keen to have the latest device, with Singaporeans among the highest spenders in the
region. High spending power allows consumers in both markets to upgrade their products regularly, even
before the end of a product's useful life.
Device manufacturers are keen to gain access to these countries as well as the other top markets, Hong
Kong and Taiwan, for their wealthy populations, technological literacy, strong supporting infrastructure
(such as data networks) and, in the majority of cases, the stability of political and economic
institutions. Hong Kong, for example, is similar to Singapore in size and affluence, but has a slightly larger
consumer electronics market owing to purchases made by visitors from the Chinese mainland. While the
relationship with China boosts market value, Hong Kong continues to score below Singapore due to its
exposure to China's growth, which continues to cool. Taiwan is held back by an ageing population that is
likely to have slower demand for electronics.
China's score and position is unchanged this quarter despite the risks of its slowing economy. Local
manufacturers are helping to maintain the strong growth in consumer electronics demands, encouraging
growth to continue despite the slowdown in consumer spending power. Rapidly growing PC ownership is
Page 21
key to the market's continued strong position in the region. While China benefits from a large population,
economic and political pressures weigh on its potential to improve its position in our table.
Two of the world's largest electronics manufacturers, Samsung Electronics and LG Electronics, are based
in South Korea. Furthermore, the country's telecoms networks are regularly upgraded and are among the
most advanced globally. However, the country's small population holds it behind China. BMI believes
South Korea retains strong potential for moving up our ratings as consumers continue to demonstrate a large
appetite for new products and devices.
Malaysia's position in the middle of the table marks a sharp difference in scores between the top half and
those at the bottom. The country is unlikely to overtake the more developed markets ranked above it, but
positive developments such as government policy promoting the adoption of ICT across many sectors offer
upside potential to Malaysia's scores. Consumer spending ability is weakened by a large proportion of the
population living in rural areas, limiting the market's expansion potential.
Thailand has overtaken Indonesia and India. The country's score rose 3.8 points, higher than any other, and
took advantage of small declines seen in Indonesia and India's scores. Our previous expectation that the
market was looking up for Indonesia has played out well, with 3G licences boosting demand for mobile
devices. We still expect private consumption to support consumer electronics demand, offering further
upside potential.
Indonesia and India both benefit from large populations and continued economic growth. Indonesia's
growth, which we expect to continue, is built on strong fundamentals. In the short term consumers are
highly price sensitive and generally still prefer low- to mid-range consumer electronics products, meaning
vendors still have to adopt flexible pricing strategies and accept lower margins compared to the most
lucrative markets in the region. India has many similar characteristics and its large population should push it
above many of its peers but we believe it will take a longer time to fulfil its potential compared to China.
The Philippines remains in 11th place with potential to improve its position in the medium term through
strong remittance inflows. However, the short-term outlook is weak. Increasing inflation as well as the
impact from slowing Chinese and Japanese economies weighs on the outlook for remittances.
Vietnam and Pakistan retain their places at the bottom of our ratings. Vietnam's scores rose overall as
industry rewards improved on the back of our long term growth forecast seeing increasing opportunities.
Pakistan's position improved slightly, but remains markedly lower than Vietnam and its overall score is less
Page 22
than half the scores at the top of the table, highlighting how far the country has to go to catch up with its
peers.
Table: Asia-Pacific Consumer Electronics Risk/Reward Ratings, Q214
Rewards
Risks
Country
Industry
rewards
Country
rewards
Industry
risks
Country
risks
Consumer electronics
rating
Rank
Previous
Rank
Australia
65.0
75.0
85.0
75.8
71.8
Singapore
60.0
72.5
85.0
89.8
71.4
Hong Kong
56.7
70.0
75.0
66.5
63.9
Taiwan
60.0
42.5
70.0
87.5
61.9
China
78.3
25.0
55.0
74.4
61.8
South Korea
55.0
40.0
70.0
84.4
58.4
Malaysia
58.3
30.0
70.0
76.7
56.1
Thailand
58.3
20.0
55.0
73.7
51.3
10
Indonesia
51.7
25.0
60.0
66.2
48.7
India
56.7
15.0
60.0
57.8
47.1
10
Philippines
40.0
30.0
70.0
69.4
46.4
11
11
Vietnam
53.4
15.0
50.0
63.9
45.5
12
12
Pakistan
31.7
15.0
40.0
46.5
31.3
13
13
Average
55.8
36.5
65.0
71.7
55.0
Scores out of 100, with 100 the best. The Consumer Electronics (CE) Rating is the principal rating. It comprises two subratings, Rewards and Risks, which have a 70% and 30% weighting respectively. In turn, the Rewards rating comprises
Industry Rewards and Country Rewards, which have a 65% and 35% weighting and are based on growth/size of the
consumer electronics industry (Industry) and the broader economic/socio-demographic environment (Country). The Risks
rating comprises Industry Risks and Country Risks, which have a 40% and 60% weighting and are based on a subjective
evaluation of barriers to entry and the regulatory environment (Industry) and the industry's broader country risk exposure
(Country), which is based on BMI's Country Risk Ratings. The ratings structure is aligned across all industries for which
BMI provides Risk/Reward Ratings. Source: BMI
Page 23
Market Overview
BMI forecasts Vietnam's domestic consumer electronics devices market, defined to include computing
devices, mobile handsets, and video audio and gaming products, is forecast to increase by 9.7% in 2014 to a
value of US$5bn. Rising incomes provide the foundations for strong medium-term performance, with a
CAGR of 6.9% forecast for 2014-2018, with total market value forecast to reach US$6.9bn in 2018, the end
of our five-year forecast. The country's south east region contributes significantly to the retail sales of
consumer electronics goods. Ho Chi Minh City's retail market is growing rapidly amid increasing foreign
investment and rising personal income.
Computers
Table: Computers Demand, 2011-2018
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
Domestic Computer Hardware Sales

(US$mn)
1,143
1,294
1,487
1,692
1,893
2,113
2,363
2,631
PC Sales Revenues (US$mn)
1,020
1,166
1,353
1,539
1,727
1,927
2,155
2,400
PC Shipments ('000)
1,980
2,231
2,799
3,369
3,990
4,489
5,045
5,633
650
708
792
883
904
936
970
981
1,208
1,267
1,369
1,498
1,723
1,901
1,959
2,072
122
256
638
988
1,363
1,652
2,116
2,580
- Desktop shipments ('000)

- Notebook shipments ('000)
- Tablets shipments ('000)
BMI forecasts computer hardware sales will increase by 13.8% in 2014 to a value of US$1.69bn. We
expect a deceleration from growth of 14.9% in 2013 as a result of a maturing market and slower growth in
tablet volumes, but affordable notebooks and low-cost tablets from Chinese OEMs will continue to drive
market development. There is however a sizeable grey market, but since 2012 the government has tightened
up on this, introducing new restrictions on the import of used PCs and tablets for 'R&D' purposes.
The continued run of strong economic performance into 2014 will be supportive of increased spending on
hardware. Vendors are able to tap into demand from first-time buyers as incomes rise, while greater
consumer confidence is a boon for the upgrade market.
This will extend the trend from 2013 when market data from IDC show total sales of 500,000 units in Q113,
an increase of 13.1% y-o-y. Meanwhile, local retail chain Vien Thong A stated that demand strengthened
Page 24
further in mid-2013, with back to school purchases booming as purchasing power rises in Vietnam. Other
retailers such as Dienmay.com, Phong Vu, Hoan Long and Nguyen Kim also reported positive growth in
PC sales. The segment has also been boosted by retailers partnering with HSBC, VietinBank, ANZ and
Sacombank to launch interest-free payment plans.
Government spending has remained supportive of the IT hardware market through initiatives in sectors such
as education and healthcare. It is also providing credit programs to raise household PC penetration in rural
areas, which is estimated to still be below 10%, compared with 50% in higher income urban areas. The most
potential being in rural areas where penetration is lower. However, for the time being Hanoi and Ho Chi
Minh City are understood to account for about 85% of notebook sales.
While improved access to credit is a short-term factor boosting sales, a longer-term trend is the spread of
network infrastructure, including fixed and wireless broadband, which is boosting demand for devices for
productivity and content consumption. Telecoms operators such as Viettel are also emerging as significant
distribution channels for notebooks as vendors seek tie-ups.
Page 25
Form Factors
Industry Trends - PC Market

