The COVID-19outbreak has severely impacted the social-economic sector of the whole world,including Vietnam, and disrupted some supply chains of input materials as wellas the consumption
Modern consumption trends
- A weakened macroeconomic scenario, unstable employment and falling household incomes will force consumers to re-evaluate their values and priorities as well as embrace new consumption habits Consumer confidence declines along with inadequate finances, leading to savings to spend more carefully, setting aside a plan that arises for the unforeseen It can be seen that the pandemic has promoted planned, targeted procurement and moved to sustainable, reasonable consumption.
Reduce the frequency of going out shopping
- Surveys by market research companies show that consumer demand and behavior have changed much over the past year, since the Covid-19 outbreak The vast majority of consumers aim for a healthy lifestyle, prioritizing the choice of essential items (especially food), products that help health care, increase resistance, Data of the General Statistics Office also showed that in the first months of the year, the demand for food items increased by 4.51% compared to the previous year, food items increased by 12.28% compared to the previous year, of which pork prices increased by 57.23%, and the price of medicines and medical equipment increased by 1.35%.Shopping behavior also changes, outside shopping activities such as supermarkets, stores or traditional markets are minimized by consumers; instead it's a tendency to strengthen and focus more on what can be done at home.
Consumption trends and shopping preferences
Amidst the COVID-19 pandemic, consumers have prioritized their health and well-being, leading to increased demand for medical products and non-perishable food items The fear of infection has altered consumer behavior, prompting a shift towards purchasing longer-lasting food items that can be stored for extended periods As a result, consumers are now less likely to make frequent trips to the market to purchase fresh produce, instead opting for a more cautious approach to grocery shopping.
- According to the Food and Agriculture Organization of the United Nations Food and Agriculture Organization's World Price Index (FAO), the price index of food items in May 2021 was 4.8% higher than in April 2021 and 39.7% higher than the same period last year as the price of oil, sugar and grain along with the price of meat and milk continued to rise.
- In terms of convenience, measures such as distancing, limiting contact and so forth, making mobile, technology, and delivery orders where consumers can conveniently pick up goods help consumers buy the products they need at a time when they want to be more convenient than ever Activities such as work, shopping, entertainment, etc are still done without moving to multiple locations.
- In addition, to meet the shopping and consumption needs of people in Ho Chi Minh City, most commercial centers, supermarket systems, chain stores, etc have cooperated with domestic and foreign brands and brands to implement promotions and discounts of up to 50% These units also carry out a rich form of consumer stimulus such as buying 1 get 1 free; give coupons for the next invoice, default face value vouchers, combo sales that include the main product with gifts.
Although shopping directly in shopping centers, the discount is equivalent to or decreases more than online shopping, so many consumers in Ho Chi Minh City are quite excited Many promotional and discounted items are products of some well-known brands and brands that should create favorable conditions for consumers to shop in the context of income affected by COVID-19.
Changing business models to adapt to new consumer trends
COVID-19 has affected almost every aspect of consumers' personal lives, forcing businesses to also be innovative and responsive to adapt to new consumer trends and ways of consumption
Accordingly, changing business models, from production to distribution, transportation and consumption, is the best solution to help businesses develop in the new situation.
+ The COVID-19 pandemic is a nightmare for many economic sectors around the world, but it seems to be the "fortune" of e-commerce sites, as online shopping is the only way to get what consumers need in times of social distancing.
As a result of the COVID-19 pandemic, traditional purchasing patterns have been upended Social distancing measures have pushed consumers, including those who were previously hesitant or loyal to physical stores, to embrace online shopping This shift has been particularly evident among older adults, who are now more likely to make purchases online.
+ With the emergence of a series of domestic and cross-border e- commerce platform websites and applications such as Shopee, Lazada,Tiki, customers can easily shop for everything from groceries,electronics, to educational services and hotel bookings with just one click or simple operations on smart mobile devices and it is important that at a very affordable price.
