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2020 Consumer/ Business Confidence Index & The Impact ofCorona Virus

Ralf Matthaes | Managing DirectorRalf.matthaes@infocusmekong.com

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About IFM Consumer Confidence Index study

Annually, IFM conducts a consumer confidence study amongst two specific target groups ▪ Vietnamese consumers▪ Vietnam’s local / Foreign Business Community (Senior & C-Suite Business persons) – see below

Typically, this survey is conducted between December 15 – 30th of the previous year and asks questions about their consumers and Business Confidence for the up coming year and their consumption behavior of the previous year with respect to spend.

With the outbreak of the Corona Virus at the start of the year, IFM decided to conduct a very similar survey with many of the same questions and additional questions to ascertain the perceived impact that Corona Virus has had and will have on Overall Business and consumer confidence and Impact on Business in Vietnam. This survey is divided into two parts / Pre Corona and Post Corona sentiment to show the ripple effect it has had on Vietnam.

Target groups Location Year Sample size

VN Consumers Nation-wide 2019 3,567

VN Business Community HCMC / Hanoi 2019 75

VN Consumer nation-wide 2020 – Dec 15-30, 2019 – Pre Corona 2,964

VN Consumer HCMC / Hanoi 2020 – Feb 15-19, 2020 – Post Corona 506

VN Business Community HCMC / Hanoi 2020 – Feb 15-20, 2020 – Post Corona 167

This survey has been prepared for clients and professional associates of Infocus Mekong Research. Whilst every effort has been made to ensure accuracy, this presentation is not

an exhaustive treatment of the area Research not consumer confidence discussed and no responsibility for any loss occasioned to any person acting or refraining from action as a

result of material in this presentation is accepted by of Infocus Mekong Research Company LTD.

Sample size and Profile

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2020 CONSUMER CONFIDENCE INDEXPre-Coronavirus Outbreak

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INTRODUCTION

▪ Every year Infocus Mekong conducts Mobus, Consumer Confidence index, which predicts the year ahead in terms of Consumer Confidence and spend for 2020.

▪ The next few slides are an introduction of 2020 Vietnam Consumer Confidence Index.

METHODOLOGY RESEARCH METHODOLOGY

▪ Quantitative – Self-completion by end consumers▪ Using IFM Mobile Panel via smartphones▪ Sample Size: N=2,964 (sampling error 2.7%)

Age N=2,964

18-24 18%25-30 37%31-40 33%40+ 12%

Regions N=2,964North 46%

Central 9%

South 45%

Monthly Household income N=2,964

Below 10,000,000 VND 8%10,000,001 -15,000,000 VND 12%

15,000,001 - 20,000,000 VND 23%20,000,001 - 25,000,000 VND 11%25,000,001 - 30,000,000 VND 15%30,000,001 - 40,000,000 VND 11%

Above 40,000,000 VND 20%Areas N=2,964Urban 69%

Rural 31%

Gender N=2,964Male 41%

Female 59%

Date: December 15-30, 2019

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THE YEAR OF THE RAT can be defined by:

Strengths

Adaptable, Smart, Cautious, Alert, Positive, Cheerful

Weaknesses

Timid, Suspicious, Conservative, Short-sighted, Lack Of Persistence

Psychological context

One need to understand the following results in the context of Vietnamese

cultural beliefs, to better understand some of the cautiousness of consumer in 2020.

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SUMMARY OF FINDINGS

CONSUMER CONFIDENCE INDEX

01▪ After 9 years of moving up the food chain with high confidence and positive perspectives,

consumers are becoming more spend conscious in 2020, Indicating a slow down in overall SPEND.

03▪ Pollution, Inflation, Vietnam economic slowdown are consumers biggest fears for 2020.▪ Rural areas are more optimistic than urban consumers

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▪ Personal debts remain stable with more focus on automobile → aligned with the booming of private transportation market.

▪ Foreign financial institutions are getting more share from the consumer finance market. ▪ Local loan providers are still preferred by rural customers.▪ Urban consumers shifting loan for investment, while rurals use loans more for personal

purposes.

