Premia TNC Vietnam Team
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Seizing Growth in Vietnam’s E-Commerce Market for Korean Companies
Recently, the Korean e-commerce market has become increasingly monopolistic, dominated by large platforms, making it increasingly difficult for small brands and new businesses to survive. Rising advertising and store opening costs are limiting the ability of many companies to achieve sustained growth in the domestic market. Consequently, there’s a growing movement to expand into overseas markets, particularly Southeast Asia.
Among them, Vietnam is the fastest-growing e-commerce market in Southeast Asia, offering an ideal environment for establishing a legal entity and operating a direct brand. With mobile-centric consumption patterns and the proliferation of social media-based live commerce, there are numerous opportunities for Korean brands to easily enter and establish themselves. Establishing a legal entity allows you to utilize local payment systems, boost consumer trust, and create a favorable environment for targeting the local market.
1. Vietnam Emerges as a Key Opportunity for Korean E-Commerce Growth
The Korean E-Commerce Market Nears Its Peak
The Korean e-commerce market has already matured, and the monopoly structure of large platforms makes it difficult for small and medium-sized brands and new businesses to survive. As competition intensifies, advertising and store opening costs are rising. Even operating a private online store requires significant costs and effort to secure traffic and manage logistics.
Key Issues in the Korean Market:
- Monopoly structure centered on large platforms (Coupang, Naver, SSG) has caused difficulty for small brands to secure competitiveness.
- Increased advertising and store opening costs have become a burden on sellers, increasing marketing costs.
- Operating a company mall is no longer feasible as traffic and logistics burdens increase, which causes search advertising and SNS marketing costs to increase.
Overseas Markets Set to Drive the Next Breakthrough for Korean Companies
Vietnam, in particular, is rapidly growing in mobile shopping and social media-based live commerce, making it an ideal market for Korean brands to thrive. Vietnamese consumers perceive Korean brands as premium products and have a strong preference for a variety of Korean products, including K-beauty, K-food, and K-fashion. Leveraging this momentum to establish a corporation and develop a marketing strategy tailored to the Vietnamese market will significantly increase your chances of success.
2. The Case for Setting Up a Vietnamese Corporation to Tap E-Commerce Potential
The Vietnamese e-commerce market is considered one of the most promising in Southeast Asia, with an average annual growth rate of 25.6%. For Korean brands entering the Vietnamese market, establishing a legal entity allows for more efficient operations and significantly contributes to establishing brand credibility.
The Upsides of Entering the Vietnamese Market:
- Explosive growth in the e-commerce sector, as the market size is expected to reach approximately $24 billion by 2023.
- Mobile shopping rate exceeds 90%, driven by young Generation Z consumers familiar with online shopping.
- The spread of social media-based shopping culture via TikTok Shop and Shopee Live activation and influencer marketing is essential.
- High preference for K-beauty, K-food, and K-fashion products has led to building trust in Korean brands and increasing local demand.
Vietnamese consumers are young, possess strong purchasing power, and tend to favor Korean brands. However, simply exporting without a legal entity poses challenges such as tax issues, logistics burdens, and platform entry restrictions. Therefore, establishing a legal entity in Vietnam and selling directly is the most effective strategy.
3. Market Entry Strategy for Shopee, Lazada, and TikTok Shop in Vietnam
Perks of Incorporating Your Business in Vietnam:
- Official seller registration is possible on Shopee, Lazada, and TikTok Shop, leading to more secure sales channels in Vietnam.
- Use of Vietnamese payment systems (VNPay, MoMo, and so on) has increased trust among local consumers.
- Building your own logistics network helps strengthen market competitiveness through fast delivery and increases the repeat purchase rate.
Shopee, Lazada, and TikTok Shop Entry Strategies
Shopee
Southeast Asia’s largest e-commerce platform, essential for brand shops (BMs), and targeting a mass consumer base.
Lazada
Suitable for brand promotion and premium product sales, creating a high-end brand image.
TikTok Shop
Real-time sales strategy utilizing live commerce is essential and can be linked with influencer marketing.
To Conclude
Vietnamese consumers prefer social media-based shopping, so operating a live commerce platform is essential after establishing a corporation. Additionally, you can conduct official marketing campaigns through your Vietnamese subsidiary and utilize the local logistics system to ensure fast and efficient delivery.
Premia TNC Vietnam Team
Author
Premia TNC Vietnam is a dynamic team of experts dedicated to supporting businesses and entrepreneurs as they establish, manage, and grow their presence in Vietnam and across the region. Premia TNC Vietnam specializes in providing tailored corporate services, from company incorporation and compliance to tax planning and accounting. With our extensive experience and deep understanding of the local regulatory environment, we are here to make business operations smoother and more efficient.
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