vietnam smartphone market Archives

Vietnam Smartphone Shipments Down 3% YoY in Q1 2022; Xiaomi Becomes Second-biggest Brand

Vietnam’s smartphone shipments decreased 3% YoY and 12% QoQ in Q1 2022.
Samsung led the market with a 30.8% share, followed by Xiaomi at 20.6%, OPPO at 14.4% and vivo at 11%.
5G smartphone shipments increased 80% to reach 23% of the total shipments in Q1 2022.

Hong Kong, London, Boston, Toronto, New Delhi, Beijing, Taipei, Seoul – May 24, 2022

Vietnam’s smartphone shipments witnessed a 3% YoY decrease in Q1 2022, according to Counterpoint Research’s Monthly Vietnam Channel Share Tracker. Even as inflation and component shortages impacted the quarter, reopening of the markets, and uptick in manufacturing activities helped in the shipments. The quarter had a great start due to the Lunar New Year celebrations, following which it declined in the subsequent months.

Source: Counterpoint’s Monthly Vietnam Channel Share Tracker

Samsung maintained its lead in the market in Q1 2022 with a 30.8% share driven by the popularity of its Galaxy A series and Galaxy S22 series, especially the Galaxy S22 Ultra. Vietnam’s consumers prefer premium smartphones and the Galaxy S22 Ultra and Apple iPhone 13 Pro Max were among the bestsellers in the category. Xiaomi took the second spot with a 20.6% share. Its success was driven by the Redmi 9 series and the recently launched Redmi Note 11 series. OPPO and vivo took the third and fourth spots with 14.4% and 11% shares respectively.

Talking about the factors affecting Vietnam’s smartphone shipments, Research Analyst Akash Jatwala said, “The Lunar New Year holiday season revived the demand at the beginning of the quarter, supported by new launches. In terms of promotions, brands had various offers on new launches. Xiaomi offered free Mi Pad 5 and Xiaomi Air Purifier on Xiaomi 12 series pre-orders, while OPPO offered a Bluetooth speaker and neck massager on Reno7 series pre-orders. Vietnam is a major mobile gaming market and brands are sponsoring events and games to capitalize on it. Samsung has become the official PUBG Mobile sponsor at the SEA Games.”

Online channel grew 20% YoY in Q1 2022 and made up 18% of the total shipments. E-commerce platforms such as Shopee and Lazada had their sales events in March 2022, where they offered various deals on smartphones. Local e-commerce platform Tiki is also gaining popularity in Vietnam, as it offers discounts and two-hour deliveries.

Commenting on the manufacturing scenario, Jatwala said, “Manufacturing activities in Vietnam are gradually gathering pace. Workers started returning to work after the Lunar New Year holidays. Factories are hiring more workers to keep up with the demand. OEMs are increasing their investments to raise production capacities. However, global component shortages and inflation may act as a bottleneck in the country’s manufacturing activities and impact smartphone shipments going forward.”

Background:

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media, and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects, and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts:

Akash Jatwala

Follow Counterpoint Research
press(at)counterpointresearch.com

Vietnam Smartphone Shipments Double QoQ in Q4 2021, Up 15% YoY; Samsung Retains Top Spot

Vietnam’s smartphone shipments soared 104% QoQ in Q4 2021.
Samsung retained the top spot, capturing 28% share, followed by vivo (18%) and OPPO(17%).
With its iPhone 13, Apple surpassed Xiaomi to rank fourth, its best ever show in Vietnam.
For the full year of 2021, smartphone shipments increased 7% YoY.

Beijing, Seoul, Taipei, London, Boston, Toronto, New Delhi, Hong Kong – February 10, 2022

Vietnam’s smartphone shipments increased 15% YoY and 104% QoQ in Q4 2021, according to Counterpoint Research’s Monthly Vietnam Channel Share Tracker. After crossing the post-pandemic phase of pent-up demand, smartphones remained in high demand throughout the year, despite the market facing many difficulties, including macroeconomic worries, supply chain issues and the emergence of new COVID-19 variants. The year 2021 also saw Samsung and Apple registering their highest ever shipments in Vietnam.