FEARS & RESPERVATIONS

CONSUMER FINANCE

02 FUTURE SPENDING

▪ Only Transportation and Household utilities are predicted to grow compared to 2019.▪ Transportation appears to be the big Winner for 2020, with a 12% increase vs. 2019 spend ▪ Other categories show spend slow down ▪ Big Losers in terms of Growth appear to be Communications, Entertainment & dining out,

Personal care products & Health care products/services , all minus 10 -16% spend downturn

Overall, both Vietnam’s business community and Consumers, though still positive have a more negative outlook for 2020, that 2019, especially the business community

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42%

85%

70%

40%

11%

22%

18%

4%

8%

2019

2019

2020

Better Same Worse

Vietnam Consumers

Vietnam Business Community

1. Vietnam Economic Out Look for 2020 – Pre Corona Outbreak

Consumer: 2020 N=29642019 N = 3,567Business: 2019 = 75

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7968

5651

8292

8692 91

84

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

IFM CONSUMER CONFIDENCE INDEX

Base: All (N=2964)

2. 2020 Consumer Confidence

2020 will see conservative spend growth across most sectors, as Consumers sentiment is driven by caution in the year of the Rat

Index: The index is based on 11 spend categories in terms of spending more –

same – less than previous year . More + Same subtract less of 11

Categories average = Index

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Sector spend – more – same – less Vs 2019 PLUS/ MINUS

Transportation 12% +++

Household utilities 11% +++

Personal equipment. (Phones/laptops, etc) -1% /

Food & beverages products -4% -

Household care products -5% -

Education -9% - - -

Home appliances -10% - - -

Health care products/services -13% - - -

Personal care products -16% - - -

Entertainment & dining out -19% - - -

Communications -21% - - -

SPENDING PRIORITIES 2019 VS 2020

Base: All (N=2964)

3. 2020 Consumer spend in terms of growth

Only Transportation and Household utilities are predicted to grow over 2019.Education, F&B, health care and personal care remain the top spending categories for 2020. However, they are hesitant to spend more.

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ESTIMATED SPENDING BY CATEGORY IN COMPARE TO PREVIOUS YEAR

63%

70%

61%

64%

59%

69%

52%

64%

49%

62%

47%

40%

30%

24%

34%

32%

35%

28%

41%

32%

40%

32%

44%

47%

8%

6%

5%

4%

6%

3%

7%

3%

12%

6%

8%

13%

EDUCATION

FOOD & BEVERAGES

HEALTH CARE

PERSONAL CARE

ENTERTAINMENT & DINING OUT

TRANSPORTATION

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

45%

46%

43%

45%

41%

50%

41%

34%

35%

54%

40%

37%

47%

49%

44%

36%

50%

53%

56%

38%

16%

17%

9%

6%

15%

14%

8%

13%

9%

7%

PERSONAL EQUIPMENT

HOUSEHOLD CARE

HOME APPLIANCES

HOUSEHOLD UTILITIES

COMMUNICATIONS

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

Q13 Which of the following best describe your spending in 2020 as compared to 2019? (MA)

Base: All (N=2964)

DETAILED ESTIMATED SPENDING BY CATEGORY TO 2019

Education, F&B, Healthcare and Personal Care will still contribute the highest growth in 2020, but lower in terms of Growth than 2019.

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Communications -21%

Health care products/services -13% Personal care products -16%

Entertainment & dining out -19%

4. Key Sector spend reduction

After years of Boom in Spend, some sectors are becoming saturated and have reach their optimum organic growth.

Healthcare and Personal care and FMCG could see a spike due to Corona Impact as consumer sanitize for safety and stay at home to avoid contagion

Base: All (N=2964)

1313

BIGGEST FEARS/ RESERVATIONS

61%

17%

12%

53%

14%

8%

2020

2019

Environmental pollution

Reduction in health / education services

Lack of infrastructure development

Even before the Corona Virus reached Vietnam, Consumers are increasingly more worried about their environment and health, much of which is brought on by the evolution of Vietnam's economy, causing longer travel time to work, sickness and ultimately a reduction in productivity

5. Longer travel time, more stress, a decline in health = Lower productivity

Base: All (N=2964)

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Loan taken in P12M

29%41%

52% 54%

2015 2017 2018 2019

9%14%

25%

35%

57%

19%15%

29%

39%

45%

AutomobileEducationReal EstateBusinessPersonal

Purpose of loan

2018 2019

Base: All (N=2964)

6. The slow down of consumer financing = More fiscal responsibility

Personal Debt grew only marginally in 2019, Indicating a slow down in Borrowing, save for Cars loans, which boomed in 2019.Foreign financial institutions are getting more shares from consumers borrowing Power

54%

47%

24%

11%7%

54% 56%

25%

6% 4%

Friends/ Family / Relatives

VN banksVN consumer

finance Co.Foreign Banks

Foreign consumer finance

Co.

Sources of loan in 2019

2019

2018

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7. The Growth of the automotive industry

47% 44% 8%

Transportation spend 2020

More Same Less

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6%9%

19%

2019 2018 2016

Purpose of taking out a Loan

Minimum 12% growth in transportation spend and over 100% growth in Loans for Automobiles, indicated a huge potential spike in automotive sales for 2020

Car Loan

Base: All (N=2964)

A Spike in Growth and new customer acquisition, along with a shit in category purchases is a key positive fallout

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▪ .▪ .▪ .

