I just returned from a trip to Ho Chi Minh City (Saigon), where I had a front-row seat to see the forthcoming global consumption boom driven by a rapidly expanding middle class. During my short trip, I had the chance to meet with business and government leaders, local and foreign investors, artists, farmers, and several taxi drivers. I ate at a restaurant that made NYC look cheap, with Vietnamese who regularly spend six figures on custom-designed jewelry featuring imported gemstones. Inequality was palpable in almost every walk of life, even if the tide appeared to be lifting all boats. There were also contradictions galore. An attendant at a roadside noodle stand beamed a broader smile than I’ve ever seen after receiving my tip of less than $1.
But one thing was absolutely certain: consumption is booming. The middle class is using its newfound income to emulate a Western lifestyle.
Restaurants and cafes are increasingly common and multinational corporations are noticing. Consider McDonald's. The company recently entered the country and today has 5 restaurants in Saigon. In some of these early locations, volumes are running 30%+ above even the most optimistic scenario. Many middle class Vietnamese families now have their Sunday dinner under the golden arches. The market is so under-penetrated that it wouldn’t surprise me if McDonald's had a thousand restaurants in Vietnam by 2025.
Food is not the only item chewing up (pardon the pun) the newfound incomes of the Vietnamese middle class. Housing is another focus. After spending several hours navigating the streets of Saigon on scooter with a local friend, who has lived in Vietnam for ~10 years, he took me a former colleague’s home. The young man we met described himself as a “farmer” (he was an executive at Vietnam’s largest shrimp farming company), and while he was humble, intelligent, and insightful, I was distracted by the surroundings. We met in the courtyard of his apartment building, as modern and comfortable as the nicest developments in the United States. The pool was filled with middle class Vietnamese…and although I looked hard, I failed to notice a single non-Vietnamese ex-pat.
Later that evening, I had dinner with my friend and his wife at Sorae, a top-notch sushi restaurant, located atop one of the city’s tallest towers. Beyond the budget of most Vietnamese, I expected a foreign crowd. But no, the place was filled with locals. Many were entrepreneurs educated abroad; most were in the city to pursue what they felt were unparalleled economic opportunities. Twenty-five floors below us on the streets, families were heading out to dinner; traffic, overwhelming; restaurants, packed; bars, full; stores, crowded. In general, Saigon was sizzling. All around, it sure seemed to me that a middle class was in the making.