+ Due to the highly infectious COVID-19 virus and the convenience of online delivery and ordering, contactless goods trading services increased sharply According to a survey by U.S market research firm Forrester, in 2020, 58% of consumers chose to spend online, up 12% from pre-pandemic levels.
+ According to U.S financial advisory firm LBMC, many industries are negatively affected by COVID-19, with some industries such as technology and professional services less affected by meeting modern consumer demand.
+ It is clear that the e-commerce industry is increasingly bringing more and more motivation to the economic recovery that has been severely affected by the COVID-19 pandemic According to a report released by Lazada, the leading e-commerce platform in Southeast Asia, 52% of sellers in Indonesia, the Philippines, Thailand, Vietnam, Malaysia and Singapore achieved high revenue growth in the first half of 2021, while 70% expect that revenue growth will continue to be increased by 10% in the third quarter of 2021.
In fact, e-commerce platforms have contributed to opening up rich and diverse shopping opportunities for people living in small cities, neighborhoods and rural areas, connect young consumers and live in urban areas to many international brands One feature that makes cross-border purchases on a digital platform easier is the presence of e-wallets, which can be used to purchase any product on the platform.
- Conscious business towards smart consumption:
+ According to Worldbank, sustainability is a factor that modern consumers are interested in when shopping 71% of consumers worldwide think climate change is just as important as COVID-19. + Consumers are more sympathetic to responsible brands, which can make the world cleaner Therefore, enterprises will also have to change their production and business models, from standard and sustainable sourcing to building a non-polluting production process, negatively impacting the environment.
The COVID-19 pandemic has been having a major impact on all aspects of life, negatively affecting the economy and the health and safety of many people around the world However, this epidemic also brings some positive effects, including consumer awareness of sustainable consumption.
According to a recent survey conducted by the IBM Institute for Business Value (IBV), 14,000 people from nine countries found the results to be of great interest: 90% of those surveyed said covid-19 changed their view of environmental and sustainable consumption issues.
Consumers are increasingly prioritizing sustainability in their purchasing decisions, with 55% citing it as a crucial factor when selecting brands This growing awareness has led to a significant shift in behavior, with 62% of consumers willing to modify their buying habits to reduce environmental harm.
Despite a lack of official data, sustainable consumption is gaining traction in Vietnam post-pandemic The 2021 Vietnam Consumer Rights Day Event highlighted the importance of sustainability in business practices and consumer behavior This event reinforced the shift towards sustainable values, promoting responsible consumption and encouraging businesses to align their policies with environmental and social considerations.
- Application of technical technology in distribution:
+ COVID-19 disrupts supply chains, reduces customer service and causes delivery delays.
+ Therefore, even logistics providers need to change their business models Advanced technologies such as artificial intelligence (AI),blockchain and automation are being integrated into the digital supply network, integrating data and information from different sources to drive the distribution of manufactured goods along the value chain.
+ Artificial Intelligence (AI) technology plays an important role in optimizing modern supply chains For example, for warehousing goods, artificial intelligence and location can help retailers maintain a competitive advantage over their product distribution and supply chain. Multifaceted big data from specific geographic locations combined with online interactions can show purchasing patterns based on certain times, events, and conditions in detailed customer segments.
Leveraging AI, retailers can optimize inventory by predicting the most profitable products to stock in warehouses based on proximity to specific regions Blockchain technology, by distributing verification processes, provides transparency and accountability throughout supply chains Over time, blockchain ledgers uncover vulnerabilities and inform ongoing operational improvements Adapting business models to align with evolving consumer demands remains crucial for sustained success in the contemporary global landscape.
Conclusion
- The actual record shows that, although Vietnamese consumers have reduced the size of their carts in terms of the number of goods in each grocery shopping, the value of shopping carts has increased significantly.
At the same time, people are willing to spend more per unit of goods or cart value per consumer purchase in daily activities.
- This trend, quite in line with the status of many families, prioritize the planned monthly spending on processed and fresh food, canned food and other items that have increased in the past.
- In particular, with the impact of COVID-19, consumer behavior has changed greatly, which means increasing monthly spending on health care products such as hand sanitizer and masks.