There is considerable potential for vendors to tap
2011-2018
into the first-time buyer market in Vietnam as PC

ownership is still relatively limited. The latest data
from the regulator, the MIC show a base of 5.5mn
installed PCs at the end of 2011, equal to individual
penetration rate of 6.1%. Household PC penetration
data also reflects the low level of PC ownership in
Vietnam, at 16% in 2011, and is estimated to be
around 20% for the country as a whole by 2013.
Given these low penetration rates there is a sizeable

opportunity for vendors in terms of the first-time
buyer market. However, with GDP per capita
estimated at US$1,859 in 2013 and forecast to reach
US$3,309 by 2018, the mass market is geared

towards the value end of the spectrum.
With a large number of first-time buyers, consumer
Vietnam PC Installed Base

2008-2011
choice in terms of form factors is uncertain. While

productivity devices such as desktops and notebooks
will remain popular for education and enterprise
purchasers, the availability of cheap tablets from
China could see large numbers of consumers move
straight to tablets - and have little or no experience
with more traditional form factors. There is,
however, an opportunity for hybrid notebook devices
to capture share by offering the mobility advantages
of tablets while also meeting the broader
functionality required for a sole household device.
In 2013 sales in the retail market continued to

increase in the desktop, notebook and tablet
Source: MIC
segments. Tablet growth is to be expected, coming
Page 26
from a low base and considering the increased availability of low-cost devices from OEMs. However, the
desktop and notebook market is also faring well, with IDC data for 2013 showing 20% y-o-y unit growth in
desktop shipments.
There could be a boost to the desktop market from Windows upgrades in 2014 and 2015 as Microsoft
support for Windows XP is withdrawn from 2014. However, the extent to which consumers replace
desktops rather than shifting to notebooks and tablets is uncertain. Windows XP still accounted for 45.7%
of Vietnamese PC browsing traffic in February 2014, according to data from Statcounter, illustrating the
size of the potential upgrade market.
However, two factors limit the potential boost to desktop sales. First is the competition from mobile
computing, as consumers and enterprises will likely shift towards greater usage of notebooks and tablets
when upgrading. A second factor is the prevalence of pirated software in Vietnam, meaning the loss of
Microsoft support is less of a push factor.
Meanwhile, the latest data from retailers up to August 2013 indicates demand for notebooks remains strong,
with consumers opting for notebooks in the VND8-10mn range, particularly university students requiring
more advanced functionality. However, they also reported that demand for low cost VND3-5mn tablets was
strong.
We believe low PC penetration is the key to continued growth momentum, but migrations to Microsoft's
Windows 8 operating system are also boosting sales. In 2012 retailers claimed many businesses and
consumers were waiting for the October release of the new OS before investing in an upgrade. The final
months of 2012 saw the release of Windows 8 RT tablets from Acer, Asus and other vendors, priced at
about US$600. However these tablets proved unsuccessful in the face of stiff competition from low priced
Chinese tablet imports, predominantly running Google's Android OS. Local press reports have stated that
the low-price tablets are selling well and being pushed by dealers who are able to secure high margins on
the devices and still undercut international vendors.
Page 27
Despite being a global leader in the tablet market,
APAC PC Penetration (%)
Apple - unsurprisingly given its premium price
2011
orientation - has had limited success in Vietnam

where its devices are not affordable for the vast
majority of the population. However, the
proliferation of affordable tablets running Android
and the entry to the market of vendors producing
Windows 8 devices is already seeing tablet sales
increase rapidly. In early 2013, reports of an influx
of own-brand Chinese made tablets indicate growth
at the low value end, but we also expect price
competition between international vendors to boost
sales of mid-range tablets in Vietnam.
A victim of the surge in tablet sales will be the
Source: MIC, World Economic Forum, Global Information
notebook market - especially netbooks. Netbooks
Technology Report 2013
saw a steep decline in popularity in 2011, with a

number of leading vendors, such as former netbook
segment leader Sony, withdrawing models from the market. Netbooks initially suffered under competition
from lower priced notebooks, however tablets are now squeezing them further.
With tablets making gains at the low end of the market the notebook category is becoming a primarily midrange device category in Vietnam as vendors are unable to compete against own brand Chinese tablets on
price. Although notebook sales are being cannibalised by tablets, with PC penetration low in Vietnam, a
large number of first time buyers are still opting for the functionality of notebooks. This has helped sustain
unit growth, in contrast to developed markets where consumers are more likely to opt of tablets as
supplementary devices to their existing desktops and notebooks.
The release of Windows 8/8.1 has also spurred the creation of hybrid devices, which had little impact in
2013 in Vietnam as early examples are priced as premium products. However, price competition will reduce
the cost to consumers and hybrids are set to be a growth area in 2014. Windows has a traditional strength in
productivity use cases and software, with the OS being central to the enterprise market and Microsoft's
Office Suite ubiquitous.
Page 28
There is therefore an opportunity for vendors to leverage this strength over rival iOS and Android devices
by designing tablets with strong productivity functionality, alongside the passive media consumption
features. Early examples have been hybrid devices such as Microsoft's own Surface (RT & Pro), HewlettPackard's Envy, Lenovo Miix 2 (8 inch), Lenovo IdeaPad Yoga 2 Pro, Nokia Lumia 2520, Lenovo
ThinkPad Yoga and Dell Venue 11 Pro.
Although design innovation has some way to go and prices of hybrids will need to decline, the multi-use
device has scope to capture a share of the tablet market by offering a stronger value proposition to
consumers while not compromising on user experience. Such devices, along with ultra-slim notebooks are
already regaining share of sales from tablets in more developed Asia markets in H113, for instance in South
Korea, and we believe the same phenomenon could affect Vietnam as prices decline over the medium term.
Another device category that is evolving is the ultrabook - a category of slim-line, high-spec devices with
long battery life that use Intel processors. Initial uptake after launch in 2012 was slow due to the high price
of devices, meaning limited applicability in a low income market such as Vietnam. In 2012 brands such as
HP, Asus, Acer, Sony, Lenovo and Samsung launched ultrabooks in Vietnam. However, they failed to see
success in terms of unit sales due to high prices. The local press reported that prices of low-end ultrabooks
declined in early 2013, from about VND15mn in 2012 to VND10mn which could see unit sales grow. Local
producer CMC has moved into the ultrabook market in November 2012 with low-end models. Mid-range
ultrabooks are reported to be retailing for VND20-30mn while premium models are priced over VND30mn.
The cheaper models are using lower power Intel i3 chips rather than i5 and i7 chips. Even after these price
cuts, ultrabooks will be significantly more expensive than low-end tablets.
Vendor Developments
The Vietnamese PC market is surprisingly competitive, with most of the major laptop vendor players
having below 10% local market share. Other multinational vendors, including Dell, Toshiba and Samsung,
have enjoyed strong growth in the market. Samsung is considered a threat as it aims to leverage its
distribution network and strong brand recognition from the smartphone and TV market into a 10% share of
the Vietnamese notebook PC market.
In 2013, vendors are hoping upgrades to PC devices based on Microsoft's new Windows 8 operating
system will spur a new cycle of procurements. Q412 saw the release of a number of tablets based on
Windows 8 on the Vietnamese market. Acer released two Windows 8 tablets, the Inconia Tab W700 and
Page 29
W511, while fellow Taiwanese leader Asus introduced its Asus Vivo Tab. The devices were not cheap, with
prices for the products being set at more than US$600.
Volumes have benefited from retailers cutting prices and cooperating with banks to offer credit to boost
sales in mid-2013. For instance Dienmay.com cut prices for notebooks from Dell, Sony and HP, as well as
enabling consumers to test and return or exchange products within 10 days. Nguyen Kim cut prices on HP,
Toshiba, Acer, Asus and Sony notebooks, as well as offering free accessories worth up to VND2mn. The
most important strategy for boosting sales of products from international vendors has been cooperation with
banks such as HSBC, VietinBank, ANZ and Sacombank to make interest-free credit available.
As already noted, Asus has benefited from efforts to strengthen its distribution channel. In 2011 Asus
launched a new partnership with local company FPT Distribution, which has a nationwide network of 400
dealers. FPT, a member of FPT Trading Group, will distribute Asus products, with Asus planning to
introduce the full range of its new products in Vietnam during Q211. FTP also distributes a portfolio of
other leading PC brands, including Dell, Lenovo and Acer. Asus, which first entered the Vietnamese market
only three years ago, is also focusing on service as a competitive differentiator. FTP will provide warranty
services for Asus laptops at its four new service centres in Hanoi, Ho Chi Minh City, Danang and Can Tho.
Asus opened service centres across Vietnam in 2011.
While foreign vendors dominate sales of notebook, local manufacturers have a strong position in the, albeit
declining, desktop market. Vietnam's top five computer companies, as selected by the Ho Chi Minh City
Computer Association in 2011, were FTP, CMS, Robo, Viettronics Tan Binh and the Khai Tri
Technology Trading Co. The total turnover of these top five companies was around VND1tn in 2011 (US
$48.1mn), down 25% from the previous year.
In November 2012 local press reported dealers were pushing cheap tablets from China as a result of the
margins they could generate on the devices. It has been reported that wholesale dealers are able to sell the
tablets for double the market price in China in Vietnam. Examples include the Hipad Mid A13 and Ondan
V971, as well as other own-brand Chinese manufacturers such as Teclast and Ampe - as well as counterfeits
of foreign products.
As in many other markets, telecoms carriers have also emerged as a significant channel option for PC
vendors. Dell has launched a partnership with Viettel, which will distribute Dell PCs. Viettel has a
substantial presence in rural areas, which have big PC market growth potential, as PC penetration is
Page 30
currently low. Dell has also partnered with local retail leader The Gioi Di Dong to sell online and through
the company's 40 retail outlets.
AV Devices
Table: AV Demand, 2011-2018
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
738
889
1,046
1,157
1,286
1,415
1,543
1,672
- Video applications (US$mn)
646
774
934
1,025
1,140
1,256
1,371
1,487
LCD & Plasma TV Sets (US$mn)
363
447
533
607
691
780
881
981
Domestic AV Devices sales