Top OEMs’ Market Share in Vietnam, Q4 2020 vs Q4 2021

Source: Counterpoint Research’s Monthly Vietnam Channel Share Tracker
Notes: Xiaomi includes POCO and Redmi; OPPO includes OnePlus; Figures may not add up to 100% due to rounding.

Commenting on the quarterly performance, Senior Research Analyst Ivan Lam said, “Vietnam’s smartphone market has been dominated by offline channels. COVID-19 forced the government to impose multiple lockdowns, which hugely impacted the mobile phone distribution chain. As a result, shipments in Q3 2021 reached their lowest point in 2021. A few key positive factors drove up the numbers in Q4 2021. First, increasing vaccination rates helped offline channels move towards normalcy. Second, Apple’s iPhone 13 and other new launches, some pent-up demand and the approaching Vietnamese Lunar New Year stimulated purchase activities. Third, Samsung and Chinese brands managed to resume their supply and logistics activities in Vietnam. Lastly, the country’s major cities such as Ho Chi Minh City released guidelines that required people entering these cities to show a QR code from a mobile app to prove their vaccination status or recovery from COVID-19. This also pushed people to switch to a smartphone or an upgrade.”

Apple was the fastest growing brand in Q4 2021 in YoY terms. With a hair’s breadth, it surpassed Xiaomi to capture the fourth highest market share during the quarter. Lam added, “Apple enjoys a good place among Vietnamese consumers. In 2021, Apple enhanced its distribution strategy in Vietnam. It pushed online sales through Lazada Apple Flagship Stores and boosted “mini Apple Stores” by working with retailers, although there are already Apple Zones in Thegiodidong stores and F.Studio in the FPT shops system. Also, in Vietnam, 5G smartphone penetration is increasing gradually, supporting iPhone 13 sales.”

Vietnam Smartphone Shipment Share, 2020 vs 2021

Source: Counterpoint Research’s Monthly Vietnam Channel Share Tracker
Notes: Xiaomi includes POCO and Redmi; OPPO includes OnePlus; Figures may not add up to 100% due to rounding.

Vietnam’s smartphone shipments grew 7% YoY in 2021. Research Director Tarun Pathak said, “Vietnam is one of the most active consumer electronics markets in Southeast Asia, as well as one of the Asian countries with highest internet penetration. Although COVID-19 continued to disrupt the market, the demand was always there. We expect this rebound to continue in 2022.”

Apple showed the highest YoY growth in 2021 at 119%, followed by vivo at 24% and Xiaomi at 19%. Although OPPO (including OnePlus) ranked second in terms of market share in 2021, its growth declined 6% YoY during the year. Senior Research Analyst Glen Cardoza said, “OPPO was hugely impacted by the COVID-19 lockdowns in Q2 and Q3 because its main strength is offline channels. Also, OPPO experienced a shortage of 4G SoCs. However, it bounced back in Q4, showing 88% QoQ growth. We see OPPO showing stable performance in 2022.”

Online channels made up 15% of the total shipments in 2021, growing 8% YoY. It’s not a big jump because the country’s logistics systems and digital payment ecosystem are still in the process of being developed.

Despite all difficulties, Vietnam’s smartphone market is expected to continue to grow in 2022 and be one of the most competitive markets in Southeast Asia.

Please reach out to press (at) counterpointresearch.com for press comments and enquiries.

You can also visit our Data Section (updated quarterly) to view the smartphone market share for World, US, China and India.

Background

Analyst Contacts:

Ivan Lam

Glen Cardoza

Tarun Pathak

Follow Counterpoint Research

Vietnam Smartphone Shipments Down 28% YoY in Q3 2021 on COVID-19

Hong Kong, London, Boston, Toronto, New Delhi, Beijing, Taipei, Seoul – November 25, 2021

Vietnam’s smartphone shipments witnessed a 28% YoY decrease in Q3 2021, according to Counterpoint Research’s Monthly Vietnam Channel Share Tracker. COVID-19-induced restrictions in Vietnam’s major cities played the biggest role in this slowdown, triggering labour shortages and closure of shops and malls. The ongoing component shortages added to the limited volumes as well. On a monthly level, the market performed well during July while August witnessed a decline in shipments as Vietnam faced its highest ever spike in COVID-19 cases. The cases started to decline in September.

