Vietnam's middle class projected to double by 2020

The so-called "middle and affluent class" earning US$714 a month or more in Vietnam will double to 33 million people, about a third of the population, between 2014 and 2020, the Nikkei Asian Review reported, citing Boston Consulting Group.

Meanwhile market research firm Nielsen has estimated that the number of middle class Vietnamese will reach 44 million by 2020 and 95 million by 2030.

Global brands ranging from retailers and electronics makers to fast-food restaurants and property developers are flocking to Vietnam to seize the market potentials.

Young model poses for group of amateur photographers. Photo by VnExpress/Xavier Bourgois

Samsung commanded 35.6% of the market for mobile phones in Vietnam last year, with Apple in second place with 24%, according to research company IDC. With rising incomes, Vietnamese consumers are switching from feature phones to smartphones, particularly of top brands.

Vietnam is currently named in the top five in Asia and ranked 11th globally in terms of growth in the retail market.

Its retail industry has expanded 8%-10% annually in recent years, said Sebastian Eckardt, a senior economist of the World Bank.

Young population, higher disposable incomes, rapid urbanization and better living standards are said to be the main drivers of the sector's growth. Nielsen has found that almost 60% of 93 million Vietnamese are under 35 years old who are becoming better educated with more money to spend

Foreign retail giants, including Thailand’s Central Group, Japan's Aeon and Takashimaya, and the Republic of Korea's Lotte, have already arrived.

“It would be no surprise to see Vietnam to continue to attract huge foreign investment inflow into its retail market in the future,” said Eckardt.

Aparna Bharadwaj from Boston Consulting Group told the Nikkei Asian Review that foreign companies should focus on selling cosmetics, telecommunications gears, high-end dairy goods, hygiene items and "experiences" such as travel.