Attractive market with stable, fast growth
The shares of Digiworld, a big high-technology production distribution chain, officially turned up on the bourse in early August. The company has set an ambitious plan of obtaining revenue of $1 billion by 2020, though it had only $230 million in 2014.
Analysts commented that Digiworld has every reason to be optimistic about its business. GfK last year reported that the Vietnamese smartphone market grew by 57 percent with 11.6 million phones sold. Not only smartphones, but laptops and tablets have also become more popular with Vietnamese.
The country, with a population of 90 million and average annual income per capita exceeding the $2,000 threshold, is attractive to high-technology groups such as Apple, Samsung and Microsoft.
The Financial Times noted that just 10 years ago, very few Vietnamese owned mobile phones and personal computers, but nowadays, smartphones and tablets are as common in Hanoi and HCM City as they are in London and New York.
Business Monitor International’s report shows that the Vietnamese electronics market would see a gross growth rate of 6.2 percent in 2014-2018 to reach $6.39 billion in value. The products considered in the report include mobile phones, computers, audio devices and electronic games.
There are many players in the field, but the market is controlled by FPT Trading belonging to FPT, the largest technology group in Vietnam, PET belonging to PetroVietnam and Digiworld.
In 2014, FPT Trading reported distribution revenue of VND17 trillion, while had PET VND11 trillion and Digiworld VND5 trillion.
The strategies of big firms
FPT Trading, taking full advantage of the FPT brand, chooses high-end products to distribute. It has been the distributor of Apple’s iPhones since April 2013.
iPhones made up 23 percent of its total mobile phone distribution turnover in 2014, while iPads made up 14 percent of its turnover from technology-product distribution.
However, analysts noted that FPT Trading tends to distribute low-cost products, as well as Nokia and Huawei.
PET distributes Samsung and Blackberry’s products (since 2012), and Lenovo and Philips (since 2014).
PET not only distributes technology products, but also distributes petrochemical products as a subsidiary of PetroVietnam. This allows it to have an advantage over the rivals and disperse risk.
The main power of Digiworld, a younger company, does not lie in phone distribution (it accounts for only 8 percent of market share), but in information technology products market segment (computer, laptop) where it holds 24 percent of market share.
However, as computer market growth has slowed, Digiworld is considering promoting low-cost smartphones.
NCDT