[Post-China Vietnam] ① Surpassing 100 Million by Late April... Population as a Competitive Edge

"A population of 100 million will present great opportunities and challenges for Vietnam. It is an important milestone for the country's investment attraction and socio-economic development." (Pham Vu Hoang, Deputy Director of the Population and Family Planning Department, Ministry of Health, Vietnam)

As Vietnam's population is expected to reach 100 million by the end of this month, excitement is rising in the country. Once Vietnam surpasses 100 million people at the end of this month, it will officially become the 15th country in the world to exceed a population of 100 million. Among Southeast Asian countries, it will be one of the three nations to cross this threshold. While the decline in the working-age population has become a major common challenge for advanced countries, Vietnam's abundant human resources are considered a key factor that will drive the country's economic growth in the future. Notably, since the establishment of diplomatic relations between Korea and Vietnam in 1992, last year marked the first time in 30 years that Korea recorded its largest trade surplus with Vietnam. Amid escalating conflicts between the U.S. and China, Vietnam is emerging as an 'alternative production base to China,' and Korea's export landscape is diversifying. Vietnam's growth, backed by its population, is expected to provide new opportunities for Korea as well.

The 15th Country Worldwide and Third in Southeast Asia to Surpass 100 Million Population

According to data from the international statistics site Worldometer as of the 18th, Vietnam's population stood at 99,831,110, nearing the 100 million mark. Considering Vietnam's population growth trend, it is expected to exceed 100 million as early as the end of this month. Nguyen Trung Thien, Deputy Director of the Vietnam General Statistics Office, emphasized, "Every country regards human resources as a key factor for the future," adding, "Surpassing 100 million in population is an opportunity to improve Vietnam's standing in the world." Professor Cho Young-tae of Seoul National University’s Graduate School of Public Health, who served as a population policy advisor at Vietnam's Population and Family Planning Department, evaluated, "Vietnam's growth engine aiming to be the next China is its population structure. Currently, Vietnam's working-age population is about 68 million, abundant, and with approximately 1.3 million people entering the workforce annually, a stable population structure is expected to be maintained for the next 20 years, making it a market with great potential." Professor Cho explained, "When expanding overseas or investing, the first consideration is how attractive the market is as a consumer market, and the other is whether it is a labor market supplying competitively priced, quality labor. In these respects, Vietnam is one of the attractive markets."

Another reason to pay attention to Vietnam besides its population structure is its economic growth rate. Despite the impact of COVID-19, Vietnam has maintained a high economic growth rate. Last year, Vietnam's economic growth rate was 8%, the highest in 11 years since 2011, significantly surpassing the ASEAN average of 5.6%. Recently, the ASEAN+3 Macroeconomic Research Office (AMRO) forecasted that Korea's economy will grow by 2.3% next year, while Vietnam's growth rate is expected to reach 7.1%.

The most significant reason Korea should focus on Vietnam is that amid the COVID-19 pandemic and intensified U.S.-China conflicts, Vietnam has emerged as a major alternative market to China. Last year, Korea's trade surplus with Vietnam reached $34.25 billion (approximately 43 trillion KRW), making Vietnam the largest trade surplus country for Korea for the first time in history. In contrast, China, which was the top surplus country in 2018, dropped to second place in 2019, third in 2020-2021, and plummeted to 22nd place last year. Korea's trade deficit with China recorded $2.77 billion last month, marking six consecutive months of deficit, and poor performance has continued this year as well. With China, Korea's largest export market, turning into the largest trade deficit country, diversifying export markets has become an urgent task.

Korea-Vietnam Trade Volume Hits Record $87.7 Billion Last Year

Experts expect that Korea, exposed to risks from China due to strategic competition between the U.S. and China, will see Vietnam play a significant role in stabilizing supply chains for Korean companies. Kim Dong-soo, Senior Research Fellow at the Korea Institute for Industrial Economics and Trade (KIET), said, "In reality, finding suppliers of parts, materials, and intermediate goods that can replace China in terms of quality, price, and volume is nearly impossible in the short term," adding, "In a situation where the U.S.-China strategic competition intensifies and third countries are forced to choose sides, Korea, which lacks a protective framework like the European Union, can consider Vietnam an effective alternative to reduce risks originating from China."

Based on the time taken to reach $1 billion and then $20 billion in trade with Vietnam, Korea's import growth rate was the fastest compared to other countries, and its export growth rate was the second fastest after China. According to the Korea Institute for International Economic Policy (KIEP), Korea's exports to Vietnam have maintained an average annual growth rate of 16% from the first time exceeding $1 billion in 1994 until 2021, which is the second highest after China’s 18.5% average annual growth rate since 1991.

According to the Korea International Trade Association (KITA), Korea and Vietnam's trade volume reached $87.7 billion last year, setting a record high. Looking at the changes in trade volume since diplomatic relations were established, the trade volume was only $490 million in 1992 but increased 178 times to $87.7 billion last year. The top export items were semiconductors, flat panel displays and sensors, and petroleum products, while the top imports were wireless communication devices, clothing, and computers. Researcher Kim emphasized, "The export structure to Vietnam is shifting from mid-to-low technology industries to high-technology industries," adding, "Although the share of displays and semiconductors in exports to Vietnam accounts for about 51.9% of total manufacturing exports and exports to Korean companies operating in Vietnam constitute a very large portion, Vietnam holds sufficient strategic value as a production hub in Southeast Asia."

Jang Sang-sik, Director of Trend Analysis at KITA, said, "Vietnam is one of the countries with the best image of South Korea worldwide and has a high willingness to purchase Korean products," adding, "Considering that the population is expected to surpass 100 million in April, making it a huge consumer market, it is necessary to strengthen the expansion of consumer goods exports by recognizing the importance of the Vietnamese market not only as a production base but also as a consumer market in the future."