Textile and Garment Industry in Vietnam

Textile&Garment IndustryinVietnam
ResearchonGarmentProducersinVietnam InternationalBusinessResearchVietnam2008
Ms.L.Buisman Ms.G.J.Wielenga Groningen August15th,2008 UniversityofGroningen,FacultyofEconomicsandBusiness
InternationalBusinessResearchVietnam2008 Bandolera 1
ExecutiveSummary
Vietnamisknowntohaveanimpressiveandquicklydevelopingtextileandgarmentindustryandlow laborcosts.ThesefactorsmakeitapossibleinterestingandattractivemarketforDutchgarmentand fashionbrandssuchasBandolera.BandoleraisaDutchfashionbrandforwomenof2560years.Her collectionsaredesignedwithspecialcare,madeoutofhighqualityfabricsandusemanydetailsand accessoriestoprovidewomenwithtrendyclothing.ForherproductionsheisalreadysettledinChina andIndiaandnowlookingforextrasourcingpossibilitiesinVietnam.Thegoalofthisreportistogive ananswertothemainquestionwhetheritisinterestingforBandoleratoproducetheirgarmentin Vietnam. From February till August 2008, the International Business Research Project of the University of GroningencontainedmarketresearchinVietnambyorderofBandolera.Theresearchwasexecuted by 2 selected business students of the Faculty of Economics and Business and supported by two assistantprofessors. To get detailed information on all important aspects, both desk and field researchwasexecuted,ofwhichthelatertookplaceinVietnam(MayJune2008). TodecidewhetheritisinterestingforBandoleratolettheirgarmentbeproducedinVietnam,three requirements are of main importance. First of all, the fabrics Bandolera wants to use should be availableinVietnamandofgoodquality.Secondly,thelocalgarmentproducershavetobecapableof producingfashionablegarmentwithmanydetails,forloworderquantitiesrangingfrom3003.000 pieces and deliver everything within 90 days in the depot in The Netherlands. Third and last of all, Vietnameselegislationsshouldnotrestraintheexportofgarmentandgoodlogisticservicesofshould wellrepresentedforbothshipmentandairmail. ThefabricsavailableinVietnamaremainlycotton,followedbypolyesterandsilk.Thegarmentsector needs up to 200.000 tonnes of cotton for its export plans. The current production does not meet morethan2%ofthisdemand.Despitebiginvestmentsbythegovernment,theproductionofcotton isdecreasinginthelastcoupleofyearsduetoloweconomicefficiency.Theproductionofpolyester onlymeets4%ofthenationaldemand.Recently,biginvestmentshavebeenmadeinthepolyester plantswhichshouldbeableprovidein50%ofthenationaldemandby2012.Thesilkproductionin Vietnamissmallandstillinatraditionalway.ComparedtoJapanesesilkthequalityislow.Itturnsout that Vietnam does not have the machinery and capacity to produce silk for the industry to export. Overall,differentsourcesconfirmthattheVietnameseproductionoffabricsisinsufficienttoprovide inthesectorsdemand,makingitdependentonimport.Intermsofquality,Vietnamcanprovidein lowtomidlevelquality,buthighqualityfabricsstillneedtobeimportedfromChina,Taiwan,etc.It hastobenotedthatVietnamisheavilyinvestinginitsfabricproductioncapacity,butthefocusisfirst ofallonquantitiesandtheseplansalsocopewithmanydifficulties. Ingeneral,mostgarmentcompanies(70%)arelocatedinthesouthofVietnam,neartheharborand airport of Ho Chi Minh City. In total we visited 17 garment companies in Vietnam. These company visitsclarifiedthatthefocusofthesectorisonmassivequantitiesoflowtomidlevelquality.These massive quantities are needed because the main reason for customers to go to Vietnam for productionofgarmentisitslowpricing.Therearealotofbigquantitiesordersoflowqualityfabrics availableforlowprices,whichhastheinterestofhugecorporationsmostlyfromtheUS.Althoughthe machineryinVietnamesefactoriesisnewandadvanced,thereislittlemarketfortheproductionof small,fashionableorders.OftenVietnamesegarmentproducerswillnotacceptloworderquantities, becausetheyneedtokeeptheirmachinesrunninganddonothavethetimetoinstructthesewerson differentproductionlineshowtocreatemanydetails.Theyrealizehighturnoversbyproducinglarge, simple orders for low prices. None of the companies we visited could meet all requirements of Bandolera. TheVietnamesegovernmentispromotingtheexportofgarmentandthereforethereisnorestriction ontheexportofgarmentandverylittlelegislationinfluencesthedeliverytimesofgarmentorders. Next to that, logistic services in Vietnam are well represented and accommodated. However, there
aresomesetbacksconcerningthepricingmethods.BandolerapreferspricingonCost&Freight(C&F), inwhichtheproducertakescareofalllogisticmattersuntilthedeliveryinthecustomersdepot.One stepdownispricingonFreightonBoard(FOB),inwhichtheproducertakescareofthegoodsuntil they are on board of the ship. Pricing on FOB is becoming more common in Vietnam, but is still consideredasariskybusiness.WehavenotfoundanyproducerwillingtodeliverordersonC&Fbase. Other barriers exist in the more informal aspects such as language and communication problems. These barriers make it necessary for a company such as Bandolera to, when producing in Vietnam, keepacloseeyeontheproductiontopreventmistakesandmisunderstandings. BasedontherequirementsofBandoleraitisdifficulttofindafittinggarmentproducerinVietnam. Vietnamesefabricplantsarenotabletoproducemiddletohighqualityfabrics,andoftenthequality is not stable. Next to supplying fabrics from other foreign countries buttons, sewing threads, interlining,shoulderpads,andotherembroideryareimportedaswell.Duetothefactthatmostmust besourcedfromotherAsiancountries,thelead/deliverytimeofgarmentaswellasthecostpriceof garment increases. Furthermore, Vietnamese garment companies are not specialized in the production of detailed, fashionable garment and also do not prefer this kind of orders. At this moment there is much competition in the textile and garment industry and there are many big quantityordersavailable,guaranteeingsalaryandemployment.Becauseofthebadfitontwoofthe threeinvestigatedaspects,wecananswerourmainquestionnegatively.Alltogether,Vietnamdoes notappearasaninterestingmarketforBandoleratoinvesthertimeandenergyin.