Research Analyst Akash Jatwala said, “Due to the rising COVID-19 cases, the authorities imposed restrictions and lockdowns on major cities. This hit the economy and social life. Most of the manufacturing facilities in Ho Chi Minh City were either closed or operating with limited manpower and volumes. Only 9% of Vietnam’s population had been fully vaccinated during the beginning of the fourth wave.”

Samsung reached its highest ever share in Q3 2021, capturing 49% of the smartphone market. This was due to demand for its fast-moving models like the Galaxy A12, Galaxy A03s and Galaxy A22. Samsung’s emphasis on its A series has started paying off, giving further momentum to its growth in the market. OPPO captured the second spot with a 19% share driven by the A series. Xiaomi and vivo took the third and fourth spots with 13% and 8% shares respectively. The Redmi series was the volume driver for Xiaomi while the Y series grabbed the numbers for vivo.

The online channel made up 13% of the total shipments during the quarter. Even this channel faced logistical issues during the period. To increase online sales, OEMs partnered with online platforms to offer exclusive deals. Samsung partnered with Lazada for the fourth edition of LazMall Super Brand Day, where customers could avail savings at Samsung’s official store. Xiaomi continued to lead in online sales with a share of 36%. Samsung followed with 33%.

5G smartphones made up 20% of the total shipments in Q3 2021. Their share is expected to increase further by the end of 2021. Vietnam has started 5G trials with Viettel becoming the country’s first operator to do so, achieving a top speed of 4.7 Gbps during the trial. Vietnam’s government is also planning to auction 5G spectrum during Q4 2021.

Commenting on the manufacturing scenario in Q3 2021, Senior Research Analyst Glen Cardoza said, “Manufacturing in Vietnam was deeply impacted by restrictions and lockdowns, hitting shipments of major OEMs. Some OEMs like Samsung have a big part of their manufacturing done in the country. While Vietnam is still considered as a preferred location for OEMs, some brands might look to spread their manufacturing facilities across multiple geographies.”

On the bright side, restrictions are currently being reduced while workers have started returning to industrial towns. The vaccination rate is also gaining momentum. We expect smartphone shipments to bounce back in Q4 2021 with improving consumer sentiment.

Background:

Analyst Contacts:

Akash Jatwala

Follow Counterpoint Research
press(at)counterpointresearch.com

Vietnam Offline Channels Successfully Embracing Online

Vietnam’s mobile phone market is dominated by offline distribution channels. However, responding to the changing times, offline channels have been trying to embrace the online mode, with some of them achieving big success.

Hanoi, the country’s capital, opened in late September after the COVID-19 lockdowns, while Ho Chi Minh City (commonly known as Saigon), the country’s largest city, opened a little bit later. While hugely impacting the economy, the lockdowns also pushed online sales to new heights. Retailers like Mobile World Group (MWG), which owns the highest number of offline shops in Vietnam, registered record online sales. According to an August financial release, MWG’s online revenue contributed 17.5% of its total revenue with 17% YoY growth, undoubtedly a big achievement for the offline channel giant. Thegiodidong (TGDD) and Dien May Xanh (DMX), the MWG chains selling mobile phones and consumer electronics, together accounted for 51.5% of the total group revenue.

TGDD, which means “mobile world” in English, built its standing in the market as a chain of stores selling mobile phones and related 3C products.

In July this year, COVID-19 started spreading rapidly in Vietnam. More than 70% of the offline stores and shops in the country had to be closed due to the restrictions. The situation worsened in August and September. In Saigon, the military had to be called in to enforce social distancing. Only essential stores and deliverymen were allowed to function in the key cities.

With offline channels dominating Vietnam’s mobile phone retail, the COVID-19 impact was severely felt by major OEMs like Samsung, OPPO and vivo, which had been mainly focusing on building offline retail in the country. Even Xiaomi, an internet brand, had to rely on national distributors to cover main offline channels. The lockdown surely made an impact on these leading brands’ distribution strategies.