Due to social distancing measures, households have reduced their planned monthly travel expenses as they curtail non-essential outings Additionally, spending on education services has diminished during the pandemic as these services are not deemed essential at this time Businesses should take note of these shifts in consumer behavior and adjust their marketing strategies accordingly.
- Although Covid-19 brings many disadvantages and difficulties for businesses, the reality is that this is also an opportunity for businesses to develop in a more sustainable way, towards more community values To do that, businesses, manufacturers and distributors can refer to the following recommendations:
+ Use green, environmentally friendly materials in the distribution channel. + Allow consumers to be proactive in not using plastic products when buying from a distance.
+ Create a mechanism for consumers to continue to make purchases sustainably through a "refill" mechanism that allows consumers to bring used bottles and jars to store products.
- Sustainable consumption may be a relatively new concept in Vietnam. However, this concept is not difficult to implement Although the covid-19 pandemic brings many difficulties, this is also an opportunity for consumers to "sustain" daily consumption to contribute to the safety of themselves, society and for later generations, such as:
+ Use multi-compartment cloth bags and containers to go to the market, go to the supermarket, to limit the use of plastic bags.
+ Use eco-friendly straws instead of plastic straws such as bamboo straws, grass, metal, paper
+ Bring personal water bottles to buy drinks to minimize plastic cups.
To promote sustainable consumption, it's crucial to prioritize local products that reduce environmental impact during transportation By utilizing reusable containers for purchases and declining single-use plastic cutlery, individuals can actively engage with eco-conscious businesses Additionally, patronizing establishments that prioritize sustainable packaging, such as using paper bags and banana leaves, supports the adoption of environmentally responsible practices throughout the supply chain.
VIETNAM’S IMPORT AND EXPORT IN THE CONTEXT OF COVID-19 PANDEMIC
Set the problem
- In recent years, Vietnam's import and export of goods has changed drastically, becoming an important driver for economic growth
- Import and export activities help increase foreign currency reserves, improve the balance of payments, increase revenues for the State budget, stimulate technological innovation, access to new forms of business, create more jobs,create competition between domestic and foreign goods, improving people's living standard, contributing to shortening Vietnam's economic gap with developed countries in the world It is expected that in the coming time, import and export activities will continue to flourish
- The fact that free trade agreements (FTAs) are gradually being implemented more comprehensively and effectively will facilitate Vietnamese goods to enter potential markets with preferential tariffs
- In addition, the price of exported goods is on the rise, especially vietnam's strong commodities, which is an important motivation to increase the value of Vietnam's exports
- However, import and export activities are also being affected by many new factors such as the COVID-19 pandemic, trade protectionism trends, global supply chain fractures This fact sets the requirement that Vietnam needs more solutions to overcome difficulties and challenges and take advantage of new opportunities.
Import and export situation of Vietnam before and after the COVID-19 pandemic
- According to the General Department of Customs, the total import and export turnover of goods in 2015 reached 327.76 billion USD, an increase of 10% compared to 2014; of which, goods exports reached 162.11 billion USD, up7.9% over the same period in 2014 and imports of goods were 165.65 billionUSD, up 12% over the same period in 2014.
- The country's merchandise trade balance had a deficit of 3.54 billion USD (equivalent to about 2.2% of the country's merchandise export turnover) and vice versa compared with the surplus trend of 2.37 billion USD in 2014 In 2016, import- export turnover of the whole country had an impressive growth when reaching
- In which, exports reached more than
176.63 billion USD, up 9% (equivalent to nearly 14.52 billion USD) compared to 2015; imports reached more than 174.11 billion USD, an increase of 5.2% (equivalent to 8.46 billion USD) compared to 2015 In particular, 2016 was also the year Vietnam achieved a high export surplus rate, at 2.52 billion USD
- In 2017, the total import-export value continued to increase, reaching USD 425.12 billion, up 21% (equivalent to about USD 73.74 billion) compared to 2016 In which, the total export value reached USD 214.02 billion , an increase of 21.2%
(equivalent to an increase of 37.44 billion USD); total import value reached 211.1 billion USD, up 21% (equivalent to 36.3 billion USD) compared to 2016.