Preface
Thereisnodoubtaboutit,Vietnamisbooming.Sincetheadoptionofthedoimoi(renewal)policy in the late 1980s, Vietnams economy has shown remarkable growth. Numerous economic progressionshavetransformedthecentrallyplannedeconomyintoamarketbasedone.Overthelast fiveyearsVietnamreachedasteadyaverageeconomicgrowthof8percent.WhenVietnamjoinedthe WorldTradeOrganizationin2007,theinternationalborderswereofficiallyopenedandinthatsame yeartheamountofforeigninvestmentsdoubledto7.8billionUSdollars. Vietnam has become a great potential for foreign investors because of its crude oil production, its richness in natural gas reserves and its hardworking workforce with low labor costs. All together, Vietnam has become one of Asias best economic performers and is often described as the new China.ThismakesitaninterestingbusinessopportunityforDutchcompanies. From February till August 2008, the International Business Research Project of the University of GroningencontainedmarketresearchinVietnamfor11Dutchcompanies.Thereportinfrontofyou is the result of the research for one of those companies: Bandolera, a Dutch fashionable garment brand for women. The research was executed by 2 selected business students of the Faculty of EconomicsandBusinessandsupportedbytwoassistantprofessors. Goal of this report is to give an answer to the question whether it is interesting for Bandolera to producetheirgarmentinVietnam.Todothis,welookedatthreeaspects:(1)theavailabilityoffabrics inVietnam,(2)visitingandevaluatinglocalgarmentproducersoncapability,and(3)theinfluenceof legislations and the availability of logistic services. Toget detailed information on all three aspects, both desk and field research was executed, of which the later took place in Vietnam (May June 2008). During our stay in Vietnam we visited both stateowned and private companies and held interviews with different experts and agents. The results of our research are represented in this report. Forallthehelpwereceivedduringtheresearchandthewritingofthereport,wewouldliketothank our assistantprofessors Mr. dr. K.J. Alsem and Mr. dr. T.W. de Boer. They have guided us through manydifficultiesduringourresearchandsupporteduswiththewritingofthereport.InVietnamwe hadmanyhelpwhencommunicatingwithVietnamesecompaniesfromourinterpreters,Ms.Nguyen ThuyVyandMs.NguyenHongChinh.Manythanksforalltheirhelp,withoutthemwecouldnothave gathered as much information as we have. Finally we would like to thank Mrs. Nghiem Lien Huong andMr.JosLangensfortheirhelpandhospitalityduringourstayinHCMC.Fromthemwereceived manyimportantadditionalinformation,weotherwisewouldnothavebeenabletofind. Alastwordtoallreadersofthisreport;wehaveputmucheffortinwritingthisreportasclearand pleasantaspossible.Wehopeyouwillfindtheinformationyouarelookingfor.Enjoy! August2008,Groningen. LisetteBuismanandGerdaWielenga
Content
ExecutiveSummary............................................................................................................................... 2 Preface Content Chapter1 1.1 1.2 1.3 1.4 Chapter2 2.1 2.2 2.3 Chapter3 3.1 3.2 3.3 Chapter4 4.1 4.2 4.3 4.4 4.5 Chapter5 5.1 5.2 5.3 5.4 5.5 5.6 Chapter6 6.1 6.2 6.3 6.4 4 5 Introduction..................................................................................................................... 7 Bandolera............................................................................................................................. 7 Purposeofresearchandresearchquestions........................................................................ 8 ConceptualModel................................................................................................................ 9 Reportsetup ..................................................................................................................... 10 Methodology ................................................................................................................. 11 Generalmethodology ........................................................................................................ 11 Criteriaforselectionofnewgarmentproducers................................................................ 11 DecisionTree ..................................................................................................................... 14 TheVietnameseFabricMarket ...................................................................................... 16 CurrentsituationandtrendsintheVietnamesefabricmarket .......................................... 16 Overviewmaindomesticproductionoffabrics.................................................................. 17 Conclusion ......................................................................................................................... 18 TheVietnameseGarmentIndustry ................................................................................ 20 Economy ............................................................................................................................ 20 Exportoftextileandgarment ............................................................................................ 21 Overviewofcompanies...................................................................................................... 21 TheVietnamTextileandApparelAssociation .................................................................... 22 Futureplans ...................................................................................................................... 22 EvaluationofGarmentProducers .................................................................................. 24 Descriptionofvisitedgarmentcompaniesandfactories.................................................... 24 Finalevaluationofgarmentproducers............................................................................... 32 ComparisonstocurrentproducersofBandolera................................................................ 35 Excludedgarmentproducers ............................................................................................. 35 Expertsandagents............................................................................................................. 36 Conclusion ......................................................................................................................... 37 LogisticsandLegislation............................................................................................... 391 LegislationandrulesaboutexportinggarmenttotheEU ................................................ 391 Pricingandpayment ........................................................................................................ 391 LogisticservicecompaniesVietnamTheNetherlands ..................................................... 40 InformaltradebarriersintheVietnamesegarmentindustry ............................................. 41
6.5 Chapter7 7.1 7.2
Conclusion ......................................................................................................................... 42 ConclusionandRecommendation ................................................................................. 43 Conclusion ......................................................................................................................... 43 Recommendation............................................................................................................... 44
References ...................................................................................................................................... 46 OverviewofAppendixes ..................................................................................................................... 47 Appendix1 AbbreviationList............................................................................................................ 48 Appendix2 ProcessofFabricProduction.......................................................................................... 49 Appendix3 ProcessofGarmentProduction ..................................................................................... 51 Appendix4 MapsofVietnam ......................................................................................................... 526 Appendix4.1......................................................................................................ProvincesofVietnam 52 Appendix4.2........................................................................................... IndustrialzonesofVietnam 53 Appendix5 AgendainVietnamandContactDetails......................................................................... 54 Appendix5.1........................................................................................................ AgendainVietnam 54 Appendix5.2.............................................................................................................. ContactDetails 55 Appendix6 ListofRejectedGarmentCompanies ............................................................................. 59 Appendix7 Checklist ........................................................................................................................ 62
Chapter1 Introduction BandoleraisaDutchfashionbrandforwomenof2560years.Thecompanyissearchingfornew attractivesourcingplacestoimproveherproductionprocess,possiblyinVietnam.Inthisfirstchapter we will give more information about the company and what she is precisely looking for. We will continue with clarifying the purpose of the research and its research questions. This is further illustrated with a conceptual model. We conclude the chapter with an outline of the set up of the report.
