Vietnam and Russia are both considered emerging markets. This means they are not fully developed markets but have some characteristics of them. Emerging markets are closer to developed countries with respect to their economic statistics (GDP growth and inflation rate) compared to undeveloped nations. We’ll dive deeper into Vietnam and Russia and compare these two emerging markets.
First, let’s cover some of Vietnam’s strengths. Firstly, as discussed by Duong Nguyen, Vietnam has a large population compared to its physical size. 95.5 million as of 2017, almost 70% (66.7 million) are of working age. Which shows that there is a huge labor force in Vietnam waiting to be unleashed. Vietnam is also expected to climb the ranks in terms of its GDP as well. They are projected to grow more than 5% per year until the year 2050. Also slated to become the 20th largest economy in the world by that time. Currently, Vietnam is ranked 32nd on that list. Lastly, Vietnam is a huge player in the international market. Vietnam’s biggest export market happens to be the United States. But it doesn’t stop there. The United State’s fastest growing export market has been Vietnam for the last two years. All these statistics point to Vietnam becoming an economic powerhouse in the next 10-30 years.
However, these strengths don’t come without a list of weaknesses. Firstly, Vietnam has a fairly high-risk rating compared to other, more developed nations. A risk rating of B means there are both political and economic uncertainties and risks. This is compared to the United States, which has a risk rating of A2, which is very low. Another weakness is that Vietnam is a Communist country. There is only one party ruling the country. Which this increases the risk of the country, especially for companies trying to conduct business in Vietnam. Lastly, Vietnam’s currency (Vietnam Dong) is highly volatile. Business are hesitant to do business in foreign countries when they don’t know from day to day what their profit margin will look like in their home currency. Additional risks and weaknesses include: lack of infrastructure, natural disasters and floods, high tariffs on agricultural and food products, and high amounts of corruption.
Now, Vietnam and Russia are fairly comparable to each other when it comes to their markets. Russia’s percentage of working population is 68.2% compared to 69.8% in Vietnam. Russia has more people in its working population, but one must consider the sheer size of Russia compared to Vietnam. Vietnam is much more densely populated. Vietnam also has an advantage over Russia with GDP consistency and predictions. As shown by this graph, Russia’s GDP over the last five years proves to be volatile. Vietnam’s graph shows a steady increase year over year. Lastly, Russia’s risk assessment is slightly worse than Vietnam’s. Russia has a ranking of B for the country in relation to economic and political uncertainties. They also have a C rating for the overall business climate. Vietnam has a slight edge over Russia with a B ranking in its business climate.
In conclusion, is businesses are considering investing in either Russia or Vietnam, I’d recommend taking a hard look at Vietnam. Their future projections for GDP and working population make it very attractive for potential business activity. Not to mention additional opportunities in industries such as IT, power, education, telecommunications, and health care. Vietnam appears to be the better pick for businesses.
