Apparel manufacturing: Vietnam

 

Vietnam is one of the world’s major sources of textiles and clothing. In 2017, it ranked among the top 10 exporters of these merchandise, according to the World Trade Statistical Review 2018.1

In the first eight months of 2018, it exported $19.8 billion worth of textiles and garments, up nearly 17 percent from the same period in 2017, according to the data from the General Department of Customs, Ministry of Finance of Vietnam. Double-digit growth in 2018 exports is anticipated, in part because of buyers shifting orders to Vietnam from China amid the US-China trade dispute and rising labor costs in China.

The US was the industry’s top market during the eight-month period, accounting for about 46 percent of the export value. The other key markets were Japan, South Korea, China, Germany and the UK.

Vietnam has 7,154 enterprises in the garments and textiles industry, according to Cao Huu Hieu, managing director of the state-invested garment supplier Vietnam Garments and Textile Group (Vinatex). Of these organizations, about 40 percent are foreign-owned and 17 percent are joint ventures. Private companies make up nearly 40 percent of the industry and state-owned enterprises (SOEs) account for the rest.

The industry comprises apparel makers, spinning, weaving, knitting and dyeing operations, and accessory producers. Garment manufacturers account for about 70 percent of the industry, and the majority of these are primarily engaged in cut, make and trim (CMT) production.


The Vietnam advantageDesigner spotlightSupplier spotlightChallengesEndnotesPDF download

Apparel manufacturing: Vietnam The Vietnam advantage

Among the key factors that have made Vietnam an attractive source of garments and thereby supported the industry’s growth are its free trade agreements with various economies, its large workforce and relatively low labor costs, and the favorable business environment. These factors enable apparel makers to produce small- and large-volume orders at competitive prices.


Free trade agreements

Vietnam is one of the countries with the most free trade agreements (FTAs) in the world. It has signed more than 15 trade deals, of which 10 have become effective. Existing FTAs include deals with key export markets for garments and textiles, including Japan, South Korea, China and the EU.

Under these agreements, textiles and apparel from Vietnam will benefit from lower or zero percent tariffs in signatory countries compared with rates of 10 percent of more that would be levied otherwise. Garment accessories can also be imported from signatory countries at preferential rates, providing garment makers access to more suppliers of manufacturing inputs.

FTAs also encourage investment in the industry and upstream sectors, making apparel exports less dependent on imported materials. From 2012 to 2016, the garments and textiles industry received more than $5 billion in foreign direct investment (FDI). In the first four months of 2018, FDI in the industry amounted to $1.1. billion, primarily in yarns and textiles, a May 2018 report on Vietnam Briefing. The main sources of FDI were mainland China, Taiwan, Hong Kong, Japan, South Korea, Thailand, the US, the EU and Russia.2

The most recent trade agreement that Vietnam has signed is the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Expected to become effective in 2019, the deal is anticipated to significantly boost exports of textiles and garments to member countries once it comes into force.

Shipments to Australia –one of the biggest importers of Vietnam garments and textiles among the CPTPP signatories — are projected to see double-digit growth, according to a May 2018 report on Customs News, which cites Truong Van Cam, vice chairman and secretary general of the Vietnam Textile and Apparel Association (VITAS).3 Data from the General Department of Customs, Ministry of Finance of Vietnam, show that in the first eight months of 2018, Vietnam sent abroad $138.6 million worth of garments and textiles to Australia, already up 24 percent from the same period in 2017.

Vietnam’s free trade agreements4Garments: Vietnam FTAs

Abundant, low-cost labor

Another factor supporting the growth of Vietnam’s labor-intensive garments industry is the country’s large labor force. Vietnam’s labor force at 15 years or older comprised over 54.8 million people in 2017, making up about 59 percent of the country’s population, according to preliminary data from its General Statistics Office. Of those aged 15 years or older, nearly 60 percent were between 25 and 49 years old.5

Vietnam’s population is expected to reach 120 million by 2050, according to information posted on the World Bank Group’s site.6

Labor costs in Vietnam are lower compared with several countries in Asia. Minimum wages across the country range from 2.76 million to 3.98 million Vietnamese dong per month, or about $110.40 to $159.20.

For garment workers, the average monthly wage is between 5 million ($213.34) and 6 million ($256.00). In comparison, it is about $700 in China, $350 in Thailand, $180 in Bangladesh, $135 in India, $120 in Pakistan and $110 in Cambodia, said Cao Huu Hieu, managing director of the state-invested garment supplier Vietnam Garments and Textile Group, citing an International Labour Organization (ILO) survey.