1.1 Bandolera
Bandolera was established in 1985 as an original wholesaler. Over the last 20 years, Bandolera has growntoaninternationalladiesfashionbrand.TheirmainmarketliesinEurope,butBandoleraalso hassellingpointsintheUnitedStates(US)andCanada.Thebrand Bandoleraissoldin40different countriesandNotTheSame(NTS;anindependentcoordinatedcasuallineofBandolera)isavailable in 30 countries. With 40%, the Netherlands still takes care of the biggest part of the turnover, followedbyBelgiumandNorway. Bandolerasellsover1.5milliongarmentsannually,representingayearlyturnoverover50million (year 2007). Worldwide Bandolera has more than 2,400 points of sale, including several Bandolera standalone or franchised shops and several shops incorporated within department stores. In total, Bandolera has 51 monobrand Bandolera stores and NTS shops. The company started with establishingitsownstoresthreeyearsago.Ofthetotalturnoverof2007,morethan60%isexported to25countries.Over2007,theturnoverrategrowthwas30%. Qualitymanagementisveryimportantforthecompany.Thedesigning,buyingofmaterials,makingof patterns,planningandsupervisionofproductionalltakesplaceattheheadofficeinRotterdam,The Netherlands. All materials are tested for quality, shrinkage and wear ability. To keep the ability of bringingout16collectionsperyear,theneedforprecisedeliverydatesandquicksupplyreordersis very high. Bandolera therefore needs to retain control over the whole process from designing to 1 logistics . Philosophyandmarketpositioning Bandolerafocusesontheyoungdynamicwomanwholeadsanactivelife.Bandolerascollectionaims to create a distinctive image which is trend following, while offering the possibility of multiple combinations,butstillprovidinganelegantandfemininefeeling. Tokeepclosetrackonfashiontrends,Bandolerahasitsowntrendwatcherswhoarefollowingthe international fashion scene. Next to that, Bandolera offers 16 collections a year, which is a flexible way for the styling department to keep close track of the trends and share them with Bandoleras customers.Inshort,Bandoleratriestocombinehighqualityandservicewithastrong,trendfollowing image. Sourcing:suppliersinTurkey,IndiaandChina Bandolera is already working with garment producers in Turkey, China and India. They have the longestandstrongestrelationshipwiththefactoryinnlu,Turkey.Bandolerahasworkedwiththem since they started. Of the whole Bandolera collection, 50% is produced in Turkey. Bandolera is co ownerofthisfactory,20%oftheproductionofthisfactoryisforBandolera.Therelationshipwiththis factoryisstrong;theydonotjustproducethegarment,butalsotakecareofsmallproblemsatthe scene when these occur (for instance local logistic problems). The factory in nlu (Turkey) has 800 sewers.ForBandoleratheymainlyproducesuits(blazers,pants,confection).Theproductionofthese is still cheaper and better in Turkey then in Asia. Bandoleras head of purchase (Mrs. P. Punt Oldenhof) visits this factory together with a stylist every two weeks. This is mainly to check the processesandtofitthefittingsamples. FortheNTSbrand,allgarmentsareproducedinAsia.BandoleraiscooperatingwithIndiaandChina forabout3years.Inrelationshiptermsthisisstillshort.Oneofthedifficultieswithfindinganew
1
www.bandolera.com,4March2008
garmentproducerinAsiancountriesisthedifferenceinlanguageandculture.TheAsianwayofdoing business is not always as straight forward as the Western way of doing business. Samples that are shownbyproducers,forexample,couldbemodelsthattheydonotmakeanymore,orevenhavenot produced in their own factory. It has taken Bandolera 2 years to establish a real open, trustful relationshipwiththeircurrentproducersinChinaandIndia.TheyvisitthecompaniesinChina2to3 timesperyear.FirstBandoleravisitsthefactory,afterthatthefactorywillsendthesamplestothe Netherlandswheretheywillbecheckedonfitsize.ThefactoriesinChinaareinHongzou,ShangHai, BeijngandHongKong.Theyhavethefastestdeliverytimesandhavethemostandnewestmaterials. ThefactoriesinChinaandIndiausuallyhaveabout50/100sewers.Alotofjacketsareproducedin Asia. For the fitting of the garment from Asia, the samples are flown in by air. Fitting ladies in the Netherlandswillcheckifthesizesarecorrect.Afterthatthesamplesaresentbacktothefactory.The usualprocessisthatsamplesfromAsiaaresentforthandbackbyair,whiletherealproductionorder isshippedoversea.Thisisnecessarytocatchthedeadlineoftotaldeliverytimeof90days,butalso resultsin400.000500.000UPScostsperyear.Thetotaldeliverytimeof90daysisverytightand importantforBandoleratobeabletobringout16collectionsperyear.These16collectionsperyear meanthattheyofferanewcollectionevery2/3weeks.Thereforethefirstdeliverytimeisusuallythe tightestandissometimessendbyair. Ingeneral,ordersareplacedpersizeandpercolor.Sizesrangefrom3646.Theaveragequantity