The Go-To Sourcing Destination: Vietnam Continues to Lure U.S. Firms. SOURCING at MAGIC August 14, 2017
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1 The Go-To Sourcing Destination: Vietnam Continues to Lure U.S. Firms SOURCING at MAGIC August 14, 2017
2 About the United States Fashion Industry Association (USFIA)
3 Our Mission The United States Fashion Industry Association (USFIA) is dedicated to the removal of barriers that impede the free movement of textile and apparel products to the United States and international markets. Our Work for the Industry Communication Education Advocacy
4 USFIA Members & Affiliates include Fashion brands, retailers, importers, and wholesalers doing business globally Service providers, including customs brokers, freight forwarders, law firms, logistics providers, steamship lines, and testing and certification companies Manufacturers and suppliers of finished products and inputs Supplier associations, business councils, promotional groups and agencies, and academic institutions
5 More Information Julia K. Hughes President United States Fashion Industry Association (USFIA)
6 Meet Our Panelists
7 Dr. Sheng Lu Assistant Professor, Department of Fashion and Apparel Studies University of Delaware
8 Dr. Sheng Lu Over 40 publications in academic and trade journals, Sheng s research focuses on the economic and business aspects of the global soft-goods industry (textile, apparel and related retailing), including international trade, trade policy and the governance of global apparel value chain. Author of USFIA s Annual Fashion Industry Benchmarking Study. Received his Ph.D. from the University of Missouri in Textile and Apparel Management in Worked with the U.S.-China Business Council in Washington D.C., conducting policy analysis and market research for U.S. multinationals having business with China.
9 Outlook of Sourcing from Vietnam: Results from the 2017 U.S. Fashion Industry Benchmarking Study Dr. Sheng Lu Assistant Professor Fashion & Apparel Studies University of Delaware August 14, 2017
10 About the Benchmarking Study Based on a survey of 34 executives at leading U.S. fashion companies (68% with 1,000+ employees, including 58% with 3,000+ employees) from April to May Respondents represent various business types in the U.S. fashion industry: retailers, brands, importers/ wholesalers and manufacturers.
11 Finding 1: Vietnam is the #2 most used sourcing base Respondents report sourcing from 51 countries or regions in 2017, close to 56 in last year s study. 8 out of the top 10 sourcing destinations are based in Asia #1 China (91%), down from 100% in previous studies #2 Vietnam (88%) #3 India (76%) #4 Indonesia (73%) #5 USA (70%), much higher than 52% in 2016
12 Sourcing base remains diversified
13 Finding 2: China Plus Vietnam Plus Many is the most popular sourcing model China Typically accounts for percent of a company s sourcing portfolio Only 19 percent of respondents source more than percent from China in 2017, down from 23 percent in 2016 Vietnam Typically accounts for percent of a company s sourcing portfolio Many Include the United States, North America, South & Central America, Africa, and Europe Each typically accounts for <10 percent of a company s sourcing portfolio
14 Finding 3: Vietnam is one of the most competitive and balanced Asian suppliers Sourcing base Speed to market Sourcing cost Risk of compliance USA Mexico CAFTA-DR China Vietnam Cambodia Indonesia Sri Lanka India AGOA Bangladesh Note: The results were based on respondent s average rating for each sourcing base. means much higher performance than the average and means much lower performance than the average.
15 Finding 4: Vietnam remains a rising star but U.S. fashion companies are more cautious about Vietnam s growth potential
16 Top Categories of Vietnam s Apparel Exports to the United States in 2016 (by value) and Market Competition Rank Share in Vietnam s OTEXA code and product apparel exports to the description United States (Women s knit blouse) 9.16% (Women s knit shirts) 9.02% (Women s trousers-cotton) 8.3% (Women s slacks) 6.98% (Men s knit shirts cotton) 6.06% (Dresses) 5.16% (Men s trousers) 4.92% (Women s coats) 4.7% (Men s knit shirts) 4.6% (Other MMF Apparel) 4.3% Data source: OTEXA (2017) Vietnam s rank (market shares) #2 (19.1%) #2 (19.6%) #2 (14.9%) #1 (25.5%) #2 (11%) #2 (15.9%) #1 (21.9%) #2 (24.2%) #2 (13.3%) #2 (10.4%) Competition in the U.S. import market Vietnam s #1 competitor Vietnam s #2 competitor (market shares) (market shares) China Indonesia (26.4%) (8.2%) China Indonesia (29.7%) (8%) China Bangladesh (35.4%) (11.6%) China Indonesia (21%) (7.8%) China Honduras (15.6%) (10.3%) China Indonesia (49.3%) (7.7%) China Bangladesh (19.4%) (8%) China Indonesia (48.8%) (5.9%) Honduras China (14.3%) (11.5%) China Mexico (56.8%) (4.6%)
17 Of the total 106 categories of apparel, Vietnam was a top supplier for 5 categories, China was a top supplier for 88 categories.
18 Respondents comments regarding China s competitiveness (Chinese factories) are the giant and will remain so for the foreseeable future. We will never be completely out of China due to their speed, ease of doing business. The only thing that could change that is a protectionist agenda. Speed to market is keeping China relevant in fashion apparel China will remain competitive and continue to invest in technology to differentiate and compete.
19 Avedis Seferian President & CEO Worldwide Responsible Accredited Production (WRAP)
20 Avedis Seferian Developed extensive knowledge of social responsibility issues within the highly complex worldwide supply chains of the apparel, textile and footwear sectors. Recognized expert in the area of social compliance and responsible sourcing, he often speaks on topics in this field at different forums around the world, and is on the Board of Advisors of the Alliance for Bangladesh Worker Safety. Member of the Virginia State Bar, as well as the American Bar Association
21 W R A P Worldwide Responsible Accredited Production An objective, non-profit team of global experts dedicated to promoting safe, lawful, humane, and ethical manufacturing around the world through certification and education World s leading independent facility certification program for the sewn products sector WRAP Top 10 for 2016 Rank Country Registrations 1 China Vietnam Bangladesh India Pakistan Cambodia Sri Lanka 99 8 Indonesia 75 9 Mexico Egypt 46
22 Steve DiBlasi VP Global Sourcing Lanier Clothes
23 Steven DiBlasi Responsibilities currently include compliance, sustainability, cost of goods, logistics and new factory development. He is also responsible for sourcing offices in China and Vietnam. Lanier Clothes is a global sourcing company with production currently in Mexico, China, India, Vietnam, Indonesia, Haiti, Egypt and Italy.
24 VIETNAM MAGIC August 2017
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28 VIETNAM REASONS TO BE THERE Compliance Machinery Investment English speaking Management Pro-business culture Experience in global logistics Environmental controls Factories moving from cities to rural areas to reduce wages and turnover
29 VIETNAM REASONS TO BE CAREFUL Competition for workers Samsung, LG, Panasonic Minimum wage increases every year for 10 years; 6.5% for 2018 potential to increase social welfare payments Raw materials still imported from China although more are available in country. Lack of mills & dyeing houses No FTA with USA FTA with EU reduces need to supply US. EU typically pays more for apparel
30 Chris Walker Apparel Production Advisor/Author Vietnam Garment Insider
31 Chris Walker Passionate guide for entrepreneurs, fashion designers and garment professionals investigating production in Vietnam. 9 years experience working in Ho Chi Minh city as an apparel production advisor bridging clients with garment manufacturers, sock manufacturers, ball cap manufacturers and back pack manufacturers.
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