In such a situation, offline retailers like TGDD and DMX, which had been strategically investing in online business for a while, reaped unexpected benefits. TGDD and DMX’s website experience is as good as pure e-commerce players in the mobile phone and consumer electronics domain. Apart from TGDD, there are offline store chains like Viettel and FPTShops which have also been investing in online stores at different levels.

With the easing of social distancing norms in many provinces and cities in Vietnam from the second half of September, retail businesses are expected to recover. However, even after regaining normalcy, the shift towards online will not stop.

Not just Vietnam, the whole of Southeast Asian mobile phone and consumer electronics market is heavily dependent on offline channels. But with the pandemic, the region’s leading e-commerce platforms in consumer electronics, like Lazada, Shopee and Tiki, have been reporting robust numbers. On the other hand, offline retail chains have been facing the most painful challenges. Online and offline channel constructions are totally two different business models, requiring two sets of strategies, teams and finance models. Thanks to the solid financial support it gets, TGDD has been able to develop its online business and hence limit the damage due to the lockdowns. Other store chains in the region, such as Jaymart Thailand and Erajaya Indonesia, are also keen to embrace the e-commerce era and the new normal.

For the market, it is a good sign that the distribution structure is evolving and becoming more diverse.

Southeast Asia Perks Up, Boosts Smartphones

Southeast Asia (SEA) has been showing consistent economic promise for a while now. The changing landscape is giving the smartphone sector a much-needed boost as well. Four players have a pivotal role in this sector.

While government support in key SEA countries has resulted in a faster rollout of 5G infrastructure, most governments are currently focused on COVID-19 vaccination and jump-starting the economy. In the parallel, Thailand continues to concentrate on advanced 5G utilization, while countries like Indonesia, Philippines and Vietnam are focusing on solidifying their 5G infrastructure and increasing coverage.

Operators

The main operators in the key SEA countries are not only concentrating on increasing their 5G coverage but also making sure they sustain a healthy 4G network. Rural focus is helping them raise subscription levels as well. Their consistent tie-ups with OEMs are giving a push to bundled packages and 5G (especially in metros and Tier I cities). This will continue to increase at a YoY level, even after Q4 2021.

From merging telecom operators in Indonesia to industrial applications being pursued in Thailand, 5G connectivity is growing stronger in this region.

Even consumers who had not considered 5G during their most recent purchase of a smartphone, will consider it strongly in the future.

OEMs

New 5G smartphone launches in the mid-tier price band have been all the rage in this region. The ASPs for these 5G phones will go down for upcoming models from top brands like realme. This will lead to an increase in upgrades.

Brands like OPPO, Xiaomi and realme are adding consumer IoT products, like smart speakers, to purchase deals which is good exposure for their IoT portfolio in these markets. For brands like Xiaomi, the IoT segment makes up 10% of total revenue in some markets.

As the markets open, brands are also increasing their offline footprint. Xiaomi is looking to increase its sales outlets from 38 to more than 100 within this year. The brand is also making sure its after-sales network is geographically widespread. Xiaomi and realme stand out here.

E-commerce

The “9.9” shopping festival saw some big investments and celebrity endorsements on online platforms like Shopee. Other big players across SEA, like Lazada and Tokopedia, also spent on marketing campaigns and tie-ups with brands, events and celebrities.

Online sales are one of the biggest reasons for consumers to indulge in shopping towards the end of the year.

Whether it is ‘live shopping’ on Tokopedia or increasing Korean influence with music groups like BTS, consumers can relate to this association. The main SEA economies may see their highest ever online smartphone shipments in Q4 2021. With COVID-19 infection rates going down in most SEA countries, the only deterrent here is component shortages affecting supply.

Manufacturing

Q3 2021 saw governments in Indonesia and Vietnam giving emphasis to essential items. As infection rates went down in August and September, vaccination for the manufacturing sector was given priority. Starting September, most production facilities in Vietnam resumed normal operations and scaled up to make provisions for Q4 demand.