(US$mn)
BMI forecasts Vietnam's AV market expand by

10.6% to US$1.2bn in 2014. The market is expected
AV Demand (US$mn)
to grow at a CAGR of 7.6% 2014-2018 to a value of
2011-2018
US$1.7bn in 2018, driven by growing affordability

due to steep import tariff cuts as well as rising
incomes and more flexible consumer financing.
However, growth will decelerate through the
forecast as a result of rising penetration, particularly
in the flat-screen TV market, and cannibalisation of
digital camera demand as smartphone ownership
proliferates. Video applications account for more
than 70% of the total market and are expected to
grow to US$1.5bn by 2018.
TV Market
The overall TV set market reported strong growth in

2013, with revenues growth coming from flat-panel upgrades. The market was boosted by price erosion due
to increased competition from Chinese OEMs, particularly in the LED segment, as the market expanded
into lesser developed areas and access to financing improved,
Page 31
Although the market has matured, TV sets adapted for local conditions will continue to be of use to
vendors. Some regions of Vietnam still suffer from poor infrastructure conditions, such as frequent power
losses, or weak signal strengths. This has led to some vendors offering TV sets with features such as
rechargeable battery TV sets, and ones with audio-signal boosters.
In 2013, sales of AV devices, such as flat-panel TV sets, continued to grow robustly. The main driver of AV
sales continued to be the transition from CRT to digital sets, while LED sets reported a particularly strong
upwards demand trajectory in 2013, with triple digit sales compared with 2012. By the end of the year, it is
estimated that LED accounted for around two-thirds of Vietnam flat-panel TV sales. Lower prices were a
major driver of higher LED set sales, with the average retail price of the devices down by around one-third
in 2012, compared with 2011. The average price of LED sets as of H113 was a little above US$500, while
the average of LCD sets also continued to decline, although from a lower base.
Prices of flat-panel sets have fallen and there is now a broad range of prices from VND3mn to VND70mn.
Despite the depreciation of the Vietnamese dong 2011-2013, which led to increases in the prices of some
other imported consumer electronics products, electronics retailers were offering have continued to offer
discounts of as much as 50% on their products. The discounts were explained in part by a drive to reduce
stocks after heavy stockpiling of electronics goods by stores ahead of the year-end sales season. In addition,
increased production and assembly in Vietnam had helped to lessen the impact of the devaluation.
Looking ahead, TV upgrades should be spurred by Vietnam's gradual progress towards digital TV
broadcasting, which is supposed be available nationally by 2020. In 2010, the government published a draft
plan for the digital migration, which proposed an incremental launch. The draft plan set out a number of key
targets, including assistance for people to buy digital TV equipment. Funding of about VND1.3trn was been
proposed.
TV set sales will be driven by the government's commitment, under the Vietnam TV digitalisation plan
through to 2020, to assist low-income families to buy set-top boxes to decode digital TV signals. It is
thought that around 10% of Vietnam's 20mn households could be eligible for the scheme. The government
has pledged to help these households to buy decoders, with the prices of these devices starting at around
VND500,000, according to government figures. The budget for the subsidy will come from the public
telecommunications fund.
Meanwhile, starting from 2014, manufacturers will be required to integrate digital terrestrial signal
receiving functions in their TV sets sold in the Vietnamese market. The requirement will apply to TV sets
Page 32
with a display of over 32 inches from April 1 2014, and to sets with a display smaller than 14 inches from
April 1 2015. The regulation will not apply to TVs with a CRT display.
A proliferation of new model releases, resulting in greater consumer choice, has also been a major factor
driving sales of LED and other flat-screen TV models. As of December 2012, more than 250 different LED
models were available on the Vietnamese market, compared with around 150 in 2011. LED sets therefore
appear on course to dominate flat-screen TV set sales in the near future, at the expense of regular LCD and
Plasma sets.
Next Generation TV Sets
With falling prices and growing penetration of flatpanel TV sets, vendors have looked to product
LCD And Flat-Screen TV Set

