Vietnam Garments Industry

An Expert's View about Sourcing in Vietnam

Posted on: 5 Apr 2010

Vietnam is one of the world’s most prominent supply centers of competitively priced garments. As theworld’s fifth-largest garment exporter, the country is home to more than 2,000 enterprises, most of which provide OEM services to a large number of prominent apparel and retail brands.


A few names included in the country’s impressive clientele list are J.C. Penney, Tommy Hilfiger, Disney,Wal-Mart, Lee Cooper, Li & Fung and Itochu.


The industry benefits from a vast pool of skilled labor, and numerous modern factories equipped with imported high-tech machinery.


The line is highly export-oriented,with the US and the EU as the leading overseas destinations. Combined, these markets absorb almost two-thirds of exports.


Standards compliance, particularly with ISO 9001:2000, is prevalent. A small number of manufacturers meet SA8000 requirements.


Casual and formal wear dominate as the most commonly produced items. Secondary product lines include sports and children’s apparel, underwear, and sleepwear.


Raw materials are obtained mainly from local suppliers. Some of these are cotton, polyester, silk, satin and nylon,which are purchased from fabric makers in Hanoi and Ho Chi Minh City.


Even as most suppliers are experiencing growth, the industry faces a number of challenges. Chief of these is the high cost of production brought about by rising material prices. To cope, suppliers are increasingly using locally sourced fabrics and garment components. Some are also accepting lower profits.


The following are some of the keytrends we see in Vietnam’s garments industry:

• Suppliers are divided as to whether prices will increase or remain steady in the year ahead. The majority of those planning to raise quotes will implement price adjustments of 5 percent or less. None expect quotes to drop.

• Manufacturers are confident that demand from key markets will improve over the next 12 months. As such, most are expecting export revenue to increase. A considerable number project sales to improve by at least 20 percent.

• High material and labor costs will be the most critical roadblocks for players in the industry. The ability to expand to new export markets is also a significant concern.

• Designs with simple styles, better fit and improved performance will be the main trend for new releases.



The above is extracted from the Executive Summary of China Sourcing Report: Vietnam - Garments


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Posted: 05 April 2010

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