HANOI/YANGON -- Consumer spending in emerging economies along the Mekong River is thriving, and retailers from around Asia are keen to get their foot in the door.
After decades in the doldrums, Cambodia, Laos, Myanmar and Vietnam are all enjoying robust growth and rising incomes. The planned economic integration of the Association of Southeast Asian Nations, scheduled to kick off by the end of this year, is giving retailers another reason to expand into the region.
Planning for growth
Japan's Aeon announced on Thursday it will open a shopping mall in Hanoi, its third in Vietnam and first in the capital, on Oct. 28.
Located a 20-minute drive from the congested city center, the Aeon Mall Long Bien, will be one of the largest commercial facilities in Hanoi, occupying a 96,000-sq.-meter tract of land. The sprawling shopping center will include an amusement park, a 10-screen movie theater and a fitness club.
Yukio Konishi, chairman and general director of Aeon Mall Vietnam, sees plenty of room for growth. "We can open 10 stores each in Hanoi and Ho Chi Minh City," he said in announcing the new mall on Thursday.
Aeon's first mall in Vietnam, which opened in January 2014 in Ho Chi Minh City, has been a hit with shoppers, attracting 13 million people each year. That should not be surprising, perhaps, given Vietnam's booming consumer spending. Large-store sales in the country rose 10.1% on the year during the first eight months of 2015, up from a 7.8% rise in the same period last year.
Fatter paychecks are fueling this spending boom. Minimum wages are expected to increase 15% this year and 12% next year as the country's exports of electronics, sewn products and other items continue to surge.
Emart, a major South Korean supermarket chain, plans to open its first store in Vietnam this December, a $60 million outlet located in Ho Chi Minh City.
South Korean retailer Lotte Mart entered the Vietnamese market in 2008 and already operates 10 outlets there. It aims to expand its network to 60 stores by 2020.
Wal-Mart Stores, the world's largest retailer, opened a local office in Ho Chi Minh in 2013 to study the feasibility of operations in the country.
In the other direction
Some Vietnamese companies, meanwhile, are expanding into other countries in the region.
Hoang Anh Gia Lai, Vietnam's leading real estate developer, is building the HAGL Myanmar Center in Yangon, Myanmar's largest city. The shopping and residential complex will include a high-end condominium and a hotel, as well as various retail facilities.
HAGL is shelling out $440 million to build the center on an 8-hectare plot of land in central Yangon. When completed in 2017, the complex, with its six skyscrapers, will make for a dramatic addition to the city's skyline.
The grand opening of the complex's retail section is scheduled for the end of October, though some shops have already opened their doors. The centerpiece of this section will be a mall featuring more than 30 stores specializing in personal computers and other electronics. This information technology mall, the first of its kind in Myanmar, is intended to attract well-to-do consumers in the nation's commercial hub.
Vietnam Dairy Products, the country's largest dairy company, is to plunk down $23 million on a plant in Phnom Penh, Cambodia's capital. The factory, which could come on stream as early as this year, will be the first dairy plant in the country, which currently depends on imports for its milk products.
State-run Viettel, Vietnam's largest telecoms operator, already offers mobile services in Laos and Cambodia.
In Laos, meanwhile, Thai distributor Sayam International is teaming up with a local partner to build a 37,000-sq.-meter duty-free shopping mall. The Thai company is investing 3.5 billion baht ($98.9 million) to build the mall in a special economic zone near the border with Thailand. The mall is slated to open in early 2016 and will host some 200 brand-name shops.
The operator is hoping to attract tourists from countries such as China and Thailand, in addition to wealthy Lao consumers.
Sayam International Chairman Sayam Ramasoot has told Thai media that the creation of the special economic zone, improvements in infrastructure and the growth of the tourist industry in Laos have spawned good investment opportunities for retail businesses.
Sayam also envisions a second phase of the project that would involve building hotels and office buildings around the shopping mall. Total investment would top 10 billion baht.
Time to shine
For decades, Cambodia, Laos, Myanmar and Vietnam have lagged behind other ASEAN members in terms of economic development. But political stability in recent years has made it possible for the four economies -- and their consumer markets -- to expand at a remarkable pace.
The combined retail sales of the four countries doubled in four years, from $56.7 billion in 2010 to $100.3 billion in 2014, according to Euromonitor International, a British research company. The figure will grow to $176.4 billion in 2019, Euromonitor predicts.
Demand in all these nations is growing steadily, and not just for food and other daily necessities. Sales of big-ticket items like motorbikes and automobiles are also picking up.
In Vietnam, the largest economy among the four, the ranks of upper- and middle-class consumers, those with monthly incomes of 15 million dong ($667) or more, will make up 34% of the population in 2020, up from 14% in 2012, according to a forecast by Boston Consulting Group of the U.S.
Myanmar, the second-largest economy, has also seen its economic growth gain speed since the nation began democratizing in 2011. The number of upper- and middle-class consumers, those earning at least 500,000 kyat ($390) a month, will double by 2020, BCG predicts.
The combined population of the four countries is estimated at around 170 million and looks set to surpass the 200 million mark in the near future.
The creation of the ASEAN Economic Community at the end of the year, which will see the elimination of tariffs within the bloc by 2018, is expected to expand the cross-border flow of goods and people. While some leading ASEAN economies, including Thailand, are showing signs of losing steam, the four emerging countries along the Mekong will likely receive a big boost from the economic integration.
Further growth should, in turn, fuel even greater consumer spending, setting the stage for a continuing cycle of growth.