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2020 Consumer/ Business Confidence Index & The Impact ofCorona Virus
Ralf Matthaes | Managing [email protected]
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About IFM Consumer Confidence Index study
Annually, IFM conducts a consumer confidence study amongst two specific target groups ▪ Vietnamese consumers▪ Vietnam’s local / Foreign Business Community (Senior & C-Suite Business persons) – see below
Typically, this survey is conducted between December 15 – 30th of the previous year and asks questions about their consumers and Business Confidence for the up coming year and their consumption behavior of the previous year with respect to spend.
With the outbreak of the Corona Virus at the start of the year, IFM decided to conduct a very similar survey with many of the same questions and additional questions to ascertain the perceived impact that Corona Virus has had and will have on Overall Business and consumer confidence and Impact on Business in Vietnam. This survey is divided into two parts / Pre Corona and Post Corona sentiment to show the ripple effect it has had on Vietnam.
Target groups Location Year Sample size
VN Consumers Nation-wide 2019 3,567
VN Business Community HCMC / Hanoi 2019 75
VN Consumer nation-wide 2020 – Dec 15-30, 2019 – Pre Corona 2,964
VN Consumer HCMC / Hanoi 2020 – Feb 15-19, 2020 – Post Corona 506
VN Business Community HCMC / Hanoi 2020 – Feb 15-20, 2020 – Post Corona 167
This survey has been prepared for clients and professional associates of Infocus Mekong Research. Whilst every effort has been made to ensure accuracy, this presentation is not
an exhaustive treatment of the area Research not consumer confidence discussed and no responsibility for any loss occasioned to any person acting or refraining from action as a
result of material in this presentation is accepted by of Infocus Mekong Research Company LTD.
Sample size and Profile
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2020 CONSUMER CONFIDENCE INDEXPre-Coronavirus Outbreak
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INTRODUCTION
▪ Every year Infocus Mekong conducts Mobus, Consumer Confidence index, which predicts the year ahead in terms of Consumer Confidence and spend for 2020.
▪ The next few slides are an introduction of 2020 Vietnam Consumer Confidence Index.
METHODOLOGY RESEARCH METHODOLOGY
▪ Quantitative – Self-completion by end consumers▪ Using IFM Mobile Panel via smartphones▪ Sample Size: N=2,964 (sampling error 2.7%)
Age N=2,964
18-24 18%25-30 37%31-40 33%40+ 12%
Regions N=2,964North 46%
Central 9%
South 45%
Monthly Household income N=2,964
Below 10,000,000 VND 8%10,000,001 -15,000,000 VND 12%
15,000,001 - 20,000,000 VND 23%20,000,001 - 25,000,000 VND 11%25,000,001 - 30,000,000 VND 15%30,000,001 - 40,000,000 VND 11%
Above 40,000,000 VND 20%Areas N=2,964Urban 69%
Rural 31%
Gender N=2,964Male 41%
Female 59%
Date: December 15-30, 2019
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THE YEAR OF THE RAT can be defined by:
Strengths
Adaptable, Smart, Cautious, Alert, Positive, Cheerful
Weaknesses
Timid, Suspicious, Conservative, Short-sighted, Lack Of Persistence
Psychological context
One need to understand the following results in the context of Vietnamese
cultural beliefs, to better understand some of the cautiousness of consumer in 2020.
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SUMMARY OF FINDINGS
CONSUMER CONFIDENCE INDEX
01▪ After 9 years of moving up the food chain with high confidence and positive perspectives,
consumers are becoming more spend conscious in 2020, Indicating a slow down in overall SPEND.
03▪ Pollution, Inflation, Vietnam economic slowdown are consumers biggest fears for 2020.▪ Rural areas are more optimistic than urban consumers
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▪ Personal debts remain stable with more focus on automobile → aligned with the booming of private transportation market.
▪ Foreign financial institutions are getting more share from the consumer finance market. ▪ Local loan providers are still preferred by rural customers.▪ Urban consumers shifting loan for investment, while rurals use loans more for personal
purposes.