Vietnam’s textile and garments industry employs about 2.7 million people, according to Mai Nguyen, VITAS chief representative in Ho Chi Minh City.

Minimum wages in selected countries 7 8Garments: Vietnam wages

Favorable business environment

Besides the FTAs, the country’s efforts to create a favorable business and investment climate is a key factor attracting investors and importers.

In the World Bank’s report Doing Business 2019: Training for Reform report,9 Vietnam ranked 69th among 190 economies for ease of doing business. Vietnam slid down one spot from its rank the previous year, but the country’s overall score in the index was up 1.59 points. The country ranked higher than several of its Asian neighbors, including Indonesia, India, Laos, Myanmar and Bangladesh.

A country’s ranking on the index is based on 10 topics: starting a business; dealing with construction permits, getting electricity; registering property; getting credit; protecting minority investors; paying taxes; trading across borders; enforcing contracts; and resolving insolvency.

In the World Economic Forum’s Global Competitiveness Index (GCI) 2017-2018,10 Vietnam ranked 55th out of 137 countries. The GCI measures competitiveness using 114 indicators grouped into 12 pillars: (1) institutions; (2) infrastructure; (3) macroeconomic environment; (4) health and primary education; (5) higher education and training; (6) goods market efficiency; (7) labor market efficiency; (8) financial market development; (9) technological readiness; (10) market size; (11) business sophistication; and (12) innovation.

The country also offers several incentives to attract local and foreign direct investment (FDI) to garments and textiles manufacturing, as well as supporting sectors. Incentives include preferential corporate income tax (CIT) rates, value-added tax refunds and import duty exemptions for machinery and other fixed assets.

In the first half of 2018, the garments and textiles industry attracted $2.5 billion of FDI, The Hanoitimes reported Aug. 7 2018,11 citing VITAS chairman Vu Duc Giang.

Apparel manufacturing: Vietnam Designer spotlight



Thuy Nguyen

Thuy Nguyen, also known as Ti-a, is known for her use of brocade in different patterns, prints and types. Brocade is the signature of Thuy Design House’s collections, which use it as the main material or an accent.

Ti-a blends art and fashion in her creations, and often highlights elements of Vietnam’s culture in her contemporary designs. Her collections have been showcased in Vietnam International Fashion Week (2017), Elle Fashion Journey Vietnam (2016) and Vietnam Cultural Days in Rome (2016). Actresses, beauty queens and other local celebrities have also worn her designs on the red carpet. In 2017, Ti-a’s creations were featured in the film Co Ba Saigon (The Tailor), which was co-produced by Thuy Design House.

Ti-a, a professional painter at 17, obtained her bachelor’s degree in fine arts from Hanoi Fine Art University in 2006. She then went on to complete her master’s degree at the Ukraine National University of Fine Arts in 2009, and then her doctorate degree at Kiev Fine Arts University in 2014.

In 2011, Ti-a founded Thuy Design House, which now has two locations in Ho Chi Minh City and one in Hanoi. Its products are also sold in certain stores in Ho Chi Minh City and Phu Quoc island.

In 2016, she established The Factory Contemporary Arts Centre in Ho Chi Minh City to create and host interdisciplinary contemporary art and cultural activities, and to connect artists and art lovers.

“When it comes to my designs, I always think about how the designs can conserve our traditional values. Vietnam has many beautiful values which I feel responsible for preserving it.”



Garments: Vietnam

Dieu Anh Nguyen

Dieu Anh Nguyen won the Seiko Award at the Asia Collection Makuhari Grand Prix in 1998 when she was 16. Her self-named brand, dieuANH was officially launched in 2006, following the completion of her studies at L’ecole de la Chambre Syndicale de la Couture Parisienne in France.

Dieu Anh Nguyen takes inspiration from her cultural background as well as contemporary elements around Asia. Designs under the dieuANH brand use natural materials such as silk, linen, cotton and Tencel, a brand of cellulose fiber made from wood pulp. Dieu Anh Design House intends to explore “advanced eco-friendly fabrics” for use in its products.

Dieu Anh Nguyen’s creations have been showcased in local and international fashion shows, including the Asia Fashion Federation Fashion Week in Singapore (2013) and Lao Fashion Week (2015 and 2017).