Demand (US$mn)
2011-2018
innovation such as 3D TV sets and internet-enabled

Smart TV sets to drive growth. The incorporation of
social media into TV broadcasting content has also
got under way in Vietnam. Tweeting about TV
shows has become particularly popular. Smart TV
sets appeal to consumers who increasingly demand
that TV sets should be entertainment devices able to
deliver smart contents and services such as games
and real time information, rather than merely
broadcasting. It is relatively inexpensive for vendors
to add internet capabilities to a digital TV set,
meaning that by the end of BMI's five-year forecast
period to 2018, a majority of new TV models are
likely to be internet-enabled.
The introduction of more HD sets is expected to fuel the preference for larger screen sizes. In 2013 vendors
are introduced Ultra-HD and OLED models, which offer a higher-quality resolution, but which are too
expensive currently for most consumers.
3D TV sets, although still a relatively small segment of the market, are expected to be a growth area as a
wider range of products are imported. There is a niche market for expensive 3D TV sets from tier-one
vendors. Retailers such as Audio Hoang Hai have said that high-end 3D TV sets from vendors such as
Sony had been selling well at their stores, even outside the traditional holiday peak shopping seasons.
Page 33
However, with the cheapest models retailing at about VND20mn, while high-end products are priced in the
VND100mn plus range, 3D TV sets are currently beyond the reach of the mass market.
Games Consoles
The games console market is undeveloped in Vietnam, as a result of the high cost of consoles, with gaming
devices accounting for just 3% of total AV demand.. There is a higher weighting of PC and online gamers,
and casual tablet/smartphone gamers in Vietnam compared to developed markets. Vietnam's rapidly
growing gaming market is being driven by rising internet and PC penetration, and the country's youthful
demographics. According to market research firm Pearl Research, top online games in Vietnam can attract
up to 200,000 gamers.
However, the arrival of next-generation consoles from Microsoft (Xbox One) and Sony (Playstation 4) will
give a small boost to sales, particularly in the context of strong income growth in recent years. BMI
believes there is a greater opportunity for growth through lower cost devices running Android, particularly
in a market accustomed to gaming on low-cost Android smartphones and tablets.
Following the easing of console restrictions in China in 2013/2014 we expect a flurry of new lower cost
consoles to become available. Early examples include the January 2014 announcement by Huawei of the
Tron Android powered games console with a Tegra 4 processor with 2GB and 16GB/32GB of internal
storage, and 1080p and 4K output. The device is to be launched in China in April 2014 for around US$150,
before a wider roll-out, with the low cost of this and similar consoles giving scope for deepening the
console market in Vietnam.
Vendor Developments
Foreign brands dominate the video and audio segments in Vietnam and multinational vendors continue to
regard Vietnam as a growth opportunity, with LG and Sony launching new high-end flat-screen TV sets.
Samsung has a strong position in the Vietnamese LCD TV set market and in H112, the company opened a
second brand shop in Ho Chi Minh City. The South Korean giant has a market share of around one-third,
10% ahead of the nearest competitor. One of Samsung's major Vietnam market distribution partners, Pico,
announced that it planned to increase its share of Vietnam's LCD TV market to 10% in 2011. The company
has particular strength in the capital, Hanoi, where it planned to raise share to 30%, from 27%. Pico also
partners other major consumer electronics vendors such as LG, Sony, Panasonic and Sharp.
Page 34
Meanwhile, Toshiba said that it was aiming for a 20% share of the ASEAN TV sets market in 2012,
including Vietnam. Toshiba is hoping to build this with product innovation and new product releases to
enhance its local market presence. Toshiba forecast Vietnam market revenues growth across all product
lines of 20%. The company has already introduced a broad line-up of LCD TVs in Vietnam, which it
believes is a key regional opportunity.
Fellow Japanese consumer electronics giant Sony has introduced new collections of its Bravia TV sets for
the Vietnamese market, including its LX900 model that uses 3D technology. Meanwhile, domestic brands,
mainly of TV sets, are weak and account for only about 10% of the market. The inability of the domestic
electronics industry to supply components makes it difficult for companies such as Darling, Belco, Favi
and SAM to compete on level terms. Belco's 21-inch flat-screen TVs are priced at more thanVND2mn per
unit, which is 5-25% higher than comparable products from Samsung, LG and TCL. The same goes for
other local vendors, such as East Asia Company and Chau Electronics, whose TVs, DVD players and
other products are also unable to compete with those of leading foreign vendors.
The cut in import tariffs from January 2009 placed additional pressure on local companies. Some local
manufactures may have to diversify into other product areas in order to survive. Tan Binh Electronics
Company plans to move away from production of TV sets to other products such as refrigerators, or to
provide electronics manufacturing services. Nguyen Vinh, a loudspeaker producer, has said it will cease
production altogether and shift to being a distributor of foreign-made products.
In another sign of the times, Sony announced that it would end its TV JV with Tan Binh-based company
Viettronics and switch solely to importing. Sony and other Japanese and South Korean companies started to
assemble in Vietnam in the 1990s when import taxes were about 50%; however, most applied only for 10year licences with the expectation that tariffs would fall after Vietnam's entry into ASEAN. In the event,
these manufactures continued operations in Vietnam for a couple of years longer than expected due to some
uncertainty about the prospects for imports.
Page 35
Mobile Handsets
Table: Mobile Handsets Demand, 2011-2018
2011
2012
2013e
2014f
2015f
2016f
2017f
2018f
127.3
135.7
143.1
147.4
150.4
153.4
156.5
159.6
8.4
16.8
21.9
25.4
27.9
29.3
30.8
32.3
Mobile penetration (%)
141.6
149.4
156.1
159.3
161.0
162.9
164.8
166.8
Domestic Handset Sales (US$mn)
1,380
1,506
1,983
2,106
2,284
2,432
2,579
2,627
o/w Smartphone Sales (US$mn)
803
1,396
1,706
1,984
2,163
2,239
2,372
2,410
Domestic Handset Sales (mn)
30.1
32.2
33.9
34.9
35.6
36.3
37.1
37.8
2.4
9.7
17.0
22.4
25.7
27.1
28.9
30.5
Mobile comms subscribers (mn)

3G subscribers (mn)
o/w Smartphone Sales (mn)
e/f = BMI estimate/forecast. Source: BMI, operators.
Summary
The Vietnamese mobile handset market recorded strong growth in 2013 as smartphone sales soared with the
wider availability of a wide range of low-and-mid range Android devices from local and international
vendors. The handset market will remain the most dynamic segment of the Vietnamese consumer
electronics market in 2014, with smartphone penetration expected to continue rising, but growth of market
value is expected to slow to a CAGR of 4.5% 2014-2018.
BMI expects growth in unit and value terms will slow from 2014 as a result of rising penetration in the
smartphone category and the limits on further price declines to deepen the market to low income consumer
groups. Price competition in the Android ecosystem has already subjected vendors to margin pressures in
2013, and we believe there is reduced scope for further price cuts, meaning the lowest income groups are
expected to continue relying on significantly cheaper 2G handsets and featurephones.
Page 36
Mobile Subscription Trends
The Vietnamese mobile market is well developed with an estimated penetration rate of 156.1% at the end of
2013 - equal to a total of 143.1mn subscriptions. The total includes multiple SIM holders, inactive
subscriptions and dedicated data services, but even after factoring this in the market is mature with deep
penetration of handset ownership among the population.
As a result there is little scope for mobile operators to target first-time subscribers over the medium term to
2018. BMI forecasts a subscription CAGR of 1.6% 2014-2018, with the market expected to reach 159.6mn
by 2018. However, even this meagre growth will provide little opportunity to handset vendors, with the
majority of net additions expected to be for dedicated mobile broadband services.
The wireless data service market is expected to perform much better than overall subscriptions as consumer
adopt 3G and 4G LTE data services for smartphones or dedicated data devices such as tablets, notebooks
and TVs. BMI forecasts wireless data subscriptions will increase at a CAGR of 5% 2014-2018, reaching
32.3mn in 2018. There will be no launch of 4G services in Vietnam until at least 2015, as the Ministry of
Information and Communications (MIC) wants the quality of the 3G network to improve first - presenting
vendors with a possible upgrade push factor in the smartphone market.
The Vietnamese mobile service market is highly competitive with five operators competing aggressively
across the country - and increasingly using handset and smartphones as a means of securing net additions.
The leading operator continues to be state-backed Viettel with over 40% market share at the end of 2013. It
remains ahead of MobiFone and Vinaphone, both owned by the Vietnam Posts and Telecommunications
Group (VNPT), which had shares of around 30% and 20% respectively at the end of 2013. The rest of the
market is shared by Vietnamobile and Gmobile.
Page 37
Handset Market
Mobile Subscription Outlook

2011-2018
The Vietnamese mobile handset market has already

passed through the period of rapid unit growth
200,000
170
associated with expansion of mobile services. BMI

160
forecasts limited handset unit growth over the

medium term, but as mobile penetration grows and
100,000
150
2018f
2017f
2016f
2015f
140
2014f
2012
also increase. We forecast total handset unit CAGR
0
2011
contribution of replacement and upgrade sales will
2013e
first-time buyer opportunities are diminished the
of 1.6% 2014-2018, with unit sales expected to rise

from 33.9mn in 2013 to 37.8mn in 2018.
Mobile Subscribers, '000 (LHS)

3G & 4G subscribers, '000 (LHS)
Mobile Subscribers/100 Inhabitants (RHS)
Although unit growth opportunities are diminished

in Vietnam vendors will still be able to capitalise on
e/f - BMI estimate/forecast. Source: BMI, operators, VNTA.
a buoyant upgrade/replacement market. The number

of Vietnamese owning two or more handsets, and
buying a replacement handset at least once a year, if
not more often, has increased steadily. Meanwhile,
the availability of lower cost smartphones in 2012
Mobile Handsets Demand

