Total South Korean exports to the country reached $47.8 billion last year, accounting for 8.3 percent of all outbound shipments and making the country the third-largest market behind China and the United States.

The think tank, which works to facilitate the sustainable development of SMEs, said Vietnam is attractive as it has a population of over 90 million with annual economic growth reaching 6-7 percent.

"By the late 2020s, the country's population should exceed 100 million and will likely become the central economic power in the Indochinese Peninsula," it predicted.

The institute added that because of the popularity of Korean Wave or "hallyu" and the strong presence of companies like LG, Samsung and Hyundai Motor, Vietnamese consumers have favorable impressions of South Korean products.

Hallyu refers to the popularity of South Korean TV shows and music that have secured hordes of fans in Asia, Europe and the American continent.

 KOSBI then said for SMEs to expand their presence in the country and the rest of Southeast Asia, it is advisable to make full use of the Vietnam's special economic zones.

The think tank said it is advisable for SMEs to follow a so-called multi-product, small-sized production strategy when selling consumer goods in the country. This, it said, can best meet particular market needs of the country.

On the other hand, it warned that companies needed to carefully think through any investments due to frequent labor strikes and the difficulty in finding skilled workers. (Yonhap)