Apparel manufacturing: Vietnam Supplier spotlight

Featured here are six companies manufacturing different types of apparel, including casual and sportswear .

Click “Inquire Now” to send inquiries to featured suppliers.




Ban Mai Co. Ltd Ban Mai Co. Ltd

Company details
Contact person: LINH, Cindy
Phone: 84-24-39434839
Mobile: 84-988-681440
Email: [email protected]
Website: vietnamgarment.vn
Address: 19 Le Van Huu Street, Hanoi City, Vietnam

Company facts
Year established: 1991
Head office location: Hanoi City, Vietnam
Subcontractor factory location: Northern Vietnam
Full-time employees: 32

Vietnam garments

Model: BM-JKT1001
Description: Women’s trench coat; 98:2 cotton-spandex; with belt and buckle
MOQ: 2,000 pieces
Delivery time: 90 to 120 days 

Inquire now



Como Co. Ltd Como Co. Ltd

Company details
Contact person: NGUYEN, Giang
Phone: 84-28-73010775
Mobile: 84-94-7253447
Email: [email protected]ed.com
Website: www.comolimited.com; www.globalsources.com/como.co
Address: Lot A LA-02.01+ 02, Lexington Building, 67 Mai Chi Tho Avenue,
An Phu Ward, District 2, Ho Chi Minh City, Vietnam

Company facts
Year established: 2004
Head office location: Ho Chi Minh City, Vietnam
Factory locations: Ho Chi Minh City, Vietnam
Dong Nai, Vietnam (subcontractor factories)
Full-time employees: 30

Vietnam garments

Model: Urban Heat
Description: Men’s jacket; polyester-cotton-nylon shell; polyester lining; synthetic down filling
MOQ: 500 pieces/color or 3,000 pieces/style/order
Delivery time: 30 to 45 days

Inquire now



Dong Bich Co. Ltd Dong Bich Co. Ltd

Company details
Contact person: TRAN Nam Hung
Phone: 84-28-35901095
Mobile: 84-91-7561999
Email: [email protected]
Website: www.dongbich.com
Address: 56/1A Phan Van Hon Street, Tien Lan, Ba Diem, Hoc Mon District,
Ho Chi Minh City, Vietnam

Company facts
Year established: 2008
Head office location: Ho Chi Minh City, Vietnam
Full-time employees: 50
Part-time employees: 25

Vietnam garments

Model: MPS-805
Description: School uniform shirt; cotton-polyesterspandex or 100% polyester pique
FOB price: $4.50 to $7.50
MOQ: 1,000 pieces/color
Delivery time: 45 days

Inquire now



Le Stitches Co. Ltd Le Stitches Co. Ltd

Company details
Contact person: ZAPANTIS, Dennis
Phone: 84-28-38916677
Mobile: 84-903134963
Email: [email protected]; [email protected]
Website: www.lestitches.com
Address: 551/82 Le Van Khuong, Hiep Thanh Ward, District 12, Ho Chi Minh City, Vietnam

Company facts
Year established: 2004
Head office & factory location: Ho Chi Minh City, Vietnam
Full-time employees: 250

Vietnam garments

Model: Jogging Bralette
Description: 270gsm, 88:12 polyester-spandex; with 175gsm, 87:13 nylon-spandex mesh
FOB price: $6.85
MOQ: 500 pieces
Delivery time: 60 days

Inquire now



TVP Garment JSC TVP Garment JSC

Company details
Contact person: LE, Justin
Phone: 84-28-73002022
Mobile: 84-903-304455
Email: [email protected], [email protected]
Website: dff.fit
Address: E28, No. 1 Street, Sadeco Phuoc Kien Area, NHA Be District, Ho Chi Minh City, Vietnam
Brand name: DFF

Company facts
Year established: 2013
Head office location: Ho Chi Minh City, Vietnam
Factory location: Long An, Vietnam
Full-time employees: 200 to 300
Part-time employees: 100

Vietnam garments
Model: DFF_WL10
Description: Women’s leggings; 175gsm, 80:20 nylon-spandex; with 150gsm, 95:5 polyester-spandex mesh
MOQ: 1,200 pairs
Delivery time: 30 days

Inquire now



Vietorigin Co. Ltd Vietorigin Co. Ltd

Company details
Contact person: VU, Helen
Phone: 84-28-35140280
Mobile: 84-916074758
Email: [email protected], [email protected]
Website: http://erosstyle.vn/en/
www.globalsources.com/como.co
Address: 163/2B Xo Viet Nghe Tinh Street, Ward 17, Binh Thanh District, Ho Chi Minh City, Vietnam
Brand name: Eros Activewear