2011-2018
and 2013 has been a major push factor for upgrades,

and resulted in higher average selling price (ASP)
for the market as a whole. As a result of this trend
BMI forecasts total handset market value will grow
faster than units, at a CAGR of 4.5% 2014-2018 to
reach US$2.6bn in 2018.
The boom in smartphone volumes will be the

headline development in the Vietnamese handset
market, but the 2G/featurephone market will remain
significant in a country where the market is
dominated by demand for low-cost phones. Sales in
this segment will be served expanding local
Page 38
production of low-cost handsets. Nearly half of all

handsets sold in Vietnam retail for less than one million dong, with about 70% costing less than VND2mn.
Even among imported phones, handsets retailing for less than US$50 were estimated to account for about
72% of total imported handsets in 2011.
Demand for mobile phones is growing fastest in provincial cities beyond the major hubs of Hanoi and Ho
Chi Minh City, and it is outside major rural areas where we expect 2G/featurephones will prove most stable
where low incomes make smartphone ownership prohibitively expensive. The investment in network
expansion and improvement had a positive impact on service quality and coverage in rural areas, where
three-quarters of Vietnamese live. However, Ho-Chi Minh City and Hanoi still comprise more than 40% of
total handsets sold, with Ho-Chi Minh City accounting for more than 25% of sales.
There has been an increasing focus by foreign and local vendors on customisation of handsets for the local
market. One popular feature is water-resistance, with a variety of water-resistant products released by major
brands, or imported across the border from China. High-end water-resistant products retail for as much as
16mn dong, although less expensive products are also available in the 4mn dong or less range. .
Smartphones
Smartphone sales boomed in Vietnam in 2013, with sales up 76% to an estimated 17mn over the course of
the year. Volumes were boosted by the wider availability of lower cost Android devices from both
international and local vendors. BMI forecasts smartphone unit growth will slow in 2014, but remain robust
at 31.8% as the market increases to 22.4mn units. The addressable market is expected to grow at a CAGR of
6.4% 2014-2018 to a total of 30.5mn units in 2018.
The smartphone market will grow significantly slower in value terms as a result of volume growth coming
primarily from lower income groups purchasing low-and-mid range smartphones. BMI estimates
smartphone market value increased 22.2% in 2013 to US$1.7bn, and we forecast a CAGR of 4%
2014-2018, with total sales expected to reach US$2.4bn in 2018.
The growth in smartphone sales has been fuelled by the popularity of Android-based models, which
continued to be popular in 2012, and according to vendor estimates, accounted for above 90% of
smartphone sales in 2013. Strong performances from Samsung Electronics and other vendors helped to
maintain Android's positive trajectory. Although the operating system landscape is becoming increasingly
competitive, we expect Android to retain its top position over our forecast period. Meanwhile rival
Page 39
operating systems, such as Windows Phones, have not performed so well, due to a more restricted choice of
affordable handsets.
In 2013 consumers continued to opt for lower cost smartphones. Smartphones with a value of VND1.5-3mn
have grown in popularity and according to the Nguyen Kim distribution chain accounted for 60% of
smartphone units sold and 20% of the market by value in mid-2013. Lenovo, OPPO, Alcatel, Sharp and
Huawei have all released low-cost models to tap demand in Vietnam, challenging domestic brands such as
Q-Mobile and F-Mobile. Q-Mobile, a newcomer to the mobile market, marketed its first 3G phones in
2010, with most prices in the VND2mn range. The company said it has ambitions to become the leading 3G
phone retailer in Vietnam.
Reports from local retailers indicated that Nokia retained leadership in the Vietnam handset market,
although it is coming under increasing pressure from global rival Samsung, as well as from local vendors
and Chinese OEMs. Nokia was attributed a 35% share, narrowly ahead of Samsung with 33% in Q113, with
their respective mid-range devices Lumia 520 and Galaxy Y the leading devices. An increasing share of
sales are however going to local vendors such as F-Mobile that target the bottom of the market, as well as
Chinese vendors including Lenovo and Huawei that are increasing their presence in the VND3-6mn range.
Retailer data from mid-2013 indicated that local vendors releasing devices at VND1.5-3.5mn price bracket
accounted for 20% of the market by value, but 60% of unit sales.
In contrast to many other global markets, where its share has declined more sharply, Nokia retains a lead of
Vietnam mobile handset sales. However, the company's share has declined from around 50% in Q112 to
35% in Q113. Nokia has defended its share based on the popularity of its Lumia 520, dual-SIM models, and
a range of lower-cost phones such as the 101 and C2-00.
The continued success in Vietnam, and the low-cost advantages offered, has prompted Nokia to increase
investment in Vietnam. In Q413 Nokia opened its first US$320mn production facility in Vietnam to
produce feature phones.
Samsung was the leader in the Vietnam smartphone segment in H113 and ranking second in Q113 in terms
of overall handset sales. Replicating its global success, Samsung took top spot in Vietnam smartphone sales
in the first 2012, ahead of Taiwanese vendor HTC and fellow Korean vendor LG, while Nokia ranked
fourth. According to data from the Saigon Times Daily News, the highest-ranked Vietnamese brand was the
fifth-placed Q-Smart, a subsidiary of Vietnamese firm Q-Mobile.
Page 40
Samsung has also targeted the low-cost dual core segment, with models that retail at price points of less
than seven million dong. However, Apple is expected to fight back in June 2013, with the Vietnamese
release of its iPhone 5S, seen as a direct rival to the Galaxy S4. Meanwhile other top-tier vendors have also
brought their flagship products to Vietnam, including Nokia's Windows-based Lumia smartphones, LG's
Optimus, and HTC's One. Along with HTC's Desire smartphone series, the One has sold well in Vietnam,
and helped to elevate HTC in the local smartphone market rankings in 2012, at the expense of LG and other
vendors.
Data from research firm GfK show Samsung retained its dominance in the Vietnam smartphone market in
2013, with a share of 43.1%, well ahead of Nokia with 19.8%. Apple was in third place. Samsung's market
share fell slightly compared with its position in November 2012, when according to GfK it managed a
48.4% share, while Nokia's share rose slightly over the same period.
The smartphone explosion has given foreign vendors an advantage in this segment. Several local vendors
such as Q-Mobile and FTP have launched Android smartphones, at price-points below VND5mn (US$238)
per unit. However, these prices are not really competitive, given the perceived superiority of foreign brands.
Leading Chinese vendors are continuing their march on the Vietnamese market. Shenzhen-based mobile
communications giant Huawei set a target of selling 400,000 smartphones in the Vietnamese market in
2013. Huawei is already the largest telecoms equipment vendor in Vietnam and handsets only contribute
about 25% of its local revenues. However, in 2013 Huawei expected to expand through opening shops and
maintenance centres in Vietnam to complement official distribution channels. Huawei will also launch its
Acend D2 smartphone which runs on Android 4.1.
The growing acceptance of Vietnamese brands has attracted large number of local vendors into the market.
Q-Mobile was estimated to have taken about a 20% share of local handset sales in 2010, and it ambitiously
announced a target of overtaking Nokia in 2011 to achieve a 50% market share. The company said it would
expand in the 3G and smartphone segments, while also rolling out low-cost phones in partnership with
Indian companies.
In addition to the Q-Mobile brand owned by ABTel, there is also the F-Mobile brand of FPT, VinaPone's
Avio, Viettel's Zik 3G, and FPT's F-Mobile. The Vu Huy Hoang company owns three Vietnamese brands:
Mobell, Cayon and K-Touch., CMC launched its Bluefone cellphone and has ambitions to become another
leading Vietnamese mobile phone brand. Leading electronics vendor Hanel launched handset products, as
did HiPT and CMC while Digiworld launched Mobistar phones.
Page 41
Meanwhile, network operators have also entered the market with their own-brand handsets. These include
S-Fone's Eco handset, VinaPhone's Alo and Viettel's VT handset brand. The main driver of this trend has
been price, with about 70% of phones in the market now priced below VND2mn.
Page 42
Competitive Landscape
International Companies
Table: Samsung Electronics
Address
Yen Phong 2 Industrial Zone, Long Chau Ward, Yen Phong District, Bac Ninh
Province, Vietnam
Company History
Samsung Electronics is part of the South Korea-based industrial conglomerate the