8. The Rise of On-line shopping

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POST CORONA VIRUS IMPACT

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20%

16%

70%

25%

22%

22%

55%

62%

8%

Post CoronaBusiness Commuity

Post CoronaConsumers

Pre CoronaConsumers

Better Same Worse

Vietnam Consumers

What is your view of the overall economy in 2020 as compared to 2019?

Sample

2,964

502

167

Vietnam Economic Out Look for 2020 – Post Corona Outbreak

The Corona Virus has had a huge impact on the overall economic outlook for Vietnam’s Consumers for 2020, Dropping 54 index points. Business sentiment is slightly more up-beat with 55% noting 2020 being worse that 2019, and long 20% seeing 2020 as better than 2019.

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From environmental pollution to the Negative Impact of Corona on My Business and Vietnam / Global economic slow down - Vietnam’s Business community has shifted its concerns too Business specifics, while consumers are totally engrossed in Corona infection and Global / Vietnam downturn.

Biggest fears /reservations for 2020? (Top 2)

14%

35%

16%

17%

18%

Business Position

Business owners GM

CEO MD

Senior Director 7%

10%

18%

23%

31%

32%

57%

8%

6%

19%

46%

21%

20%

46%

Increased Inflation

Lack of institutional transparency

Environmental pollution

Being infected by Corona Infection

Vietnam economic slow down

Global economic down turn

Negative impact of Virus on my business

Fears & Reservations

Consumers

Business

Sample

502

167

1% 8% 9% 40% 44%

Business Impact of Corona Virus

Very Positive Positive No Impact Negative Very Negative

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84% note Business being negatively impacted by Corona with an estimated reduction of 13.5% of revenue in 2020

Base: 167

Corona Virus Business Impact in 2020?

Corona Virus Revenue impact for 2020 Growth

25% 25%

14%19%

6% 4% 5%

20% Plus 16-20% 11-15% 6-10% 1-5% No Impact 1-5% 6-10% 10% Plus

Impact of Corona Virus on Revenue

1% 3%

2020 Estimated Decline in Revenue

-13.48%

22Base: 91

Top 5 concerns for your business

12%

12%

16%

20%

21%

Reduction in Chinese /Foreign tourists

Reduction of investment /consumer confidence

Reduction in Sales

Less traffic / volume ofcustomers

Cancellation / Postponements of

everything…

Specific Business Concerns

▪ Tourism - China accounted for 32% of total tourists and 25% of tourist spend in 2019

▪ Agriculture - China accounts for 20% of exports

▪ Supply chain disruption for manufacturers - May impact trade. China accounts for 30% of imports.

▪ Domestic service sector may be impacted by an abundance of caution

▪ Potential loss - as a 1.0% loss in GDP growth in 1Q20 and 2.0% or more for the full year FY20

Fallout

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Corona Negatives

▪ Decline in GDP / Revenue Growth – 10%

▪ Decline in confidence

▪ Decline in Travel / Tourism / Hospitability

▪ Decline in all gatherings of large numbers

Corona Positives

▪ Increase in Medical / preventative Products / services ▪ Increase all things digital – Banking / On-lie shopping / Delivery▪ Increase in Purchase of Packaged FMCG Foods / Personal Care

▪ Increase in Vietnam reputation – By containing the Spread of CV

▪ Increase in China Plus 1 = More FDI

Fearless Predictions

2020 was already a year of caution, conservativism and a decline in growth across multiple sectors, equaling reduced spend. The Corona Virus outbreak has amplified these “Year of the Rat” conservative traits and will negatively impact Vietnam for at least to the end of Q1. and potentially Q.2, 2020.

With Schools now being suspended to the end of March, this will have substantial impact on all Vietnamese consumers, as they need to support nannies, babysitters and spend more time around the home, reducing productivity and further denting their pockets, beyond the fears of infections.

However, Vietnam’s economy is structurally sound, It’s Government one of the strongest in Asia and Vietnam’s hottest economiccommodity, so though pain will be felt in the first few month of 2020, the Country should rebound nicely, though not meet its GDP growth expectations.

Agile - Accurate - Actionable

Ralf Matthaes | Managing DirectorTel: +84-8 2262-7627Mobile: +84-903-949-531Website: www.ifmresearch.comifmpanel website: www.ifmpanel.com

Email: Ralf.matthaes@infocusmekong.com4th Floor, 21 Phung Khac Khoan Street, D.1HCMC, Vietnam