All the above factors play in favor of a very productive and lucrative smartphone season in Q4 2021. All key SEA countries are likely to show more than 20% growth over Q3 2021 and a healthy YoY increase as well. Indonesia, Thailand and Philippines will show a higher online share in smartphone shipments.

Will Vietnam Produce Another VinSmart?

In May this year, Vietnam’s Vingroup announced that its subsidiary VinSmart would stop manufacturing smartphones and televisions. “The production of smartphones or smart TVs no longer brings breakthroughs and creates unique values for users,” said Nguyen Viet Quang, vice-president and CEO of Vingroup. Quang set up VinSmart in 2018 with an aim to raise Vietnam’s smartphone R&D and manufacturing to another level.

VinSmart’s future strategy will take three directions — R&D for VinFast, Vingroup’s carmaker unit; IoT solutions for vehicles and homes; and winding down the smartphone production for partners, such as some US carriers. While the VinSmart’s move looked wise against the backdrop of ongoing component shortages, the real logic working behind the decision is more complicated than expected.

Original Design Manufacturer (ODM) vs ‘Made in Vietnam’

Prior to VinSmart’s exit, a few popular Vietnamese mobile phone brands had already disappeared from the market, such as Q-mobile, Mobiistar, and FPT Mobile. Q-mobile quit the market quite early, around the time the Android smartphone segment started heating up. Q-mobile failed due to cash flow issues stemming from its smartphones’ average cost being two to three times compared to a normal feature phone. Mobiistar tried expanding to India, the second-largest market, to counter competition in its domestic market. Although Mobiistar entered India in a joint venture with a Chinese manufacturer, it was still a wrong move because India was already a very competitive market.

These failures of local brands can be pinned down to their business model. Most of them relied on ODMs (mainly based in China), which means outsourcing design and manufacturing to some other firm. But the Chinese brands, with their manufacturing and supply chain advantages, didn’t take much time to beat the local firms.

Secondly, most of the Chinese ODMs provide Android turnkey solutions, with only minor customizations for the local brands, such as housing, wallpapers, and ringtones. However, with the Vietnamese consumers already becoming used to the variety of features and improvements offered by international brands, the local companies found it difficult to keep pace.

Thirdly, establishing and building a mobile phone brand involves cash burn. But brands like Q-mobile, Mobiistar, and Masstel had no such solid capital. With squeezed margins, it is super-easy to block cash flow. For example, 10,000 handset units costing $50 per unit mean $500,000 worth of goods. But in case these units fail to sell, it would take more than three months to convert this stock back into cash. And for a local brand, $500,000 is a big amount.

Therefore, the ODM business model is very challenging for local brands. But in the light of the abovementioned challenges, VinSmart got a head start. It was backed by Vietnam’s biggest business group, which believed in promoting ‘Made in Vietnam’.

Was VinSmart a Success?

Looking at VinSmart’s past performance, it ranked among the top four OEMs (by volume) both in Q1 2020 and Q1 2021.

Vietnam Smartphone Market Shipment Share

VinSmart managed to impress the market and consumers alike. The channels were happy to have such a ‘Made in Vietnam’ brand on their shelves. The key selling points (KSPs) for VinSmart were:

Made in Vietnam (Manufacturing).
R&D in Vietnam after teaming up with Spain’s BQ.
Cost-effective and better than Xiaomi.

All this made VinSmart stand strong in the $150 and below segment (wholesale price). As much as 70% of VinSmart’s smartphone sales came from this segment.

From a strategic point of view, it is reasonable and practical to scale up the volume in the mid-low segment and then climb up the value chain by frequently launching flagship models. For sure, VinSmart was in for a bright future.

Why VinSmart Decided to Exit Market?

The news of VinSmart exiting the smartphone and television business was indeed sensational. Besides the obvious reasons, there were still some unfathomable causes behind the move.

VinSmart entered Spain, Russia, and some other markets even when that would have meant increased brand-building and other expenses. What triggered the foreign foray was the size of Vietnam’s market. The country, with around 100 million population, sees a mobile phone volume of around 2 million per month, of which VinSmart had a 10% share. The company’s ambitions were far bigger to be satisfied by this user base. And that, in turn, contributed to the latest move.