Company facts
Year established: 2017
Head office location: Ho Chi Minh City, Vietnam

Vietnam garments

Model: Eros 22
Description: Women’s leggings; 85:15 polyester-spandex
FOB price: $10.60
MOQ: 200 pairs
Delivery time: 30 days

Inquire now

Apparel manufacturing: Vietnam Challenges

Global integration brings challenges as well as opportunities to Vietnam’s garments industry. While it facilitates access to overseas markets, it also opens up the local market to foreign competitors. This results in fierce competition not only for orders, but also for labor, raw materials and other manufacturing inputs.

Industry analysts and leaders are recommending that clothing makers enhance their competitiveness by providing added value. Specifically, businesses must shift from the CMT mode of production to original equipment manufacturing (OEM), original design manufacturing (ODM) or original brand manufacturing (OBM). This strategy, however, is difficult for most local companies.

“Vietnamese garment enterprises, especially small and medium enterprises, have been focusing on CMT because of reasonable investment cost, easy-to-find qualified laborers and quick capital recovery compared to ODM investment,” said Cao Huu Hieu, managing director of Vinatex.


Reliance on imported feedstock

One of the factors making value addition difficult for most makers is because the upstream sectors of the textiles and clothing industry are still largely underdeveloped. Fiber, yarn and fabric requirements are typically sourced overseas. A report on the Nikkei Asian Review noted that Vietnam imports 70 to 80 percent of fabrics used in garments production, usually from China.

Dyeing operations, in particular, are limited because establishing one such facility requires an investment of 600 billion to 700 billion Vietnamese dong ($25 million to $30 million), noted Cao Huu Hieu. In contrast, setting up a garment factory with 1,000 workers costs about 100 billion dong ($4 million). Additionally, finding skilled workers to operate the machines in dyeing and weaving facilities is a challenge.

Another consequence of the industry’s reliance on imported feedstock is that apparel manufacturers cannot maximize the opportunities offered by the country’s various FTAs. Rules of origin in various trade deals require that for textiles or garments to enjoy preferential tariffs, production starting from the yarn or fabric should be done within signatory countries. This dependence on imports for manufacturing inputs also makes suppliers vulnerable to fluctuations in currency exchange rates.

Under the Textile and Garment Industry Development Plan 2020,12 with a vision for 2030, Vietnam aims to achieve a localization rate of 65 percent by 2020 and 70 percent by 2030. Export turnover, meanwhile, is projected to reach $40 billion during the 2020-2025 period.

Labor-related concerns

Another factor hindering garment makers from providing added value is the rising cost of labor and the availability of skilled workers for certain tasks.

Minimum wages in various provinces are set to rise more than 5 percent in 2019. Such an increase would mean higher social and health insurance premium contributions from employers, which will push up product prices. Companies are also providing better benefits and working environments for employees to comply with the requirements of various FTAs and growing consumer preference for sustainably produced items.

Additionally, minimum wage growth has outpaced labor productivity, a factor that could drive buyers and investors to alternative markets. Labor productivity growth rate for the 2004-2015 period was 4.96 percent, while average wage growth was 6.67 percent. The ratio of minimum wage to labor productivity increased to 50 percent in 2015 from 25 percent in 2007, according to the Vietnam Annual Economic Report 2018.13

To reduce labor costs, apparel manufacturers are procuring more efficient equipment or automating processes. In a 2016 brief,14 the International Labour Organization (ILO) noted that the textile, clothing and footwear (TCF) manufacturing in Vietnam typically involves low-skilled, labor-intensive production. It estimated that more than 85 percent of all wage workers in the industry are at risk of being replaced by automation and robotics in the coming decades.

As they adopt newer technologies, however, many suppliers – particularly FDI companies— are finding it difficult to find workers with the right skills.

To upskill its labor force, Vietnam is implementing reforms in its education system. In May 2018, the National Committee for Education Reforms and the National Council of Education and Human Resources Development from 2016-2010 met, seeking measures to implement Resolution No.29-NG/TW or the resolution on “fundamental and comprehensive innovation in education, serving industrialization and modernization in a socialist-oriented market economy during international integration.” Among the things discussed in the meeting were improvements in teacher training and allocation, accreditation of faculty and textbooks. 15

Apparel manufacturing: Vietnam Endnotes

1. World Trade Statistical Review 2018 (pp. 143-144, Publication). (2018). World Trade Organization. Retrieved December 5, 2018, from https://www.wto.org/english/res_e/statis_e/wts2018_e/wts18_toc_e.htm.