FEARS & RESPERVATIONS
CONSUMER FINANCE
02 FUTURE SPENDING
▪ Only Transportation and Household utilities are predicted to grow compared to 2019.▪ Transportation appears to be the big Winner for 2020, with a 12% increase vs. 2019 spend ▪ Other categories show spend slow down ▪ Big Losers in terms of Growth appear to be Communications, Entertainment & dining out,
Personal care products & Health care products/services , all minus 10 -16% spend downturn
Overall, both Vietnam’s business community and Consumers, though still positive have a more negative outlook for 2020, that 2019, especially the business community
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42%
85%
70%
40%
11%
22%
18%
4%
8%
2019
2019
2020
Better Same Worse
Vietnam Consumers
Vietnam Business Community
1. Vietnam Economic Out Look for 2020 – Pre Corona Outbreak
Consumer: 2020 N=29642019 N = 3,567Business: 2019 = 75
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7968
5651
8292
8692 91
84
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
IFM CONSUMER CONFIDENCE INDEX
Base: All (N=2964)
2. 2020 Consumer Confidence
2020 will see conservative spend growth across most sectors, as Consumers sentiment is driven by caution in the year of the Rat
Index: The index is based on 11 spend categories in terms of spending more –
same – less than previous year . More + Same subtract less of 11
Categories average = Index
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Sector spend – more – same – less Vs 2019 PLUS/ MINUS
Transportation 12% +++
Household utilities 11% +++
Personal equipment. (Phones/laptops, etc) -1% /
Food & beverages products -4% -
Household care products -5% -
Education -9% - - -
Home appliances -10% - - -
Health care products/services -13% - - -
Personal care products -16% - - -
Entertainment & dining out -19% - - -
Communications -21% - - -
SPENDING PRIORITIES 2019 VS 2020
Base: All (N=2964)
3. 2020 Consumer spend in terms of growth
Only Transportation and Household utilities are predicted to grow over 2019.Education, F&B, health care and personal care remain the top spending categories for 2020. However, they are hesitant to spend more.
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ESTIMATED SPENDING BY CATEGORY IN COMPARE TO PREVIOUS YEAR
63%
70%
61%
64%
59%
69%
52%
64%
49%
62%
47%
40%
30%
24%
34%
32%
35%
28%
41%
32%
40%
32%
44%
47%
8%
6%
5%
4%
6%
3%
7%
3%
12%
6%
8%
13%
EDUCATION
FOOD & BEVERAGES
HEALTH CARE
PERSONAL CARE
ENTERTAINMENT & DINING OUT
TRANSPORTATION
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
45%
46%
43%
45%
41%
50%
41%
34%
35%
54%
40%
37%
47%
49%
44%
36%
50%
53%
56%
38%
16%
17%
9%
6%
15%
14%
8%
13%
9%
7%
PERSONAL EQUIPMENT
HOUSEHOLD CARE
HOME APPLIANCES
HOUSEHOLD UTILITIES
COMMUNICATIONS
2020
2019
2020
2019
2020
2019
2020
2019
2020
2019
Q13 Which of the following best describe your spending in 2020 as compared to 2019? (MA)
Base: All (N=2964)
DETAILED ESTIMATED SPENDING BY CATEGORY TO 2019
Education, F&B, Healthcare and Personal Care will still contribute the highest growth in 2020, but lower in terms of Growth than 2019.
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Communications -21%
Health care products/services -13% Personal care products -16%
Entertainment & dining out -19%
4. Key Sector spend reduction
After years of Boom in Spend, some sectors are becoming saturated and have reach their optimum organic growth.
Healthcare and Personal care and FMCG could see a spike due to Corona Impact as consumer sanitize for safety and stay at home to avoid contagion
Base: All (N=2964)
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BIGGEST FEARS/ RESERVATIONS
61%
17%
12%
53%
14%
8%
2020
2019
Environmental pollution
Reduction in health / education services
Lack of infrastructure development
Even before the Corona Virus reached Vietnam, Consumers are increasingly more worried about their environment and health, much of which is brought on by the evolution of Vietnam's economy, causing longer travel time to work, sickness and ultimately a reduction in productivity
5. Longer travel time, more stress, a decline in health = Lower productivity
Base: All (N=2964)
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Loan taken in P12M
29%41%
52% 54%
2015 2017 2018 2019
9%14%
25%
35%
57%
19%15%
29%
39%
45%
AutomobileEducationReal EstateBusinessPersonal
Purpose of loan
2018 2019
Base: All (N=2964)
6. The slow down of consumer financing = More fiscal responsibility
Personal Debt grew only marginally in 2019, Indicating a slow down in Borrowing, save for Cars loans, which boomed in 2019.Foreign financial institutions are getting more shares from consumers borrowing Power
54%
47%
24%
11%7%
54% 56%
25%
6% 4%
Friends/ Family / Relatives
VN banksVN consumer
finance Co.Foreign Banks
Foreign consumer finance
Co.
Sources of loan in 2019
2019
2018
15
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7. The Growth of the automotive industry
47% 44% 8%
Transportation spend 2020
More Same Less
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6%9%
19%
2019 2018 2016
Purpose of taking out a Loan
Minimum 12% growth in transportation spend and over 100% growth in Loans for Automobiles, indicated a huge potential spike in automotive sales for 2020
Car Loan
Base: All (N=2964)
A Spike in Growth and new customer acquisition, along with a shit in category purchases is a key positive fallout
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▪ .▪ .▪ .