On the R&D front, the results were not strong enough to differentiate VinSmart from other brands. Its OS, called VOS, was just a customized Android OS.

Vietnam’s government is keen to transform the country into a manufacturing giant. In the long run, Vietnam’s development heavily relies on foreign investment and overseas markets. Foreign companies in Vietnam take up 70% of its foreign trade. As much as 25% of Vietnam’s total exports are taken by Samsung, which set up its first smartphone production line in the country around 10 years ago. However, Samsung’s arrival started to change the industry’s labor structure in Vietnam. Top-quality manpower became difficult to find for VinSmart even as it strived for ‘Made in Vietnam’.

To conclude, VinSmart had no choice as both resources and core competencies were in short supply to sustain the ‘Made in Vietnam’ push.

Market after VinSmart

Today, if we visit the website of Thegiodidong, Vietnam’s biggest organized chain store, there are only Masstel and Vsmart in terms of local brands. Masstel has only feature phone models on sale with the highest price of 550,000 VND (~$24). So, is this an end for local brands? Right now, the answer seems ‘no’. It is unlikely that any local brand will rise in the near future to capture the space vacated by VinSmart and take on the international biggies.

Mobile World (thegiodidong.com) Mobile Phone Category Capture Jul 2021

However, Vietnam’s government has a clear aim of improving the country’s industrial capabilities in the next 10 years. Therefore, in the long run, another local challenger is likely to rise in the Vietnamese market.

“Vietnam’s electronics industry is developing, and it certainly needs a leading local mobile phone brand,” said Tran Viet Hai, CEO of Bkav Electronics, the company that produces Bphone, as well as famous anti-virus software.

Chinese Players Capture Half of Vietnam Smartphone Market in Q2 2021

Hong Kong, Beijing, Taipei, Seoul, New Delhi, London, Boston, Toronto – Aug 2, 2021

Vietnam’s smartphone shipments witnessed an 11% YoY growth in Q2 2021, with Chinese OEMs capturing around half of the market, according to Counterpoint Research’s Monthly Vietnam Channel Share Tracker. Pent-up demand and a new user base coming from the feature phone segment largely contributed to this growth.

Compared to the past seasonal trends, the market performed well during the first two months of the quarter while the third one witnessed a drastic fall in shipments as Vietnam faced its highest ever spike in COVID-19 cases.

Samsung topped in the market with a 37% share riding on the Galaxy M31, Galaxy A12 and Galaxy A02s as top models. Xiaomi captured the second spot with a 17% share driven by the Redmi 9 series and Note 10 series. OPPO and vivo took the third and fourth spots respectively. The OPPO A series smartphones were the volume driver for the brand while the Y-series grabbed the share for vivo in Vietnam. Apple continued to do well in Vietnam and became the fifth largest smartphone brand in the market. Vietnamese consumers hold a greater aspirational value for Apple, which helps the brand.

Smartphone Shipment Share of Top 5 Brands in Vietnam, Q2 2021 vs Q2 2020

Source: Counterpoint Research Monthly Vietnam Channel Share Tracker, June 2021

Research Associate Debasish Jana said, “The Vietnamese smartphone market is constantly growing. Multiple factors are driving this growth, such as the shift towards smartphones from feature phones, increased economic stability and promotions from OEMs.”

He added that online channels were increasingly playing a significant role in the market, especially after the pandemic. With COVID restrictions shutting down offline stores, the online channel share rose YoY during the quarter to capture 14% of the total smartphone market.

Vietnam has already started its 5G trials, with Viettel becoming the country’s first operator to do so. Vinaphone and VNPT will follow suit. Although it may take a couple of years to have a countrywide 5G network, we can consider this a good start. Currently, 5G capable smartphones have a 14% share of the Vietnamese market. We can expect it to grow in the coming days as operators are gearing up to launch 5G services.

Although Vietnam is currently going through a fresh wave of the pandemic, we expect it to bounce back soon as it has contained the surge quite well in the past.

