Monday, July 14, 2008

Have money, will spend: Vietnamese acquire taste for luxury

Women walk past a Gucci store in HCMC’s District 1
Nguyen Thuy Hanh has just spent over US$300 on an Elle skirt. The 20-year-old bank employee wears a Giovanni T-shirt and jeans she bought while on business in Europe last month.

“I like Elle,” says Hanh. “Everyone in my group uses its products.”

In a country where the yearly per capita income was a mere $260 in 1995, spending on luxury brands is becoming increasingly common, especially among the nouveaux riches and youngsters, many of whom have possibly experienced poverty.

The popularity of Louis Vuitton shoes, Prada handbags, Chanel perfume and Omega watches has soared along with the per capita income, which was $715 last year.

“We recently sold three dresses at nearly $7,000 each,” says Nguyen Thu Giang, a young saleswoman at a South Korean fashion shop that sells Besti Belly products, that start at $150.

Luxury shoppers are often children of business families or those with well-paid jobs in foreign companies and powerful state-owned enterprises in banking, finance, information technology, insurance and other fields.

Sixty-eight percent of youngsters say brand is their biggest concern when buying, and 73 percent are ready to pay more for products with high quality, according a survey by advertising and marketing agency Mindshare Vietnam.

“I like famous brands,” says Nguyen Thu Ha, a press assistant at a foreign news agency, who had just bought a $700 Prada handbag in Hanoi.

“They help you show your taste and style.”

None of these products were available in the country just 20 years ago.

Today many youths, born in the late 1980s when the country started economic reform (doi moi), are determined to enjoy life, pampering themselves with jeans, shoes, cosmetics, cell phones and scooters made by global brands like Gucci, Shiseido, Nokia or Piaggio.

It is making Vietnam, a country with a population of 86.5 million, two-thirds of them under 30, an increasingly lucrative market for retailers.

The retail market’s annual growth ranged from 18-23 percent in the 2003-2007 period, according to the Association of Vietnamese Retailers.

Last year retail sales stood at VND740 trillion ($44.9 billion).

Clothing, footwear, cosmetics and perfume sales have seen annual growths of 11-14 percent in volume.

Flip side

But for the large majority of people in the country, luxury brands remain out of reach.

“A pair of Gucci shoes may cost me one year’s salary,” says Thai Van Thang, a waiter at a Hanoi hotel.

At a new watch shop in the capital, several Rado, Omega, and Oris watches priced at over $10,000 are on display.

“Some customers are ready to splurge a large amount of money on something nice,” a salesman named Giang says.

“It will reveal which social class they belong to.”

But this new brashness makes many people uncomfortable.

Older people like Hanh’s mother, who were witness to terrible economic hardship in the past, cannot understand how her daughter can spend hundreds of dollars on a dress.

“We are comfortable in Vietnamese clothes that cost around $10. The money she spent on the dress can be used for better things.”

Hanh does not think so.

“My parents always try to save for the future, for a rainy day. But we have a different concept now. We want to enjoy life.”

With a sleek Nokia cell phone in her hand, the girl gets off her Japanese-made Honda Spacy scooter to enter a clothes shop in Vincom tower, an upscale department store that sells French perfumes and Italian shoes to an emerging urban middle class.

Living in a dynamic economy, many Vietnamese youths do not worry about unemployment – jobs are easy to find.

In fact, job-hopping has become common, especially among qualified youths who want to earn a lot of money.

Construction engineer Nguyen Nhat Thanh sums up the attitude of many urban youths while sipping a frothing cappuccino at one of the city’s Wi-Fi cafes: “People achieve success and money through hard work. And they have the right to enjoy them.”