8. The Rise of On-line shopping
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POST CORONA VIRUS IMPACT
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20%
16%
70%
25%
22%
22%
55%
62%
8%
Post CoronaBusiness Commuity
Post CoronaConsumers
Pre CoronaConsumers
Better Same Worse
Vietnam Consumers
What is your view of the overall economy in 2020 as compared to 2019?
Sample
2,964
502
167
Vietnam Economic Out Look for 2020 – Post Corona Outbreak
The Corona Virus has had a huge impact on the overall economic outlook for Vietnam’s Consumers for 2020, Dropping 54 index points. Business sentiment is slightly more up-beat with 55% noting 2020 being worse that 2019, and long 20% seeing 2020 as better than 2019.
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From environmental pollution to the Negative Impact of Corona on My Business and Vietnam / Global economic slow down - Vietnam’s Business community has shifted its concerns too Business specifics, while consumers are totally engrossed in Corona infection and Global / Vietnam downturn.
Biggest fears /reservations for 2020? (Top 2)
14%
35%
16%
17%
18%
Business Position
Business owners GM
CEO MD
Senior Director 7%
10%
18%
23%
31%
32%
57%
8%
6%
19%
46%
21%
20%
46%
Increased Inflation
Lack of institutional transparency
Environmental pollution
Being infected by Corona Infection
Vietnam economic slow down
Global economic down turn
Negative impact of Virus on my business
Fears & Reservations
Consumers
Business
Sample
502
167
1% 8% 9% 40% 44%
Business Impact of Corona Virus
Very Positive Positive No Impact Negative Very Negative
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84% note Business being negatively impacted by Corona with an estimated reduction of 13.5% of revenue in 2020
Base: 167
Corona Virus Business Impact in 2020?
Corona Virus Revenue impact for 2020 Growth
25% 25%
14%19%
6% 4% 5%
20% Plus 16-20% 11-15% 6-10% 1-5% No Impact 1-5% 6-10% 10% Plus
Impact of Corona Virus on Revenue
1% 3%
2020 Estimated Decline in Revenue
-13.48%
22Base: 91
Top 5 concerns for your business
12%
12%
16%
20%
21%
Reduction in Chinese /Foreign tourists
Reduction of investment /consumer confidence
Reduction in Sales
Less traffic / volume ofcustomers
Cancellation / Postponements of
everything…
Specific Business Concerns
▪ Tourism - China accounted for 32% of total tourists and 25% of tourist spend in 2019
▪ Agriculture - China accounts for 20% of exports
▪ Supply chain disruption for manufacturers - May impact trade. China accounts for 30% of imports.
▪ Domestic service sector may be impacted by an abundance of caution
▪ Potential loss - as a 1.0% loss in GDP growth in 1Q20 and 2.0% or more for the full year FY20
Fallout
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Corona Negatives
▪ Decline in GDP / Revenue Growth – 10%
▪ Decline in confidence
▪ Decline in Travel / Tourism / Hospitability
▪ Decline in all gatherings of large numbers
Corona Positives
▪ Increase in Medical / preventative Products / services ▪ Increase all things digital – Banking / On-lie shopping / Delivery▪ Increase in Purchase of Packaged FMCG Foods / Personal Care
▪ Increase in Vietnam reputation – By containing the Spread of CV
▪ Increase in China Plus 1 = More FDI
Fearless Predictions
2020 was already a year of caution, conservativism and a decline in growth across multiple sectors, equaling reduced spend. The Corona Virus outbreak has amplified these “Year of the Rat” conservative traits and will negatively impact Vietnam for at least to the end of Q1. and potentially Q.2, 2020.
With Schools now being suspended to the end of March, this will have substantial impact on all Vietnamese consumers, as they need to support nannies, babysitters and spend more time around the home, reducing productivity and further denting their pockets, beyond the fears of infections.
However, Vietnam’s economy is structurally sound, It’s Government one of the strongest in Asia and Vietnam’s hottest economiccommodity, so though pain will be felt in the first few month of 2020, the Country should rebound nicely, though not meet its GDP growth expectations.
Agile - Accurate - Actionable
Ralf Matthaes | Managing DirectorTel: +84-8 2262-7627Mobile: +84-903-949-531Website: www.ifmresearch.comifmpanel website: www.ifmpanel.com
Email: [email protected] Floor, 21 Phung Khac Khoan Street, D.1HCMC, Vietnam