- In 2018, total import and export turnover reached 480.17 billion USD, up 12.2% (equivalent to an increase of 52.05 billion USD) compared to 2017 Of which, exports reached 243.48 billion USD, up 13.2% and imports reached 236.69 billion USD, up 11.1%
- Overall, Vietnam's trade balance in 2018 ran a surplus of $6.8 billion, 3.2 times higher than the surplus in 2017 In 2019, the total import and export turnover of goods of the country reached 500 billion USD for the first time (reaching 517.26 billion USD, up 7.6%, corresponding to an increase of 36.69 billion USD) compared to 2018
- Of which, the value of exported goods reached 264.19 billion USD, up 8.4% and imports reached 253.07 billion USD, up 6.8% This is an impressive growth as Vietnam makes good use of opportunities in international economic integration to expand imports and exports, contributing resources to the state budget and the economy as well as the business community to respond to the COVID-19 pandemic in the following years.
- In general, in the period of 2015-2019, import and export activities nationwide always achieved high growth each year In this period, the export structure has ensured the objectives set out in the Import and Export Strategy for the period 2011-2020, oriented to 2030
- In particular, the group of industrial goods accounts for over 80%; next, the group of agricultural and fishery products accounted for over 10% and the group of fuel and mineral goods accounted for just over 1% of the total export turnover The process of international economic integration is also effectively exploited, linking export growth with effective control of import activities, helping the trade balance shift from super import to super export
- As a result, from 2016 to now, the trade balance has always reached a surplus with super exports increasing over the years from $1.77 billion in 2016 to $2.1 billion in 2017, $6.8 billion in 2018, $10.9 billion in 2019 and $19.95 billion in 2020. Thereby, contributing to improving the balance of payments, stabilizing the macro-economy, improving foreign exchange reserves
II.2.2 Import and export of Vietnam since the pandemic appeared
- 2020 has a special mark on global trade, with the outbreak and complex development of the COVID-19 pandemic Blockades and border closures to prevent an outbreak of COVID-19 have brought global trade to a standstill, disrupted supply chains, and led to a wave of bankruptcies around the globe
- For Vietnam, with the implementation of the 'dual goal' of ensuring socio- economic development and drastically preventing and combating the COVID-19 epidemic, the economic growth rate in 2020 reached 2.91% This is the lowest increase in the period 2011-2020, however, given the overall impact of the COVID19 pandemic, this result is relatively impressive compared to countries in the region and the world (GDP growth is negative or non-growth).
- In 2020, Vietnam achieved a new record in the scale of import and export turnover The total import-export value of the whole country reached USD 545.36 billion, up 5.4% compared to 2019 In which, the value of exported goods reached USD 282.65 billion, up 7.0% (corresponding to an increase in value) 18.39 billion USD) and imports reached 262.70 billion USD, up 3.7% (equivalent to 9.31 billion USD)
- In 2020, Vietnam has 31 export items of over 1 billion USD, of which 9 are exported over 5 billion USD and 6 are exported over 10 billion USD Vietnam has had a trade surplus mainly in developed countries' markets, which have strict quality requirements for imported goods such as the United States (trade surplus of nearly 62.7 billion USD), the European Union (trade surplus nearly 20.3 billion USD)
- The country's trade balance of goods at the end of 2020 reached a surplus of 19.95 billion USD, this is the highest level in 5 consecutive trade surpluses since 2016.
In 2021, the world economy and Vietnam The South is still facing difficulties because the COVID-19 pandemic continues to break out
- However, according to data from the General Department of Customs, by the end of September 15, 2021, the total import-export value of Vietnam reached nearly 454.58 billion USD In which, the total export value reached nearly 225.2 billion USD, up 19.8% (equivalent to 37.15 billion USD) over the same period in 2020; the total import value of the whole country reached 229.38 billion USD, up 32.2% (equivalent to 55.92 billion USD) over the same period in 2020.