Background:

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

Analyst Contacts:

Debasish Jana

Tarun Pathak

Follow Counterpoint Research
press(at)counterpointresearch.com

Smartphone Shipments Grow 12% YoY in Key Southeast Asian Countries in Q1 2021

Hong Kong, London, Boston, Toronto, New Delhi, Beijing, Taipei, Seoul – June 10, 2021

The smartphone market in the four major Southeast Asian countries of Indonesia, Thailand, Vietnam, and the Philippines recorded a 12% YoY growth in Q1 2021, according to Counterpoint’s Global Smartphone Channel Share Tracker. Online sales grew 45% compared to the same period last year, accounting for 16% of the total market.

Looking at the growth rate of these markets, Indonesia (the biggest economy) saw YoY growth of 4%. Though relatively smaller, Thailand, Philippines and Vietnam markets saw high YoY growth rates of 13%, 19% and 26% respectively.

Top brands and their performance

OPPO led the brand share with 22% while Samsung and vivo ranked second and third with 19% and 16% shares respectively. OPPO, which has recently achieved good results in China, managed to maintain its No. 1 position in the Southeast Asian markets in the first quarter. OPPO’s A series and Reno series have proved to be successful in these markets.

Apple registered good results due to the popularity of the iPhone 12. The brand ranked sixth with a 6% market share in Q1 2021. Transsion Group brands, especially Infinix and TECNO, have been doing well in these Southeast Asian markets.

The competition in this region is getting fiercer thanks to a maturing ecosystem, increasingly tech-savvy and young population, and growing online dependence over the last year.

Along with the growth in online sales, there is an increased cohesiveness between OEMs and telecom operators as well. In addition, 5G infrastructure and 5G commercialization are moving ahead at a brisk pace. The proportion of 5G compatible smartphones will increase in 2021. Even with the recent COVID-19 resurgence, we remain optimistically cautious about this region and its potential.

Note: There have been some revisions in the overall and country-level YoY growth percentages for Q1 2021. Brand market shares remain the same.

Background:

Analyst Contacts:

Glen Cardoza

Follow Counterpoint Research
press(at)counterpointresearch.com

Podcast: Online Channels Help SEA Beat COVID Blues, Attract OEMs

The South East Asia (SEA) smartphone market declined in the first half of 2020 due to COVID-19 lockdowns. But as the restrictions started to ease, OEMs were quick enough to focus on online channels to meet the pent-up demand. Online channels in Indonesia reached their highest point in Q4 2020, with brands like Xiaomi and realme leading online sales. Thailand’s smartphone market also saw online channels registering strong growth, leading to only a marginal overall annual decline.

With the pandemic, the market dynamics completely changed with Lazada leading the pack in the region and Shopee being the fastest-growing e-commerce platform. Smaller platforms like Bukalapak, Blibli, Akulaku and JD.ID also saw increased presence in the online space. But what were the key factors contributing to the growth? How are smartphone makers and e-commerce platforms working closely to meet consumer demand?

In the latest episode of ‘The Counterpoint Podcast’, host Maurice Klaehne is joined by Senior Research Analyst Glen Cardoza to talk about the dynamics of SEA smartphone market and growth of online channels. With COVID-19 causing disruptions in the supply chain, smartphone makers have been recalibrating and diversifying production to reduce overreliance on China. But what makes Vietnam an attractive option for smartphone makers to invest in? Glen shares some valuable insights on this topic and more.

Hit the play button to listen to the podcast

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Vietnam Soars in Global Supply Chains on Favourable Conditions

Vietnamese electronics manufacturing services (EMS) market will grow at a CAGR of 5% between 2020 and 2026. According to Vietnam’s General Statistics Office, the country’s consumer electronics sector recorded its highest ever production at 369.6 million units in October 2020, followed by the electronic components sector at 325.7 million units.

Given the exponential growth in its manufacturing sector along with growing domestic demand and exports, primarily in electronics and automobiles, the EMS business is projected to scale new heights in the country. Many global OEMs and EMS providers like Samsung, LG and Foxconn (Apple’s contract manufacturer) are investing in the production of printed circuit boards, camera modules, printers, servers, phones, networking equipment, televisions and other electronics equipment in the country.