2. Vietnam’s Textile and Garment Exports Continue to Grow. (2018, May 07). Retrieved November 28, 2018, from https://www.vietnam-briefing.com/news/vietnams-textile-garment-exports-continue-grow.html.

3. CPTPP to open doors for apparel exports to Australia. (2018, May 10). Customs News. Retrieved November 26, 2018, from https://customsnews.vn/cpttp-to-open-doors-for-apparel-exports-to-australia-6926.html.

4. Free Trade Agreements. (n.d.). Retrieved November 26, 2018, from https://aric.adb.org/database/fta.

5. Retrieved November 27, 2018, from http://www.gso.gov.vn/default_en.aspx?tabid=774.

6. The World Bank in Vietnam – Overview. (n.d.). Retrieved November 28, 2018, from https://www.worldbank.org/en/country/vietnam/overview#1.

7. Comparative Wages In Selected Countries (As of 31 October 2018). (n.d.). Retrieved November 28, 2018, from http://www.nwpc.dole.gov.ph/pages/statistics/stat_comparative.html.

8. Staff correspondent. (2018, September 13). Tk 8,000 a month. Retrieved November 28, 2018, from https://www.thedailystar.net/business/news/bangladesh-rmg-garment-workers-minimum-salary-8000-taka-announced-1633342.

9. Doing Business 2019: Training for Reform. (2018, October 31). Retrieved November 29, 2018, from The World Bank Group website: http://www.worldbank.org/content/dam/doingBusiness/media/Annual-Reports/English/DB2019-report_web-version.pdf.

10. Schwab, K. (2017). The Global Competitiveness Report 2017–2018 (p. 11). Geneva: World Economic Forum. Retrieved December 5, 2018, from https://www.weforum.org/reports/the-global-competitiveness-report-2017-2018.

11. Minh Tam. (2018, August 07). Vietnam a top spot for foreign garment-textile firms. The Hanoitimes. Retrieved December 4, 2018, from http://www.hanoitimes.vn/economy/2018/08/81e0cae8/vietnam-a-top-spot-for-foreign-garment-textile-firms.

12. Vietnam Textile Industry Issues Plan for 2020 and Beyond. (2015, July 23). Retrieved December 12, 2018, from https://www.vietnam-briefing.com/news/vietnam-textile-industry-issues-plan-2020-beyond.html.

13. Viet Nam Annual Economic Report 2018. (2018, May). Retrieved December 18, 2018, from Viet Nam Institute for Economic and Policy Research (VEPR) website: http://vepr.org.vn/upload/533/fck/files/[EN] Tai lieu hoi thao FINAL.pdf.

14. Viet Nam in transformation: How technology is changing jobs and enterprises (country brief) (Rep.). (2016, December 13). Retrieved December 13, 2018, from International Labour Organization website: http://www.ilo.org/hanoi/Whatwedo/Publications/WCMS_537822/lang–en/index.htm.

15. Better teachers crucial to educational reform. (2018, May 30). Viet Nam News. Retrieved December 19, 2018, from https://vietnamnews.vn/society/education/448914/better-teachers-crucial-to-educational-reform.html#WWj1GYu7ZCbKoVSY.97.

Apparel manufacturing: Vietnam PDF download

Vietnam garments PDF downloads

Apparel manufacturing: Vietnam

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Click on the download button to get a PDF version of the report, which contains the following:

The Vietnam advantage


  • Free trade agreements
  • Abundant, low-cost labor
  • Favorable business environment

Designer spotlight


  • Thuy Nguyen
  • Dieu Anh Nguyen

Supplier spotlight


  • Ban Mai Co. Ltd
  • Como Co. Ltd
  • Dong Bich Co. Ltd
  • Le Stitches Co. Ltd
  • TVP Garment JSC
  • Vietorigin Co. Ltd

Challenges


  • Reliance on imported feedstock
  • Labor-related concerns

Endnotes


Following a thorough program review and changes in macroeconomic factors, we have decided to discontinue the New Sourcing Markets platform and focus more on our education and international trade research programs.

We will now be redirecting you to the Hinrich Foundation homepage, where you can find out more about how we promote sustainable global trade. Thank you!