Samsung Group and is one of the leading consumer electronics brands in the world. As
well as selling devices in Vietnam Samsung also has a major production base in the
country spread across several facilities with total staff of 25,000. In 2009 it opened a US
$700mn production facility near Hanoi, with capacity of 100mn units per year and staff of
10,000. The facility is largely for export, with estimated revenues of US$5bn a year
(approximately 6% of Vietnam's total export revenues). In 2012 Samsung began plans for
a significant expansion of production in Vietnam as it shifts away from China to avoid
rising labour costs, with wages in Vietnam as little as a third of those in China. Samsung
will also benefit from no tax for the first four years of operation, and half the full rate for
the following 12 years. The new US$2bn facility will produce 40% of Samsung
Electronics global smartphones by 2015, about 120mn handsets, when full capacity is
reached.
Services And Products
As well as being an important production base Vietnam is also a market in which

Samsung Electronics has seen great success. Samsung operates in the PC market, with
its share of the tablet market only exceeded by Apple. However, despite the favourable
reviews for its notebook products it remains a smaller player trailing the global leaders. It
has been the major beneficiary in the Google Android ecosystem of the smartphone and
tablet boom in recent years, but it has also seen success in the low and middle income
segment with a huge featurephone range. However, in 2013 Samsung's range of tablets
and smartphones have faced increasing competitive pressure from low priced rivals from
China that is putting pressure on units and margins.
Company Developments
In January 2014 Samsung was among the mobile handset vendors to enact price cuts
to mid-range devices in the run up to the New Year's holiday.
In February 2014 Samsung launched a Vietnam traffic map app for smartphones and
tablets giving users real-time traffic information and points of traffic congestion.
In September 2013 Samsung announced its KNOX security platform was available for
consumers (although not for all smartphone models). The KNOX platform is a
hardware-software solution that allows selected applications to run within a container
away from the rest of the device data.
In September 2013 Samsung Electronics announced plans to build a US$1.2bn chip
and components plant in the northern province of Thai Nguyen to supply its tablet and
smartphone production facilities. The plant will be operational by August 2014.
Source: BMI.
Page 43
Table: Intel
Address
Office Hanoi Tung Shing Square 2 Ngo Quyen St., Suite 1106 Hoan Kiem District,
Hanoi Vietnam
Company History
Intel opened its first office in Vietnam in 1997 and the office continues to be responsible
for developing and deploying strategies to support OEMs and developers in the local
market. In 2006 Intel announced it was going to invest US$1bn in an assembly test
facility in Vietnam near Ho Chi Minh City, which began operation in 2010. The plant in
Vietnam is one of seven Intel production facilities globally, as it chose Vietnam due to
technical proficiency, low-cost of labour and proximity to large and important markets.
Intel was the first major foreign investor in Vietnam's technology sector, and the first
investment in the semiconductor industry. Intel also works with Vietnam's Ministry of
Education and Training and Vietnamese universities to improve educational programs,
as well as providing scholarships to students.
Intel provides support to local partners through its head office in Ho Chi Minh city but its
more significant presence in the country is through its production facility. The facility in
Vietnam is the largest assembly test facility in Intel's global network to produce chipsets.
In July 2010 the facility began using the latest chipsets for mobile computing products
such as laptops, tablets and smartphones. It uses the flip chip ball grid array binding
technology for mobile processors. Intel states that its 500,000 square foot facility in
Vietnam is now the model for larger and more efficient assembly facilities it will build
around the world.
In December 2013 the transfer of capital from Intel Asia Holding to another Intel
company for a cost of US$100mn was cited as an example of tax loopholes utilised by
foreign companies. The Ho Chi Minh City People's Committee asked the Ministry of
Finance to implement new mechanisms and policies to manage such share
purchasing and franchising more effectively.
A prime ministerial decision in November 2013 stated that producers of electronics
products will be responsible for treating or recycling electronic waste from January 1
2015. Intel is ahead of many of its partners, with its e-waste already treated by locally
owned Ngoc Tan Kien Company.
Source: BMI.
Page 44
Table: LG Electronics
Address
14th Floor, Hanoi Central Office Blog. 44B Ly Thuong Kiet, Hanoi
Company History
LG Electronics Vietnam was founded in 2007 and the market is a key sales and
production centre for the South Korean group. In 2013 it was reported that LG was
building a new production facility in Vietnam, which will absorb its two existing
facilities in Vietnam, which are capable of producing 750,000 TV sets, 400,000 mobile
handsets, 150,000 air conditioners, 500,000 washing machines and 500,000 vacuum
cleaners annually. LG stated that the new facility in Haiphong City will for the majority
produce products for the local market, however there will also be some exports as LG
takes advantage of the low-cost of skilled labour in Vietnam.
LG is a leading vendor in the smartphone market, with over 12mn shipments globally
in Q313, making it the fourth largest vendor. It also produces featurephones and
handsets, with total Q313 shipments of around 18mn globally. It is through
featurephones and traditional handsets that LG has captured share in the price
sensitive consumer electronics market in Vietnam. LG is also competing in the tablet
market with devices running Google's Android OS, although its share is far below that
achieved in the smartphone market. Meanwhile, LG is estimated to be the second
largest TV vendor globally, with a share of around 15%, behind only Samsung. It also
produces a range of home appliances (refrigerators, dishwashers, washing machines
and microwaves) and solar panels. LG Electronics also has a large production base in
Vietnam and will produce TV sets, telematics devices, smartphones, tablets, washing
machines and refrigerators at its new facility.
In September 2013 LG Electronics announced it would invest US$1.5bn to expand

its production facilities in Vietnam. The production capacity will be located in
Haiphong City, 100km east of Hanoi, and be built over the course of 10 years. The
investment will also see the relocation of LG's two existing plants in Vietnam.
Investment will take place in two phases, with the first reaching US$500mn from
2013-2017, and the second from 2018-2024 comprising US$1bn. The Vietnamese
government has provided tax incentives for the investment.
Source: BMI.
Page 45
Local Companies
Table: Q-Mobile
Address
No.20, Le Duc Tho Street,My Dinh, Tu Liem, Hanoi
Company History
Q-Mobile was founded in 2003 and began operations as a distributor for brands
including Siemens and Siemens-BenQ. It is owned by An Binh Tel. It later became a
distributor for Popod and HTC in 2007. It was in May 2008 that Q-Mobile became a
domestic handset brand, before launching the smartphone brand Q-Smart in August
2012. It has grown to be the largest domestic handset brand, and is looking to expand
into the handset markets of Southeast Asia, Eastern Europe, South America and South
Africa. It has three domestic offices, with over 350,000 employees.
Q-Mobile's core business is a producer and distributor of mobile devices as original