permodelofanorderfromBandolerais1.500pieces(withrangesbetween3003.000pieces,with pikesto200or5.000pieces).Thisordersizedoesnotdifferoverthedifferentproductgroups(pants, blouses,etc.).PatternsaredesignedbyBandoleraandsendtotheproducerdigitally. Futureplans In the first half year of 2008, 20 new mono brand stores are opened in the Netherlands, Belgium, Germany, Poland and Turkey. The brand has also announced a new start in the United States. BandolerahopesthatthedevelopmentofactivitiesintheUSwillleadtoanimportantcontributionto a quick growth of the company worldwide. In the second half of this year another 20 stores are planned to open. As every company, Bandolera is looking for new ways to improve its production process.BecauseofthegreatdevelopmentofthetextileindustryandthelowlaborcostsinVietnam, Bandoleraishopingforanewsourcingplacetosupportitsfutureplans.
1.2
Purposeofresearchandresearchquestions
ThepurposeofthisresearchistoprovideBandoleraasolidreportonbaseofwhichBandolerawill make a wellconsidered decision whether to produce garment in Vietnam. At the same time the reportwillprovidepracticalinformationaboutdoingbusinessinVietnam(i.e.governmentallawsand policywithregardtoproductionandexportofgarment),whichis relevantforBandolerawhen she decidestoentertheVietnamesefabricsandgarmentmarket. We are looking for the opportunities for Bandolera to produce middletohigh quality garment in Vietnam.MainaspectsarewhetherfabricsareavailableinVietnam(homemade),investigatingwhich producersareabletoproducetherequiredgarmentofBandolera,andalsoenquirepracticalthings which are concerned with entering the Vietnamese market. The above mentioned leads to the followingproblemstatement: IsitinterestingforBandoleratoproducetheirgarmentinVietnam? Toanswerthisquestion,wedividedthesubjectin3mainresearchquestions(RQ).Eachofthemis dividedinseveralsubquestions(SQ)whichwewilltrytoanswerinthisinvestigation.Theresearch questionsarealsosummarizedinaconceptualmodelattheendofthisparagraph. RQ1 WhatistheavailabilityoffabricsinVietnam? This research question provides insight in the different kinds of fabrics (yarns, fabrics, accessory, embroidery) used for production of garment products of Bandolera. Bandolera has provided the researchtimeinformationaboutthecharacteristicsofthedifferentkindsofyarnsandfabricswhich areusedintheirproduction/fashionline.Alsoanoverviewisgivenaboutthefabricsthatareavailable inVietnam,whichofthesearehomemadeandwhichoftheseareimported.
SQ1.1 WhatkindoffabricsdoesBandoleraingeneralusefortheproductionofhercollections? SQ1.2 WhatkindsoffabricsareavailableinVietnam(dividedbyhomemadefabricsandimported fabrics)? SQ1.3 Whatisthedeliverytimeofthehomemadeandimportedfabrics? SQ1.4 How can fabrics in Vietnam be characterized in terms of quality compared to surrounding exportingAsiancountries? RQ2 CanVietnamesegarmentproducersmeettheselectioncriteriaprovidedbyBandolera? ThisresearchquestionprovidesinsightintheVietnamesemarketoffabricsandgarmentproducers. AnextensivelistofVietnamesetextileandgarmentproducerswillbeputtogether.Achecklistisused to evaluate each producer whether it is an interesting company for Bandolera to do business with. This checklist uses grades to assess for example the capacity, quality, references and the level of Englishofthelocalproducer.ThecompanieswiththemostpotentialarevisitedinVietnamandagain evaluated with a checklist of criteria. Contact information of the visited companies is included in Appendix5.2ofthisreport. SQ2.1 Whichlocalproducersareadvisedtousbyourcontactpersons? SQ2.2 DoVietnamesegarmentproducershavethecapacity,machinery,experienceandcertificates toproduceforBandolera? SQ2.3 AreVietnamesegarmentproducersabletoproducefashionablegarmentproductssimilarto thecurrentBandoleracollection? SQ2.4 Areadditionalitemsandaccessories(suchasbuttonsandYKKzippers)availableinVietnam? SQ2.5 Whatistheproductiontimeandestimatedpriceofcounterandfittingsamples? SQ2.6 With which lead times and payment terms for complete orders do Vietnamese garment producersingeneralwork? RQ3 Which Vietnameselegislationsand logistic services influencethe export of garment toThe Netherlands? This research question provides insight into thepractical executionof the researchin the case that BandolerawantstodobusinesswithaVietnameseproducer. SQ3.1 WhatdoVietnameselegislationsspecifyabouttheexportofdifferent kindsofVietnamese garmentproductstotheEU? SQ3.2 Which local producers are available to facilitate in matters of logistics? For example, are WesterncompaniessuchasUPS/DHLrepresentedinVietnam? SQ3.4 WhatarethecostsanddeliverytimesoflogisticservicesfromVietnamtotheNetherlands? (Airmailandshipping?)