Some proposed solutions
- On the basis of identifying the challenges of import and export activities after the COVID-19 pandemic, the group proposes some of the following solutions:
+ Continue to organize the exploitation and take advantage of opportunities from FTAs to find solutions for market development and remove barriers to enter new markets; Continue to closely monitor the development of the COVID-19 pandemic in the world and in the country to take timely response measures to support enterprises; Making recommendations to agencies and enterprises participating in import and export, it is necessary to be aware of the developments in the world market to be able to exploit all opportunities, continue to maintain export strengths in the current context
+ Priority shall be given to the implementation of export promotion activities and export markets to recover soon after the great enemy; focus on closely monitoring the situation of each market to review and identify the types of goods that countries are in need of imports to exploit and promote exports
+ Strengthening activities to support enterprises in the market, reform administrative procedures related to import and export, remove input difficulties, support information and promote the organization of online trade promotion activities, in order to promote the export of goods.
+ Improving capacity in early warning, analysis and warning of hot export growth, leading to the risk of being investigated for applying trade defense measures and proactively taking appropriate measures to protect Vietnam's exports
+ Promote the development of auxiliary industries to support the domestic manufacturing industry, thereby improving export capacity
+ Having credit support policies and tax support policies for exporting enterprises. For import and export enterprises
+ Further diversifying trade partners, minimizing the impact of a specific trading partner
Enhancing competitiveness, governance, and financial stability is crucial to navigating the challenges and risks of international trade To succeed, industries must undergo significant restructuring based on market research and demand forecasting This involves elevating quality standards, modernizing trade promotion strategies to align with evolving circumstances.
Conclusion
Vietnam has harnessed international economic integration to expand export markets, achieving notable success in imports and exports However, the country faces ongoing challenges, including the persistent pandemic, which hinders the sector's growth.
- Import and export activities have faced many barriers such as the transport of goods is difficult, many supply chains are disrupted, market demand has not recovered uniformly The new context requires management agencies and enterprises participating in import and export to actively and flexibly implement solutions to cope with ironing, make good use of opportunities to promote import and export activities, and contribute effectively to the country's economic development.
IMPACT OF COVID 19 PANDEMIC ON PROSPECTS FOREIGN
Definition of foreign investment in Vietnam
- Foreign investment represents international capital movements made to create, develop or maintain an overseas subsidiary and / or exercise control (or significant influence) over the management of a foreign company.
- The Law on Foreign Investment in Vietnam identifies three possible forms of investment:
+ Business cooperation through a Business cooperation contract
+ Constitution of a 100% foreign capital company.
Investors can explore Vietnam's market through the establishment of a subsidiary or representative office, providing a preliminary presence without legal status These entities facilitate immersion and market analysis, enabling investors to make informed decisions regarding future foreign investments in Vietnam.
Status Quo of foreign investment in Vietnam in COVID 19 pandemic
III.2.1 Prospect of Vietnam’s FDI in 2021
- Vietnam may attract about 30 billion USD in foreign direct investment (FDI) in
2021, posting a year-on-year rise of 2 percent, economists forecast, pointing to positive signs in FDI attraction in the first eight months of 2021 despite the complexities of COVID-19.
- According to the Ministry of Planning and Investment, foreign investors channeled 19.12 billion USD into the country in January-August, equaling nearly
98 percent of the same period last year, with several multi-billion USD projects.
- Speaking with Cong Thuong (Industry and Trade) newspaper, Phan Huu Thang, former head of the Vietnam Trade Promotion Agency (Vietrade) at the Ministry of Industry and Trade, voiced his belief that FDI inflow into Vietnam may still reach about 30 billion USD this year.
- To address current difficulties facing foreign investors when they want to enter the country to study investment possibilities or to implement investment projects, the Government and relevant ministries and agencies are urged to consider reducing quarantine period for those who have been fully vaccinated and hold a negative COVID-19 testing certificate.
- In the first eight months of the year, Vietnam attracted investors from 92 countries and territories Singapore was the leading investor with registered capital exceeding 6.2 billion USD, or 32.5 percent of the total FDI inflow.