design manufactures. It owns two brands: Q-Mobile for traditional handsets; and QSmart, the smartphone brand. It has strong domestic retail and distribution networks,
with Viettel, Mobile World and Vien Thong A - with its products available from 1,400
outlets. Q-Mobile estimates it has a 14% share of the domestic handset market. QMobile sells a range of featurephones with locally specific features such as dual-SIM, as
well as low-cost smartphones running Google's Android OS.
Q-Mobile announced it was aiming to take a top three position in the Vietnamese
smartphone market in 2013 through its Q-Smart brand. It launched Android
smartphones, at price-points below VND5mn (US$238) per unit in order to achieve
this goal with a low-cost strategy.
In December 2013 Q-Mobile launched the Q-Smart Dream, its latest smartphone that
seeks to hit the middle of the market with a price of VND6.6mn. It also taps into the
demand for phablets (larger screen sizes) with a 5-inch screen.
Source: BMI.
Page 46
Demographic Forecast
Demographic analysis is a key pillar of BMI's macroeconomic and industry forecasting model. Not only is
the total population of a country a key variable in consumer demand, but an understanding of the
demographic profile is key to understanding issues ranging from future population trends to productivity
growth and government spending requirements.
The accompanying charts detail Vietnam's population pyramid for 2013, the change in the structure of the
population between 2013 and 2050 and the total population between 1990 and 2050, as well as life
expectancy. The tables show key datapoints from all of these charts, in addition to important metrics
including the dependency ratio and the urban/rural split.
Population Pyramid
2013 (LHS) And 2013 Versus 2050 (RHS)
Source: World Bank, UN, BMI
Page 47
Population Indicators
Population (mn, LHS) And Life Expectancy (years, RHS), 1990-2050
Source: World Bank, UN, BMI
Table: Vietnam's Population By Age Group, 1990-2020 ('000)
1990
1995
2000
2005
2010
2013e
2015f
2020f
68,910
76,020
80,888
84,948
89,047
91,680
93,387
97,057
0-4 years
9,315
9,323
7,128
6,898
7,229
7,152
7,012
6,575
5-9 years
8,606
9,212
9,253
7,023
6,791
7,052
7,181
6,968
10-14 years
7,857
8,541
9,162
9,117
6,899
6,619
6,757
7,147
15-19 years
7,359
7,788
8,492
9,050
9,011
7,686
6,866
6,726
20-24 years
6,644
7,222
7,673
8,333
8,874
9,148
8,936
6,802
25-29 years
6,006
6,470
7,065
7,471
8,112
8,528
8,772
8,837
30-34 years
5,138
5,890
6,352
6,910
7,286
7,703
8,022
8,680
35-39 years
3,888
5,065
5,803
6,242
6,763
7,011
7,208
7,940
40-44 years
2,463
3,826
4,994
5,719
6,147
6,472
6,685
7,127
45-49 years
2,017
2,409
3,753
4,935
5,648
5,894
6,054
6,589
50-54 years
1,968
1,959
2,346
3,700
4,855
5,306
5,521
5,926
55-59 years
2,046
1,891
1,885
2,237
3,542
4,278
4,677
5,330
60-64 years
1,669
1,934
1,790
1,734
2,068
2,795
3,352
4,444
65-69 years
1,412
1,522
1,771
1,610
1,562
1,673
1,906
3,104
70-74 years
1,028
1,216
1,322
1,530
1,399
1,360
1,379
1,695
Total
Page 48
Vietnam's Population By Age Group, 1990-2020 ('000) - Continued
1990
1995
2000
2005
2010
2013e
2015f
2020f
75-79 years
752
819
984
1,080
1,263
1,219
1,167
1,160
80-84 years
430
536
597
732
815
919
964
900
85-89 years
224
261
336
385
483
517
546
654
90-94 years
71
108
132
177
210
245
268
306
95-99 years
16
25
41
53
74
83
89
115
100+ years
12
17
21
24
30
e/f = BMI estimate/forecast. Source: World Bank, UN, BMI
Table: Vietnam's Population By Age Group, 1990-2020 (% of total)
1990
1995
2000
2005
2010
2013e
2015f
2020f
0-4 years
13.52
12.26
8.81
8.12
8.12
7.80
7.51
6.77
5-9 years
12.49
12.12
11.44
8.27
7.63
7.69
7.69
7.18
10-14 years
11.40
11.23
11.33
10.73
7.75
7.22
7.24
7.36
15-19 years
10.68
10.25
10.50
10.65
10.12
8.38
7.35
6.93
20-24 years
9.64
9.50
9.49
9.81
9.97
9.98
9.57
7.01
25-29 years
8.72
8.51
8.73
8.79
9.11
9.30
9.39
9.11
30-34 years
7.46
7.75
7.85
8.13
8.18
8.40
8.59
8.94
35-39 years
5.64
6.66
7.17
7.35
7.60
7.65
7.72
8.18
40-44 years
3.57
5.03
6.17
6.73
6.90
7.06
7.16
7.34
45-49 years
2.93
3.17
4.64
5.81
6.34
6.43
6.48
6.79
50-54 years
2.86
2.58
2.90
4.36
5.45
5.79
5.91
6.11
55-59 years
2.97
2.49
2.33
2.63
3.98
4.67
5.01
5.49
60-64 years
2.42
2.54
2.21
2.04
2.32
3.05
3.59
4.58
65-69 years
2.05
2.00
2.19
1.89
1.75
1.83
2.04
3.20
70-74 years
1.49
1.60
1.63
1.80
1.57
1.48
1.48
1.75
75-79 years
1.09
1.08
1.22
1.27
1.42
1.33
1.25
1.19
80-84 years
0.62
0.70
0.74
0.86
0.91
1.00
1.03
0.93
85-89 years
0.32
0.34
0.42
0.45
0.54
0.56
0.58
0.67
90-94 years
0.10
0.14
0.16
0.21
0.24
0.27
0.29
0.32
95-99 years
0.02
0.03
0.05
0.06
0.08
0.09
0.10
0.12
Page 49
Vietnam's Population By Age Group, 1990-2020 (% of total) - Continued
100+ years
1990
1995
2000
2005
2010
2013e
2015f
2020f
0.00
0.00
0.01
0.01
0.02
0.02
0.03
0.03
Table: Vietnam's Key Population Ratios, 1990-2020
Dependent ratio, % of total working age

Dependent population, total, '000
1990
1995
2000
2005
2010 2013e
75.8
71.0
61.3
50.8
42.9
41.4
2015f
2020f
41.3
41.9
29,712 31,567 30,734 28,617 26,741 26,860 27,293 28,655
Active population, % of total
56.9
Active population, total, '000
58.5
62.0
66.3
70.0
70.7
70.8
70.5
39,198 44,453 50,154 56,331 62,306 64,820 66,094 68,402
Youth population, % of total working age
65.8
Youth population, total, '000
60.9
50.9
40.9
33.6
32.1
31.7
30.2
25,778 27,076 25,544 23,038 20,918 20,822 20,950 20,690
Pensionable population, % of total working age