1.3
ConceptualModel
To mark the boundaries of our research, we created a conceptual model (see figure 1.1 below) in whichwesimplifytheVietnamesetextileandgarmentmarket.Theconceptualmodelrepresentsthe main concepts and their relationships which are of significance to Bandolera and about which we collectedinformation.Themodelcanbereadfromlefttoright,dividedinthreeparts.Startingatthe left side of the model, we begin our research with the availability of fabrics, yarn and accessories (RQ1). The second column focuses on the Vietnamese production lines (RQ2). The third column represents the subject of RQ3 where the influence of legislations and the availability of logistic servicesareattended.
Figure1.1
Fabric Yarn Accessories
Conceptualmodel
Sample(s) Production lines Order
Airmail Bandolera Shipment
Legislation
Government
1.4
Reportsetup
The report is divided in 7 chapters, of which the first gives an introduction of the purpose of the research. In chapter 2 the general methodology and the specific manner of data collection is described. The 3rd chapter describes the availability and quality of fabrics and fabric production in Vietnam.Inchapter4wegiveadescriptionofthegeneralVietnamesegarmentindustrywithcurrent statisticsandfutureplans.Chapter5givesanoverviewoftherelevantcompanyvisits,comparedwith Bandolerascurrentsuppliersandsomemainconclusionsabouttheavailabilityofpotentialgarment producers in Vietnam. In the 6th chapter we give more information about logistics and legislation concerning the export of garment from Vietnam to The Netherlands. We end the report with conclusionsandrecommendationsforBandolerainchapter7.
Chapter2 Methodology
2.1
Generalmethodology
The research was conducted in two phases; the desk research in the Netherlands and the field researchinVietnam.ThedeskresearchwasexecutedfromFebruary2008tillMay2008.Inthispartof the research information about the Vietnamese textile and garment industry was collected on the internet. A first selection of garment producers was made through the use of 5 different lists2 of garmentproducers.Theseproducerswereemailedandifnoresponsewasreceived,atelephonecall wasmadetogetincontactwiththecompanies.Throughthiswaywereachedoutto80companies,of which20respondedand17appointmentsweremade.Adifferentwaytogetmoreknowledgeabout the Vietnamese textile andgarment industry was tobuild relationships with useful contact persons andexperts.IntheNetherlands,wereceivedinformationfromMr.WestlandandMr.Vrieswijkabout theirexperiencewithexportandlogisticmattersfromVietnamtoTheNetherlands.Wealsoreceived information from Mr. Marsman about his experience with importing garment from Vietnam. Furthermorewefoundtwotheses,thoughwhichwereachedtwooldPhDstudents,oneinHCMCand oneinHanoi.WithbothcontactpersonswemadeappointmentsinVietnam.Wealsogotincontact withtheUniversityofHCMCandaDutchgarmentproducerthathasbeenactiveintheVietnamese garmentindustrysince1986.Indeskresearchphaseoftheresearchwewereabletogetintouchwith 5contactpersonsandexpertsinVietnamand3inTheNetherlands. Fromthe5thofMay2008tillthe06thofJune2008fieldresearchwasexecutedinHoChiMinhCity(3 weeks)andHanoi(2weeks).Inthispartoftheresearchdatawascollectedthroughinterviewswith garment producers and experts, and through company and factory visits of selected garment producers.Thefocuswasontheareasinornearbythecentersofbothcities,atleastwithin2hours driving. InHCMC this contains the provincesHo Chi Minh, Binh Duong(and Long An).In Hanoi this containedtheprovinceHanoiandsomesurroundingprovinces. Intotalwewereabletobuildrelationshipswith11contactpersonsandexpertswholeadusto17 possiblyinterestingcompanies.Ofthesewewereabletocontact11companies.Intotalwevisited17 companiesandinterviewed7contactpersonsorexperts.
2.2
Criteriaforselectionofnewgarmentproducers
Bandoleraprovidedtheresearchteamwithcriteriaselectionstosearchforpotentialsuppliers.These criteria are demands Bandolera sets for all her producers and which producers should be able to fulfill.Generalcriteriasuchasthecapacity,machinery,exportexperienceandcertificates(ISO)ofthe companywillgivedetailsaboutthecompanysbusiness.Theseareusuallydisplayedinthecompanys profile. Based on the information in these profiles, companies were selected for a company and factory visit. During these visits the criteria discussed below were checked. Below, the criteria and howtheseareevaluatedduringacompanyvisitarediscussed. Companyprofile Capacity:Themaximumcapacityofaproducerisnotveryimportant,itismoreimportantwhether theycanmake10.000piecespermonth(minimumrequirement).BecausethequantityofBandolera ordersliewithintherangeof3003.000pieces,itisimportantthatproducersareabletoproduce these small orders. The average per model is 1.500 pieces, which can be used to make price comparisons. Datacollection:Duringtheinterviewquestionsareaskedaboutthecapacitypermodel,thecapacity permonthoryearofthefactories,thesizeofcurrentorders,thenumberofworkersinthefactories andthenumberofproductionlines. Machinery:Thekindofmachinerythatisusedinthefactoryshowswhatskillsthecompanyhasinside and which kind of activities they have to outsource. For example, the presence of spinning lines, weaving looms, knitting machines, dyeing machines, sewing machines and embroidery machines showwhichkindoffabricandgarmentcanbemade.
