STYLE for SALE

Vietnam’s super-rich are willing to spend whatever it takes as ultra-luxury goods continue to arrive.

By Jessica Nguyen on January 09,2019 10:05 AM

STYLE for SALE

PHOTOS FLANERIE CO.

Experts in luxury believe that, after China, Vietnam is and will remain a golden land in East Asia’s luxury market

Dressing in expensive clothes, getting around in stylish cars, and staying in luxurious resorts for $4,000 (VND 92 million) a night is the life of 20-year-old Nguyen Dang Tieu Giang. The daughter of a renowned motor car dealer, Giang regularly posts photos on Instagram of her standing beside a Bentley, a Rolls Royce, or a Maserati.

She is one of hundreds of members of the “Rich Vietnamese Kids” group on Instagram, with an account called “richkidsofvietnam”. Those in the group noticed a rather odd phenomenon in late 2017, with UK newspapers and magazines such as the Daily Mail, The Independent, Business Insider, and The Sun all featuring stories on them.

As the reports noted, parading the lavish lifestyles of these young Vietnamese is what the Instagram account is all about. Many may be surprised at the ostentatious wealth these young Vietnamese display, with their stylish vehicles and yachts, extravagant parties, and “shop till you drop” attitude.

STYLE for SALE

MONEY NO OBJECT

Experts in luxury believe that, after China, Vietnam is and will remain a golden land in East Asia’s luxury market. The country already has a few billionaires on the Forbes list of the worlds’ richest for 2018, who are the head of businesses in real estate, banking, aviation, manufacturing, and other fields.

In early September, researchers Wealth-X published a report revealing that Vietnam ranked third in the world in terms of growth of the super-rich in the 2012-2017 period, at 12.7 per cent annually, after Bangladesh (17.3 per cent) and China (13.4 per cent). The Wealth Report 2017 from Knight Frank also showed that, in 2016, Vietnam had 200 super-rich people, with each having $30 million (VND696 billion) or more in assets. By 2026, there are expected to be 540 dollar millionaires in the country. Its “middle class” - those with $1 million (VND23,2 billion) in assets and who can spend 10 to 20 per cent of their income on luxury goods - is also growing rapidly. In 2006 they numbered only 3,400, but in 2016 totaled 14,300 and will stand at around 37,000 by 2026.

Of these, many are young, the offspring of the super-rich and known as the “F2 generation”. They are now of mature age, relaxing and enjoying their family wealth. In contrast to generations past, these “princes” and “princesses” spend more time shopping, traveling and generally spending than studying or making their own money. As the class born with a “silver spoon in their mouth”, they travel and enjoy luxury lives to show off who they are.

“Young people crave for products that are ‘totally different’ from the products the older generation sought,” said Mr. Nguyen An Nghia, Marketing Director at the Giovani Group. “The motto ‘Vietnamese use Vietnamese goods’ is of no importance to them.” Young Vietnamese nowadays, with hopes of reaching out to the world, want to own everything common to their generation. Fashion is the voice of the young community, and helps them be closer to other young people around the world.

BIG SPENDERS

“Purchasing power in Vietnam is higher than people might think, because it’s hard to get official figures,” An Nghia added. It seems that economic development indicators such as GDP growth an inflation have no influence on the decisions of companies expanding the market for luxury goods.

This is proven by the number of new store openings. When Zara opened its first in Ho Chi Minh City in September 2016, it saw sales of VND6 billion ($272,000) on the opening day. Similarly, H&M now has four stores after opening its first just a year ago. It recorded sales of VND176 billion ($7.65 million) in the first quarter of 2018 and VND148 billion ($6.43 million) in the second. Sales average around VND1.8 billion ($78,000) each day in Vietnam.

“These fashion items are so familiar to Vietnamese consumers that they were brought in by ‘illegal means’ for many years before officially appearing in the market,” An Nghia said in explaining why they were so warmly welcomed from the outset.

Other similar brands are also doing well, opening outlets major shopping centers in Hanoi and Ho Chi Minh City.

“We see there is potential in the luxury goods market here,” said a representative from the Tam Son Company, the second-largest luxury goods supplier in Vietnam. Established in 2005, it is the exclusive distributor of luxury fashion brands from Europe, including Hermès, Bottega Veneta, Saint Laurent, Hugo Boss and Kenzo. Data released by the company reveal that sales reached VND1.337 trillion ($58 million) in 2017. In 2015 and 2016, sales were VND948 billion ($41.2 million) and VND1.117 trillion ($48.5 million), respectively, and average annual growth stands at around 18 per cent.

“Vietnam’s luxury goods market has gone beyond just having potential and has gradually developed in line with the economy overall and greater demand,” said Ms. Linh Nguyen, Head of the Marketing Flanerie Co.Ltd.

“For the years to come, there is no reason to doubt the optimism of these luxury retailers.”

Not wanting to “miss the boat”, Flanerie - a new luxury goods provider opening in late 2017 - has also sped up operations throughout the country. The local company specializes in importing and distributing high quality “contemporary fashion” products with the aim of introducing new lifestyles and modern fashions to Vietnamese consumers. Its selected fashion brands are all less than ten years old and designed and led by talented young designers and fashion stylists, and include Ellery, Christopher Esber, Ports 1961, Adeam, and Goen J.

“Working under the store concept, Flanerie aims to not just be a fashion business but a lifestyle model,” Ms. Linh added.

STYLE for SALE

ON THE SHOPPING LIST

“There is no luxury item Vietnam’s super-rich can’t afford,” said a journalist specializing in luxury branding who preferred to remain anonymous.

While for women it’s fashion and cosmetics, the two luxury items men love are watches and supercars. Peter Speake-Marin, maker of world-class watches, was one of the first to recognize the potential of the super-rich in Vietnam. In 2013, he created 18 timepieces with Dong Son bronze drum patterns on the face, each priced between VND800 million and VND900 million ($35,000 and $39,000). Soon after, 14 of his 18 customers were Vietnamese. At the end of 2015, he released another version of the Dong Son bronze drum watches, selling for VND3 billion ($130,000). Only eight were produced, and three were bought by Vietnamese.

Rolls Royce, Bentley, BMW, Lamborghini, Ferrari, Aston Martin, and McLaren are all exporting vehicles to Vietnam, for as much as VND50 billion ($2.2 million), and many have showrooms around the country.

Experts continue to rave about the potential of luxury brands in Vietnam, as there is certainly money to be spent on whatever the rich want. By way of example, a Himalayan Crocodile Birkin bag, made from albino crocodiles and costing a mere VND1.5 billion ($65,000), was snapped up just recently

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