Amazon Vietnam growth, buoyed by China, defies global tech slowdown

[Viet]

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But 'everybody's struggling' from interest rates, drop in COVID-fueled e-commerce

Amazon recruits hundreds of merchants in Ho Chi Minh City. Its growth in Vietnam runs counter to its overall international segment, which reported a loss last quarter. (Photo by Lien Hoang)
LIEN HOANG, Nikkei staff writerOctober 31, 2022 18:55 JST

HO CHI MINH CITY -- Amazon said its operations in Vietnam are defying a global downturn hitting Big Tech, thanks in part to an influx of Chinese businesses moving into the Southeast Asian nation.

Gijae Seong, head of Amazon Global Selling in Vietnam, said the local division has grown more strongly this year than in 2021, even as the company last week reported a $2.5 billion third-quarter operating loss for its international segment.

While he declined to disclose country-specific revenue, Seong said the number of local exporters using Amazon in Vietnam spiked 80% in the 12 months to August. Those exporters' sales also rose at a faster clip in 2022 than 2021, the company said.

Southeast Asia is already the world's fastest-growing e-commerce market, and Vietnam is set to lead that expansion by 2026, Seong added.

But he also acknowledged the "double challenge" of a rise in interest rates and decline in people shopping from home as they try "to go back to their normal lives" after COVID.

"We're struggling. I think everybody's struggling this year," Seong told reporters in Ho Chi Minh City.

When Nikkei Asia asked about the impact of companies relocating from China, Seong described two benefits for Amazon.

First, he said, merchants and service providers coming to the country raise standards and offer lessons to Vietnamese partners, drawing on a decade of experience in China's larger online market. Second, Chinese e-commerce sellers ship from Vietnam, increasing export volume and therefore the incentive to invest in the country's logistics, he said.

Much news has focused on factories moving from China across the border to Vietnam amid U.S.-China tensions and COVID disruptions. Amazon's remarks highlight how the trend can have knock-on effects in other areas, in this case the online marketplace.

Amazon says the merchants who had moved from China to Vietnam bring lessons from a far bigger e-commerce industry. (Photo by Lien Hoang)

Seong's upbeat comments on Vietnam come as gloom in the global economy has weighed on a number of industries, including fashion and furniture -- two of the top five product categories that companies in Vietnam's export-driven economy sell via Amazon.

Looking to capitalize on one of the world's fastest-growing economies, Amazon said it has focused on improving services for local merchants, offering discounts, Vietnamese-language customer service, and other support.

"We received a lot of complaints from our sellers that it's so hard to create an Amazon account" in Vietnam around 2018-2019, when it was first entering the country, Seong said. "There were a lot of rumors... that Amazon includes a lot of difficulty."

Hiring more Vietnamese staff to solve registration and other problems was one major improvement that helped increase the number of vendors on the online store, he added.

Merchants in Vietnam sold 10 million products on the platform in the 12 months to August, according to the Seattle-based company.

Amazon Vietnam growth, buoyed by China, defies global tech slowdown

But 'everybody's struggling' from interest rates, drop in COVID-fueled e-commerce

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