Pensionable population, total, '000
10.0
10.1
10.3
9.9
9.3
9.3
9.6
11.6
3,934
4,491
5,190
5,579
5,823
6,037
6,343
7,965
Table: Vietnam's Rural And Urban Population, 1990-2020
1990
1995
2000
2005
2010
2013e
2015f
2020f
Urban population, % of total
20.3
22.2
24.4
27.3
30.4
32.3
33.6
36.9
Rural population, % of total
79.7
77.8
75.6
72.7
69.6
67.7
66.4
63.1
Urban population, total, '000
13,958
16,867
19,716
23,175
27,064
29,632
31,384
35,771
Rural population, total, '000
54,952
59,153
61,172
61,773
61,983
62,048
62,003
61,286
Page 50
Methodology
Industry Forecast Methodology
BMI's industry forecasts are generated using the best-practice techniques of time-series and causal/
econometric modelling. The precise form of model we use varies from industry to industry, in each case
being determined, as per standard practice, by the prevailing features of the industry data being examined.
Common to our analysis of every industry is the use of vector autoregressions, which allow us to forecast a
variable using more than the variable's own history as explanatory information. For example, when
forecasting oil prices, we can include information about oil consumption, supply and capacity.
When forecasting for some of our industry sub-component variables, however, using a variable's own
history is often the most desirable method of analysis. Such single-variable analysis is called univariate
modelling. We use the most common and versatile form of univariate models: the autoregressive moving
average model (ARMA).
In some cases, ARMA techniques are inappropriate because there is insufficient historic data or data quality
is poor. In such cases, we use either traditional decomposition methods or smoothing methods as a basis for
analysis and forecasting.
We mainly use OLS estimators and in order to avoid relying on subjective views and encourage the use of
objective views, we use a 'general-to-specific' method. BMI mainly uses a linear model, but simple nonlinear models, such as the log-linear model, are used when necessary. During periods of 'industry shock', for
example poor weather conditions impeding agricultural output, dummy variables are used to determine the
level of impact.
Effective forecasting depends on appropriately selected regression models. BMI selects the best model
according to various different criteria and tests, including but not exclusive to:
R2 tests explanatory power; adjusted R2 takes degree of freedom into account;
Testing the directional movement and magnitude of coefficients;
Hypothesis testing to ensure coefficients are significant (normally t-test and/or P-value);
All results are assessed to alleviate issues related to auto-correlation and multi-collinearity.
Page 51
BMI uses the selected best model to perform forecasting.
Human intervention plays a necessary and desirable role in all our industry forecasting. Experience,
expertise and knowledge of industry data and trends ensure that analysts spot structural breaks, anomalous
data, turning points and seasonal features where a purely mechanical forecasting process would not.
Sector-Specific Methodology
Consumer Electronics forecasting is complicated due to the fragmented nature of the market, with little
transparency of vendor data and low apparent agreement between many sets of figures in terms of market
definition, base and methodology. Individual variables taken into account in creating each forecast include:
Economic context, and GDP and demographic trends;
Technological developments, and diffusion rates;
Underlying demand trends;
Telecommunications market developments
Projected GDP share of industry;
Maturity of market structure;
Regulatory developments and government policies;
Exogenous events.
Estimates for each industry segment are calculated using government statistics, where available, and our
own macroeconomic and demographic forecasts.
Sources
Sources used in electronics reports include national ministries, statistics agencies, ICT regulatory bodies,
national industry associations, officially released company results and figures and international and national
industry news.
Page 52
Risk/Reward Rating Methodology
BMI's Risk/Reward Ratings (RRR) provide a comparative regional ranking system evaluating the ease of
doing business and the industry-specific opportunities and limitations for potential investors in a given
market.The RRR system divides into two distinct areas:
Rewards: Evaluation of sector's size and growth potential in each state, and also broader industry/state
characteristics that may inhibit its development. This is further broken down into two sub categories:
Industry Rewards (this is an industry-specific category taking into account current industry size and
growth forecasts, the openness of market to new entrants and foreign investors, to provide an overall
score for potential returns for investors)
Country Rewards (this is a country-specific category, and the score factors in favourable political and
economic conditions for the industry)
Risks: Evaluation of industry-specific dangers and those emanating from the state's political/economic
profile that call into question the likelihood of anticipated returns being realised over the assessed time
period. This is further broken down into two sub categories:
Industry Risks (this is an industry-specific category whose score covers potential operational risks to
investors, regulatory issues inhibiting the industry and the relative maturity of a market)
Country Risks (this is a country-specific category in which political and economic instability,
unfavourable legislation and a poor overall business environment are evaluated to provide an overall
score).
We take a weighted average, combining industry and country risks, or industry and country rewards. These
two results in turn provide an overall Risk/Reward Rating, which is used to create our regional ranking
system for the risks and rewards of involvement in a specific industry in a particular country.
For each category and sub-category, each state is scored out of 100 (100 being the best), with the overall
Risk/Reward Rating a weighted average of the total score. Importantly, as most of the countries and
territories evaluated are considered by BMI to be 'emerging markets', our rating is revised on a quarterly
basis. This ensures that the rating draws on the latest information and data across our broad range of
sources, and the expertise of our analysts.
Page 53
BMI's approach in assessing the risk/reward balance for infrastructure industry investors globally is
fourfold:
First, we identify factors (in terms of current industry/country trends and forecast industry/country
growth) that represent opportunities to would-be investors;
Second, we identify country and industry-specific traits that pose or could pose operational risks to
would-be investors;
Third, we attempt, where possible, to identify objective indicators that may serve as proxies for issues/
trends to avoid subjectivity;
Finally, we use BMI's proprietary Country Risk Ratings (CRR) in a nuanced manner to ensure that only the
aspects most relevant to the infrastructure industry are incorporated. Overall, the system offers an industryleading, comparative insight into the opportunities/risks for companies across the globe.
Sector-Specific Methodology
In constructing these ratings, the following indicators have been used. Almost all indicators are objectively
based.
Page 54
Table: Consumer Electronics Risk/Reward Ratings Indicators
Indicator
Rewards
Industry Rewards
Consumer electronics sales, US$mn
Sales per capita, US$
ICT development
Growth, %
Country Rewards
Urban/rural split
Young population
Richest 10%, % of total
GDP per capita, US$
Risks
Industry Risks
Barriers to entry
Government consumer electronics policies
Country Risks
Short-term economic risk
Real PC growth, volatility
Short-term financial risk
Trade bureaucracy
Institutions
Source: BMI
Weighting
Given the number of indicators/datasets used, it would be inappropriate to give all sub-components equal
weight. The following weighting has been adopted:
Page 55
Table: Weighting Of Indicators
Indicator
Weighting (%)
Rewards
70, of which
Industry Rewards
65, of which
Consumer electronics sales, US$mn
50
Sales per capita, US$
16
ICT development
16
Growth, %
16
Country Rewards
35, of which
Urban/rural split
25
Young population
25
Richest 10%, % of total
25
GDP per capita, US$
25
Risks
30, of which
Industry Risks
40, of which
Barriers to entry
10
Government consumer electronics policies
10
Country Risks
60, of which
Short-term economic risk
10
Real PC growth, volatility
10
Short-term financial risk
10
Trade bureaucracy
10
Institutions
10
Source: BMI
Page 56

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Q2 2014

Vietnam Consumer Electronics

Part of BMIs Industry Report & Forecasts Series

Business Monitor International

2014 Business Monitor International

Vietnam Consumer Electronics Report Q2 2014

Industry Forecast .............................................................................................................. 14

Macroeconomic Forecasts ............................................................................................... 17

Industry Risk Reward Ratings .......................................................................................... 21

Market Overview ............................................................................................................... 24

Mobile Handsets .................................................................................................................................... 36

Competitive Landscape .................................................................................................... 43

Local Companies ................................................................................................................................... 46

Demographic Forecast ..................................................................................................... 47

Business Monitor International

Vietnam Consumer Electronics Report Q2 2014

Business Monitor International

Vietnam Consumer Electronics Report Q2 2014

BMI Industry View

Headline Expenditure Projections

Key Trends And Developments

Business Monitor International

Vietnam Consumer Electronics Report Q2 2014

Business Monitor International

Vietnam Consumer Electronics Report Q2 2014

Large 'grey' market for illegal products.

Low broadband penetration continues to be a drag on demand for consumer

Smartphones, particularly low-cost Android devices are popular with consumers.

Low-cost tablet sales are also booming.

Set-top boxes, with the Vietnamese government offering support to lower-income

LED TV sets, with triple-digit growth in 2013 as Vietnamese consumers upgrade to

Business Monitor International

Vietnam Consumer Electronics Report Q2 2014

SWOT Analysis - Continued

Concerns about unemployment and a potential economic slowdown in 2013 may

Business Monitor International

Vietnam Consumer Electronics Report Q2 2014

The Communist Party of Vietnam remains committed to market-oriented reforms and

Vietnam has allowed legislators to become more vocal in criticising government

Macroeconomic instabilities continue to weigh on public acceptance of the one-party

Business Monitor International

Vietnam Consumer Electronics Report Q2 2014

The heavily-managed and weak currency reduces incentives to improve quality of

Urbanisation will continue to be a long-term growth driver. The UN forecasts the

Prolonged macroeconomic instability could prompt the authorities to put reforms on

Business Monitor International

Vietnam Consumer Electronics Report Q2 2014

Vietnam remains one of the world's most corrupt countries. According to

Vietnam is increasingly attracting investment from key Asian economies, such as

Business Monitor International

Vietnam Consumer Electronics Report Q2 2014

2012 2013e 2014f 2015f 2016f 2017f 2018f

Consumer Electronics Devices Total Demand (US$mn)

Video, Audio & Gaming (US$mn)

e/f = BMI estimate/forecast. Source: BMI

BMI forecast Vietnam's consumer electronics

Consumer Electronics Demand

audio and gaming products, will grow by 9.7% in

We expect growth will decelerate over the medium

e/f = BMI estimate/forecast. Source: BMI

Business Monitor International

Vietnam Consumer Electronics Report Q2 2014

Mobile handsets accounted for the largest part of

Demand By CE Market Segment