Vietnam mobile phone sales thrive despite inflation

Led by strong smartphone growth, country's mobile market continues to expand as consumers seem undeterred by rising cost of living, reveals new report.
Written by Ellyne Phneah, Contributor

Smartphone and feature phone sales in Vietnam increased by 27 percent in unit shipment and 21 percent in value in the first seven months of 2011, despite cutbacks in general consumer spending, reveals a new report released Monday by GfK Asia.

The research firm noted that accelerating inflation had affected Vietnam's economy since the beginning of the year and increased the country's cost of living. However, the mobile phone sector continued to thrive under these economic conditions, it added.

GfK saw declined sales across various market segments it tracked including IT, home appliances and consumer electronics, but the mobile phone sector remained unaffected and instead, enjoyed continued growth, said Van Tran Khoa, general manager of GfK Vietnam.

Even as prices of basic living necessities such as food and fuel increased, Vietnamese consumers continued to splurge on the latest phone technology, the analyst said.

The report noted that the average price of a smartphone was at US$300, five times the price of a feature phone which averaged at US$66. Overall, 1 in 10 mobile phones purchased in 2011 was a smartphone and its share in the overall market grew by 10 percent to 34 percent.

The smartphone category propelled the mobile industry's good performance even though feature phones also enjoyed the positive growth. Smartphone unit sales grew over 73 percent this year over the same period last year, boosting the value of this market segment to nearly US$280 million, up 67 percent from last year's US$168 million.

Although the feature phone segment continued to expand, the growth momentum slowed to 24 percent in unit shipment and 6 percent in value compared to 34 percent and 7 percent, respectively, the year before.

Van said: "As with the other developing markets in the region, the smartphone industry in Vietnam presents high growth potential for manufacturers for at least the upcoming few years. We can expect intensifying competition in the marketplace as increasing number of manufacturers foray into the scene to cash in on this growing sector."

He added that, ultimately, consumers will stand to gain from the growing choice of smartphone brands and models made available to the Vietnamese market at lower pricepoints.

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