2
SeereferencesChapter8
Datacollection:Whenvisitingthefactory,machinesarecheckedwhethertheyarefullyusedandif not, what explanation this has. It is a bad signal if there is, for example, a layer of dust on the machinery. Next to that it is important to check what kind of machinery they have and use. The brandsofthesemachinesarewrittendown. Export experience: The experience of Vietnamese companies with exporting to western countries (preferablytheyexporttotheEU,butifnottheyshouldatleastexporttotheUS).Producersthatdo notalreadyexportarenotpotential,becausethentheyarenotfamiliarwiththeprocessofexporting anddealingwithEnglishspeakingcustomers. Datacollection:Intheinterview,questionsareaskedforwhichcustomerstheyproduceandtowhich countriestheyexport.Whilewalkingaroundinthefactoryandlookingatsamplesintheshowroom, labels of garment are checked for familiar brands. The ability to work with foreign countries also becomesclearinhowwellthecommunicationisgoingduringtheinterview.Wecheckthisbyjudging thegradeofEnglishofthecontactpersonandwhetherornotitisnecessarytousealinguist ISOnorms:TheISO9001certificateisastandardtochecktheorganizationofthecompany,butthe use of it should not be overestimated. ISO 9001 is one of the standards in the ISO 9000 family of standardsforqualitymanagementsystems.ISO9000ismaintainedbytheInternationalOrganization for Standardization and is administered by accreditation and certification bodies. Some of the requirementsinISO9001include(1)asetofproceduresthatcoverallkeyprocessesinthebusiness, (2) monitoring processes to ensure they are effective, (3) keeping adequate records, (4) checking output for defects, with appropriate and corrective action where necessary, (5) regularly reviewing individual processes and the quality system itself for effectiveness, and (6) facilitating continual improvement. ISO 9001 certification does not guarantee that the company delivers products of superior(orevendecent)quality.Itjustcertifiesthatthecompanyengagesinternallyinpaperwork prescribedbythestandard.SomecompaniesusetheISO9001certificationasamarketingtool. Datacollection:Duringtheinterview,questionsareaskedaboutthepresenceofISO9000,ISO9001 andSA8000certificates.UsuallycertificateslikeISOarepubliclydisplayed. Fabrics Intheresearchwesearchforall kindoffabricsandgarment.Strongrequirementis thatproducers work with middletohigh quality fabrics and can supply these fabrics. The focus thus lies on good quality fabrics, not cheap ones. The processing of good fabrics is more complex. To have short deliverytimes,fabricsshouldbeproducedinVietnamandnotimportedfromChina.Becausedelivery timesareshort,fabricsshouldbeavailableinjustafewdays.Iffabrichastobeimported,ittakesat leastafewdaystocrosstheborder.BecauseBandoleraworkswithatightschedule,theystresson precise delivery dates and quick supply reorders. Bandolera starts her process of designing a new collectionwiththefabric.Thefabricisthefirstinputandwiththisfabrictheydesignanewmodel. ThereforeBandoleraissearchingforspecialfabricsofgoodto,preferably,highquality.Nexttothat,it isalsoveryimportantthatthequalityofthefabricsisstable.ThequalityBandoleraislookingforis middlepricelevel,notatthebudgetendandalsonotatthehighendpricelevel.Theproducershave tobeabletoshowwithwhatkindoffabrictheyareworkingwithandcanfind.Theyalmostnever havefabricsinstock.Bandoleramostlyusesitsowncolors,thereforefabricshavetobedyedspecially forBandolerasproduction. Datacollection:Whenvisitingthecompanies,questionswillbeaskedaboutwhichkindoffabricsthe companiesworkwithandwheretheygettherefabricsfrom.Whenaskingaboutthedeliverytimesof thefabrics,thefocusliesonfabricfromscratch(beforethedyeingtakesplace),becauseBandolera oftenusesherowndyeingcolors.Anotherimportantaspectoffabricsisthequality,thisisdifficultto check. Therefore we ask questions, take pieces of fabric and we also ask if quality of the fabrics is stable.Inalaterstadium,thesefabricscanberecheckedforqualitybyBandolera. Garment Bandoleraislookingfortheproductionofallkindsofproductgroups;tshirts,jeans,blouses,etc.The only garment product group Bandolera is not interested in is underwear. Every factory is usually specializedin oneproductgroup,forexampletheyareonlyspecializedinmakingjeans.Butifthey can make blazers, they usually also are able to produce blouses. If factories make many different productgroups,thenthesewillbeseparatedivisionswithadifferentmanageryouhavetodealwith.
