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1 Type your keywords... Search Countries» Sourcing From Guides» About» Contact us Vietnam Sourcing: Garments Industry overview Vietnam Vietnam Sourcing: Garments Vietnam Sourcing: Footwear This section discusses key issues affecting export manufacturers in Vietnam, offering insight into industry composition and important supply centers. Sections Charts Vietnam Sourcing: Fashion accessories Highlights Garments exports Vietnam Sourcing: Lacquerware Vietnam garments exports Competitive advantages Supplier locations map Click charts below to enlarge Vietnam Sourcing: Home Decor Vietnam Sourcing: Bags Vietnam Sourcing: Toys Vietnam Sourcing: Footwear Casual wear Formal wear Sportswear Underwear Sleepwear Baby & children s wear Vietnam garments suppliers Vietnam Sourcing: Promotional gifts Download PDF of page Vietnam Sourcing: Wooden & wicker furniture Highlights Vietnam Sourcing: Table & dinnerware Vietnam Sourcing: Wicker baskets Vietnam Sourcing: Home furnishings Vietnam s textiles and garments industry has attracted foreign investments that are believed to have been made in anticipation of impending reduced tariffs and trade incentives. The country s pact with the US and 11 other nations of the Trans-Pacific Partnership, and free trade deal with the European Union will loosen up its door to global manufacturers. Vietnam footwear exports Competitive advantages Top four markets are the United States, Belgium, Germany and the United Kingdom Suppliers total output reached 130 million pairs of footwear Over 50% of footwear companies have overseas orders in the second half of 2015 Abundant labor force and low labor cost Significant number of available weaving factories Top five biggest manufacturers in the world Need for better sources of materials Manufacturers depend on foreign technology, design and machinery Low workers productivity The sector is composed of about some 720,000 workers from about 1,100 companies. FDIs share 77% of the country s total export sales Vietnam government and private sectors own most of footwear companies Export companies are eyeing to establish businesses in less expensive places in the South. In Southeast Asia, Vietnam is a better location than the neighboring countries. Labor strikes are rampant in Cambodia; on-going protests are challenging the Thai government; Myanmar s infrastructure needs improvement.
2 Many large foreign firms have entered the sector, while others are expanding, with an eye on export opportunities the TPP is expected to bring. Suppliers believe that if TPP goes into effect soon, its exports could reach approximately $30 billion by 2020 and US$55 billion by Meanwhile, local firms invest in material manufacturing. The industry is relatively successful because of its competitiveness. With a new production structure, the sector is shifting its focus from quantity to productivity. Manufacturers are also increasing the percentage of locally sourced raw materials that have high quality. For instance, a government-owned company has increased the ratio of local materials up to 60 percent. This achievement is attributed to the investment strategy preparation of materials investment, and the building of supply chain links among its members. Some enterprises have developed roadmaps and plans for FOB and ODM production. They are prepping up for Vietnam s participation in TPP through gradual technological innovation and modernization, and improvement of management efficiency, particularly in weaving, dyeing, designing and finalizing stages. Exports The textiles and garments industry is one of the largest economic sectors in the country, according to the Vietnam Textiles and Apparel Association (VITAS). It has 4,000 enterprises with a turnover of 20 billion dollars a year, accounting for 15 percent of gross domestic products, making Vietnam as the fifth largest garments suppliers of the world. Vietnam products have been exported to 180 countries and territories, in which the largest markets are the United States, Europe and Japan. The export value in the first six months of 2015 hit $10.2 billion, an increase by 9.6 percent compared to the sales in the same period last year. The average growth rate of Vietnam export revenue during was about 17.6 percent. Vietnam s market share in the U.S., which is its largest importer, may increase up to 13 percent from 9 percent once TPP will be implemented. Vietnam is currently in negotiations to sign free trade agreements (FTA) with other important markets. One of them is South Korea, which is the fourth-largest importer of Vietnam s textiles and garments. The trade deals can help improve the competitiveness of its exported goods and increasing foreign direct investment into Vietnam. Export sales in Belarus and Kazakhstan grew by percent year on year, accounting to$135.6 million, according to the General Department of Vietnam Customs. With the FTA, Russia can become a key market of garments industry, as it has a population of about 143 million and ranks fifth among the biggest economy in the world. Volumes shipped to Europe, the second largest importer of Vietnam s products, could increase by as much as 20 percent with the FTA, according to VITAS. Competitive advantages The industry has been growing through time because of many advantages. For one, it has a strong base of facilities and human resources for traditional sewing, weaving and dyeing from 2,000 long-established villages. Companies are taking full advantage of the good embroidery skills and needle work in Vietnam, as they keep their cultural traditions. The country is also a good location for smaller companies that want to source out with lower volume production. The FTAs have benefited the industry, resulting in increased earnings during the first half of Some of its FTAs include the ASEAN Free Trade Agreement (AFTA), the ASEAN-China FTA, the ASEAN-RoK FTA, the ASEAN-Japan Comprehensive Economic Partnership Agreement, the ASEAN-Australia-New Zealand FTA,