- A parting from keeping strong investment of foreign business on Vietnam, Covid-
19 also more or less exert a negative impact on Vietnam’s economy In an article written in August 8, 2021, foreign direct investment (FDI) inflows have shown special “sensitive” to investors’ ability to travel amid complicated and widespread
Covid-19 developments This requires Vietnam to make appropriate adjustments in attracting FDI in the coming time
- Forecasts on the prospect of attracting FDI recently released by the Organization for Economic Cooperation and Development (OECD) have "applied" to the FDI inflows into Vietnam in the first 7 months of 2021, which is the decline in FDI inflows reduce both registered capital and disbursement.
- According to published data, as of July 20, 2021, the total registered FDI capital reached 16.7 billion USD, down 11.1% over the same period in 2020 This is the strongest decrease since the Covid-19 epidemic COVID -19 broke out again in late April 2021 and early May 2021 in Vinh Phuc, Bac Ninh and Bac Giang provinces Previously, registered FDI in 6 months decreased by 2.6% (US$15.27 billion), while 5 months still increased by 0.8% over the same period (US$14 billion).
- Although disbursed FDI in 7 months increased by 3.8% over the same period in
2020 (10.5 billion USD), this increase gradually decreased compared to previous months (6 months increased by 6.8%, 5 months increased by 6.8%) 6.7%, 4 months increased by 6.8% One of the reasons that dragged down the 7-month uptrend was because the disbursement in July 2021 decreased by 14.3% compared to July 2020 and decreased by 39.7% compared to the previous month.
- In conclusion, in the context that the Covid-19 epidemic is still complicated and will not end soon, in order to find opportunities in terms of the forecasted decrease in capital, it is necessary to urgently grasp the situation to adjust the appropriate solution to attract FDI Accordingly, the measures mentioned are to reorganize investment promotion in the direction of proactively approaching, learning about and supporting partners and large corporations with high technology, leading or operating chains value; proactively plan to create clean premises, connection infrastructure, human resources to meet the requirements of investors.
- In addition, focus on policy dialogue, on-the-spot investment promotion, grasp the situation, take timely and appropriate measures, remove difficulties for foreign- invested enterprises operating in Vietnamese territory.
III.2.2 Foreign investors keep trust in Vietnam’s recovery
- According to the article written in September 27, 2021, investment in Vietnam is viewed as one of potential sources for foreign investors Following projects which have been invested recently.
- Tetra Pak has been expanded investment in Vietnam
+ Tetra Pak of Sweden has confirmed that it will pump EUR5 million (US $5.86 million) to expand its existing EUR120-million plant in Binh Duong southern province.
(information for this investment: https://youtu.be/PLfVKrnJuCk )
The investment demonstrates the company’s trust in Vietnam’s strong economic recovery after the pandemic, according to Managing Director and President at Tetra Pak Vietnam Eliseo Barcas.
- LEGO group to build factory in Binh Duong
+ The LEGO group signed an MOU on December 8,2021 with the VietnamSingapore Industrial Park Joint Venture Company Limited (VSIP) to build a new factory in Vietnam, witnessed by Permanent Deputy Prime Minister Pham BinhMinh and Danish Ambassador to Vietnam, H.E Kim Hojlund Christensen.
+ It is expected to be deployed at the end of 2022 and begin operations in 2024, and will be the LEGO Group’s sixth manufacturing site and second in Asia The factory is being built to support additional long-term growth in the region so the company can continue to deliver playing experiences to many more children in the years to come.
+ “We are very grateful for the support of the Vietnamese Government in helping us achieve our ambition to build our first carbon-neutral factory” said Mr.Carsten Rasmussen, Chief Operations Officer of the LEGO Group The government’s plans to invest in expanding renewable energy production infrastructure and promote cooperation with high-quality foreign investment companies were the motivation for LEGO to decide to build a factory in Vietnam, he added.
(information for this investment: https://youtu.be/XZh-Pc_-G0k )