Bandolera collections are not simple, but mainly have detailed and complex designs. Some embroidery has to be done by hand. Therefore the products are very labor intense. Interesting is whetherVietnamesegarmentproducersarespecializedinonespecificgarmentgroupandifthisfits with the Bandolera style. Producers have to already be familiar with the kind of garment products thatBandoleraislookingfor,theyshouldnothavetodevelopit. Datacollection:Asmentionedmostcompaniesspecializeinonekindofproductgroup.Importantis whatkindofgarmentthecompanyisspecializedin,whichtheycanproduceandwhichtheyproduce at the moment. Furthermore questions are asked about which brands of yarn, interlining and shoulderpadstheyworkwith.AgoodbrandforyarnisCOATS.Agoodtooltojudgeacompanyisto check whether they understand the product specifications of Bandolera, if they have their own laundryandalsoiftheyareabletoprintdigitallysentpatterns.Whenvisitingthefactoryandjudging samplesfromtheshowroomabetterinsightcanbegivenofthequalityoflining,shoulderpadsand workmanship. Accessories Notonlythefabricsshouldbeavailable,butalsothezippersandthebuttons.Itisapriorrequirement that they work with YKK zippers. These are the only zippers which can be guaranteed to work correctly.ThebuttonsBandoleraisworkingwithvarieswiththeseason. Datacollection:Duringtheinterviewquestionsareaskedwithwhatkindofaccessoriesthecompany isworking.ZippershavetobefromthebrandYKK.Furthermoreitisimportanttoaskforasample bookofthebuttonsthecompanyisworkingwith.Usuallyeveryproducerhasitsownbrandandthere isnowellknownbrandofbuttons.Bestwouldbetogetasamplebookofbuttons,butthiscanalso becopied.Withblazersitisimportanttoaskwhatkindofshoulderpadstheyuse.Producersshould beabletoshowwhatkindofbuttons,shoulderpadsinterliningtheyworkwith.Forembroideryand printsweaskwhetherthecompanycanmakethemintheirownfactoriesoriftheyhavetooutsource them. During the visiting of the factory, we check with what kind of machines the embroidery and printsaremade. Samples For fitting of the garment from Asia, the samples are delivered/send by air. The experience of Bandolera with Asian suppliers is that they usually do not charge costs for the first sample. The making of the first sample (prototype) usually takes 21 days. Before a whole order is placed, Bandoleraasksfor50salesroomsamples.Afterthistheprotosalestakeplaceinabout2months. Datacollection:Whenvisitingthefactory,itshouldbepossibletoaskwhetheraBchoice(arejected product)canbegiventous.Themakingofthefirstsample(theprototype)usuallytakesabout21 days. This sample should be without costs. Before a whole order is placed, Bandolera asks for 50 salesroomsamples.Usuallythecostsofthesesamplesshouldbeabout150%oftheproductionprice. Furthermore we ask if they have a separate sample room and if yes, what is the capacity and the numberofemployeesworkingthere.Whenlookingatsamplesintheshowroomitisimportanttoask whethertheymadeaproductionorderofthesesamplesandifthistookplacerecently.Thesamples ofBandolerawillbedemonstratedattheendoftheinterview.Wewillusethesetoaskthemifthey canmakesimilargarmentandifyes,wealsoaskforanestimationoftheproductionprice. Deliverytimes TheleadtimeofBandolerasproductionorderhasamaximumof90days,withinwhichthegarment shouldbedeliveredinstockinRotterdam.Onaverageittakes2weeks(14days)toproducethefabric and4weeks(28days)toshipthegarment.Thatleaves48daystofinishthegarment.Ifthedelivery timecannotbehandled,theproductscanbeflowninbyairbutthequestionisifthisisaffordable. There are different prices in which deals and contracts can be made. Pricing on CMPT base only includes the price of total product, inclusive fabric, sewing thread, buttons and sewing of the garment.PricingonFOBbasemeansfreeonboard,thismeansthattheproducerwilldeliveruntilthe Vietnamese border. Bandolera requires C&F pricing, this includes freight until Bandoleras stock in Rotterdam. Therefore all logistics from producer until the Netherlands should be arranged by the supplier. In the Netherlands, Bandolera works with the logistics company Unique Logistics. They arrangealldistributionwithintheNetherlands.Datacollection:Differentquestionsareaskedabout thedeliverytimesduringtheinterview.Importantdeliverytimesarethedeliverytimesofthefabric,
oftheprototypeandalsothatofthetotalproductionorder.Furthermoreweaskquestionsaboutthe manneroflogistics,pricingandexporting.TheseusuallyareexpressedinCMPT,FOBandC&Fprices.
2.3
DecisionTree
To give an answer to the main question whether it is interesting for Bandolera to produce their garment in Vietnam, we created a decision tree (see below). The tree is divided in 3 hierarchies, depictedwith3differentcolors.Togiveapositiveansweronthemainquestion,allquestionsinthe pink boxes below should be answered with a yes. From left to right these pink boxes relatively represent the research questions 13. The answers given on these questions depend on the informationfoundaboutthequestionsinthegreenboxesinthelowestlevelofthetree.
Figure2.1
DecisiontreeresearchBandoleraIsitinterestingforBandoleratoproducetheirgarmentinVietnam?
InternationalBusinessResearchVietnam2008Bandolera 15
Chapter3 TheVietnameseFabricMarket
Asmentionedinchapter1,Bandoleraislookingforallkindsofhighqualityfabrics.Inthischapterwe giveinsightintheavailabilityoffabricsinVietnam.Inparagraph3.1westartwithanoverviewofthe current situation and trends in the Vietnamese fabric market. In paragraph 3.2 we will discuss the fabricproductionofthreemainfabricsinVietnam.Weendthechapterwithaconclusioninwhichwe giveanswertoresearchquestion1.