3 and the ASEAN-India FTA. Vietnam has enjoyed export yields since joining the World Trade Organization in The sector also has edge in the EU market due to the Generalized System of Preferences, which it is yet to fully utilize. The labor cost is also competitive in the country. Vietnam s minimum wage is one-third of what workers in coastal areas in China receive. Subsequently, more factories are being built to accommodate the huge pool of cheap labor. A study in 2008 showed that over four-fifths of foreign firms located in China for low labor costs, 63 percent of them chose Vietnam as an alternative. Vietnam garments sector continues to face some challenges despite being a major exporter. They are heavily dependent on imported raw materials and inputs, especially from China. The demand for yarn and textile factories is high, but they are also not capable to put up yarn and textile factories. For instance, domestic producers of cotton can supply to only 1 percent of the manufacturers, while those of fabric satisfy at least 12 percent of the demand, according to a large garment factory. The industry needs to end such dependence on imported inputs as it is very costly. It is also dealing with other production costs that continue to surge, such as electricity and transportation. Highly trained workers needed by the industry are unevenly distributed throughout the country, such that most of them are concentrated in the big cities. Meanwhile, garments sector is gearing towards investing in setting up factories to create raw material. However, the intellectual property is another issue that also needs to be addressed. The supply chain has to be taken into account when locating an outsourcing firm in the country. The local logistics remain at high costs, which comprise approximately one-fourth of Vietnam s GDP, according to a market research in As Vietnam is still at the early stage in developing its infrastructure, it remains a hurdle for the export industry to move forward despite cheap labor cost. Over 4,000 businesses comprise the garments and textiles industry, generating 4.5 million jobs. A vast pool of young, skilled workers are more than willing to work for low wages in Vietnam. With a production worth of nearly $2 billion a year, government-owned Vinatex is the largest supplier in the country and 10th in the world. Small companies normally have less than 100 workers. Their annual turnover reaches from $2 million to $5 million. They are capable of producing as many as 20,000 pieces every month. Their main product is baby and children s wear, formal wear or sportswear. Factory sizes are less than 5,000 square meters. Midsize firms have below 1,000 but not fewer than 100 full-time workers. Their total annual sales revenue varies from $5 million to $10 million. Monthly capacity is from 21,000 to 99,000 pieces. The main products are casual wear, formal wear and sportswear. Workshops cover an area up to 10,000 sqm. Upscale companies have above 1000 permanent workers. Annual turnover reaches more than $100 million. They are capable of producing over 100,000 pieces every month. They produce various products including casual wear, baby & children s wear, sportswear, underwear, sleepwear, and sportswear. Factory size is from 10,000sqm to 30,000spm. The production hubs are mainly located in six regions of Vietnam. Statistics show that 58 percent of the enterprises are located in north-east area; 27 percent in The Red River Delta area; 7 percent northern central area and central coastal area; 4 percent in the Mekong River Delta; and, the rest 4 percent in the northern midland, and mountain area and highlands. In the Red river delta, Hanoi is the center of fashion design, model production, supply services, materials, garments and textiles technology. They continue having many garments enterprises of high-end, high quality and high added value products. Some industrial parks of yarn production, weaving and dyeing are located in Pho Noi in Hung Yen, Hoa Xa, Bao Minh in Nam Dinh, Phuc Khanh, Thai Binh, Hai Phong, Ha Nam and Quang Ninh.
4 Factories of mechanical equipment and spare parts are located at the industrial park of Binh Xuyen in Vinh Phuc province. In northern midland and mountainous area, industrial parks are found in Phu Tho province, Thai Nguyen, Yen Bai, Tuyen Quang, Bac Giang and Bac Kan. In the north central region, the production hubs are concentrative in the provinces of Thanh Hoa, Nghe An, Ha Tinh, Quang Tri and Hue. In the south central coastal region, Binh Dinh, Phu Yen, Da Nang, Binh Thuan and Ninh Thuan provinces are home to textiles industrial parks. In south eastern region, Ho Chi Minh City is the center of fashion design and model production center, providing services, raw materials, garments and textiles technology. Other industrial parks are mainly located in Binh Duong, Dong Nai, Binh Phuoc, Tay Ninh and Ba Ria in Vung Tau. In the Mekong river delta region, industrial parks are located in Long An, Tien Giang, Ben Tre, Vinh Long, Dong Thap, Can Tho, Bac Lieu and Kieu Giang. Supplier locations map Vietnam garments suppliers Vietnam garments supplier database 2012 Hinrich Foundation All Rights Reserved. Contact Us
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Vietnam Sourcing: Jewelry & Fashion Accessories Industry overview
Countries» About» Contact us Vietnam Sourcing: Jewelry & Fashion Accessories Industry overview Vietnam Vietnam Sourcing: Jewelry & Fashion Accessories Suppliers & products Industry overview Export data
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