Samsung, which in 2020 held almost 70% of the handset market share in Vietnam, is also one of the largest FDI players in the country. Vietnam has one of Samsung’s largest smartphone production bases outside South Korea. By 2022, Samsung is also projected to complete its $220-million research and development centre in Vietnam.

Investment climate in Vietnam

Despite the setback caused by COVID-19, Vietnam is one of the few countries in Asia that managed to record a positive GDP growth in 2020.

The constant improvement in investment and business policies, participation in bilateral and multilateral free trade agreements, increased FDI and geographical proximity to China have all been active factors in making Vietnam a favourable destination for manufacturers.

Pegatron has pegged almost $1 billion worth of investment in its Vietnamese plant that will be rolled out in three phases, targeting investments in computing, communication and consumer electronics facilities, by 2027.

Foxconn is also moving some parts of its iPad and MacBook assemblies to Vietnam from China against the backdrop of rising US-China tensions, thus seeking to derisk its production. It has also been awarded a licence to build a $270-million plant to produce laptops and tablets in Vietnam.

Google too is moving production of its smartphone brand Pixel for the US market to Vietnam. It is also likely that the company may end up moving its hardware production to Vietnam. Similar plans are underway at companies like Samsung, itel and Microsoft.

Xiaomi too is aiming to take advantage of cheap labour and other favourable market conditions in Vietnam. Most recently, the company opened its first phone assembly factory in Vietnam.

Successful absorption from China

Like China, Vietnam is known for its comprehensive and mostly five- to ten-year strategies, like ‘Made in Vietnam 2025: Industrial Policy and Strategy 2025’ and Vision for 2035. These policies have not only helped in changing Vietnam’s growth story which started 30 years ago but have also facilitated absorption of industry from China, including the shifts triggered by trade wars.

Its unprecedented pursuit for business-friendly policies, liberalisation of its economy, low wages, favourable demographics and successful pushing of its infrastructural capacities are all catalysts in making Vietnam a suitable ‘China Plus One’ destination in the global supply chain. As economies around the world look to derisk the heavily integrated supply chain ecosystem in the post-COVID-19 era, along with a heated US-China trade war, foreign investors like Google, Microsoft and Samsung feel better diversifying their risks.

Government strategy for future development

The Vietnamese government aims to have over 10 strategic locations in the IT segment by 2025 with revenues of more than $1 billion. Under its IT and Made in Vietnam programs, it aims to have over 100,000 tech firms to make Vietnam among top 30 countries in IT development in the coming years.

Vietnam’s growing capacity under the ‘China Plus One’ policy reflects the following trends:

With its 2025 vison, Vietnam aims to target fields with high value-addition and export potential.
The electronic equipment and automobile sectors, along with other industries like textile, seem to be gaining a lot of traction.
Vietnam wants to develop its supporting industries, especially mechanical goods, chemicals and telecommunications, to significantly leverage its position in the global supply chain.
The aim is to develop priority industries in key economic zones and coastal zones along with processing industries and supporting industries.
Vietnam is also aiming to get FDI from companies that could transfer technology and capacity to local industries and talent.

Conclusion

With Vietnam’s recent ascension to the ranks of the global supply chain hubs, it is easy to overlook the fact that Vietnam is still expanding and growing its infrastructure. With more companies moving their operations to Vietnam, the leasing demand in Vietnam’s industrial zones is soaring.

However, Vietnam’s growing competitiveness, market reforms, and steady progress in ease of doing business (evident in its higher scores in the World Economic Forum’s competitiveness index) are making it rise above the rest.

In an era of protectionism where the jitters of COVID-19 are still being felt by many economies, Vietnam is soaring to become one of the prime locations for export manufacturers. With its continuous and proactive efforts for open border partnerships (the country is part of over a dozen free trade agreements), Vietnam is a country that could possibly change the course of the tech era that lies ahead.

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Insights Tag： vietnam smartphone market

Vietnam Smartphone Shipments Double QoQ in Q4 2021, Up 15% YoY; Samsung Retains Top Spot

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Vietnam Smartphone Shipments Down 28% YoY in Q3 2021 on COVID-19

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