3.1
CurrentsituationandtrendsintheVietnamesefabricmarket
TheVietnamesetextileandgarmentindustryhaslongtimebeenunderinfluenceofthecommunistic system. Its current situation and the trends in the industry are influenced by their relatively late international start. As explained more clearly by Mr. Toan (owner of Yen Bien Company in Hanoi), Vietnamdidnotexportgarmentuntiltherewasanopenpolicyin1986.Thereforetheproductionof fabricsatthebeginningwaspoor.Aftertheopenpolicy,theproductionstartedtoincreasebitbybit. But the production is mainly for massive quantities, which are needed because the main reason for customerstogotoVietnamforproductionofgarmentisitslowpricing.Thesemassivequantitiesand theeconomicgrowthingeneralhavehelpedtheVietnamesegarmentindustrytoexpand(andkeep expanding)rapidly. CurrentlyVietnamstillreliesonsubstantialimportsoffibers,yarns,fabricsandgarmentaccessories. In2004thevalueofimportsoffibers,yarns,fabricsandgarmentaccessoriesreached4,601million U.S.dollars(USD),whichismorethandoublethe2,284millionUSDworthoftheseimportsin2000. Comparedtothe1,089millionUSDworthofimportsin2000,theimportsofcotton,yarnandfabrics tripledto3,722millionUSDin2006.Themostimportantimportitemisfabric,uponwhichVietnam's garment industry is heavily dependent. In 2006 fabric imports were worth 2.954 million USD, comparedwithonly761,3millionUSDin2000.Fabricimportsroseinvalueby288percentoverthe sixyear period. The Vietnamese government has a clear strategy of increasing the supply of domesticallyproducedinputssuchasrawcotton,yarns,fabricsandgarmentaccessories.Vietnams 3 overallaimistoreducetheimportcontenttolessthan25percentby2010 . Table3.1Importvalueperyear(USdollarsx1.000) Import/Year 2000 2004 2006 Fibers,Yarn,Fabricandaccessories 2.284 4.601 Cotton,yarnandfabrics 1.089 3.722 Fabrics 761.300 2.954.000 MachineryinvestmentsInvestmentinmodernmachineryhasincreasedinrecentyears.During2006 the industry added 171.720 new spindles and 5.840 openend rotors. This followed an extended period of expansion during the tenyear period of 19972006, when 840.132 spindles and 19.784 openend rotors were obtained. In the weaving sector the industry added 6.012 shuttle less looms during19972006,ofwhich1.357alonewereaddedtotheindustry'scapacityin2006followingthe additionof476loomsin2005.Thesefiguresaresummarizedintable3.2whichshowsthatVietnamis movingtowardsmoremodernmanufacturingtechnology. Table3.2Machineryinvestmentsperyear(USdollars) Investments/Year 19972006 2005 2006 Spindles 840.132 171.720 OpenendRotors 19.784 5.840 ShuttlelessLooms 6.012 476 1.357 The textile and clothing industry has also managed to attract a substantial amount of foreign investment. The largest foreign investor in the Vietnamese textile and clothing industry is Taiwan, followedbySouthKoreaandHongKong.However,lookingatthetotalforeigndirectinvestment(FDI)
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in Vietnam, the textile and clothing industry only gets a very small piece of it. Most of the foreign investmentsaremadeinVietnamscrudeoilfieldsandtheVietnamesefinanceandbankingindustry4.
3.2
Overviewmaindomesticproductionoffabrics
The Vietnamese export of textiles and garment continues to grow. The Trade Information Center estimatesa1.7billionU.S.dollarsexportofVietnamesetextileandgarmentduringthefirst4months of2008.Thisisayearonyearriseofalmost39percent5.Inthemeantime,thegarmentsectorcopes withachronicshortageofmaterialsforitsproduction.Garmentexpertssaythattoearn7.7billion U.S.dollarsfromexportsin2007,thesectorspent5.3billionU.S.dollarsimportingrawmaterials6. OnthequestionwheretofindfabricsinVietnam,wereceivedtheanswerfromMr.Manning,owner ofapparelagency/supplierIndoPrideInternationalinHCMC.Heinformedusthatallfabricscanbe foundwithin2hoursdrivefromHCMC.Atmacroscale,mostfabricistobefoundinSouthVietnam. Differentsourceshaveindependentlyinformed usthat thefabricsavailableinVietnamaremainly cotton,followedbypolyesterandsilk(Mr.Toan,ownerofYenBienCompanyinHanoi). Belowwe willdiscusstheproductionandavailabilityofthesethreetypesoffabricsinVietnamseparately. Cotton Threeoutofthefouragentsandexpertsweinterviewed,informedusthatcottonisthemainfabric availableinVietnam.DuetotherapiddevelopmentoftheVietnamesegarmentsector,thedemand forcottonhasincreaseddrastically.However,accordingtothereportoftheVoiceofVietnam(VOV), Vietnamscottonacreagehasbeenreducedin2008to6,000haandonlyproduces2,600tonnes7.The garmentsectorsdemandisabout160,000tonnesofcottonandneedsupto200.000tonnesforits export plans. The current production of 2,600 tonnes therefore doesnt even meet more than 2 percentofthegarmentsectorsdemand.The20012010cottondevelopmentprogramhasbeenset uptoexpandthecottonacreageto150,000ha,whichshouldproduceapproximately80,000tonnes. Theseplanshavegreatdifficultyreachingtheirgoal.Thecottonacreagehasbeenshrinkingyearon year.TheDakLakprovinceforexample,hasalargeacreageundercottoncultivation intheCentral Highlands.However,theacreagehasdownsizedfrom16.000hain2002to9.000hain2003,4.000ha in 2004 and still decreased after 2004. The main cause of the continuing shrinkage in the cotton acreage is its low economic efficiency. Farmers are selecting other shortterm cash crops of higher economicvaluestogrow,suchasmaizeandsoybeansratherthancotton.Onaverage,cottongrowers need3.54millionVietnameseDong(VND)toinvestin1haofcottontoyieldatonofseedsandearn just3millionVND.Meanwhile,whentheygrowmaize,whichyields5tonnes/ha,theycanearnupto 10 million VND. In 2004 the Vietnam Cotton Company even proposed that the government should stop cultivating cotton in the floodprone Mekong River delta and adjust the cotton acreage from 80.000hato50.000haby2010.Despitethesedifficulties,theVietnameseTextileandGarmentGroup (VINATEX) set its mind to create 45.00050.000 new hectares of cotton growing area by 2010. To realizethisgoal,theydevelopedcottonplantationsinNinhThuan,BinhThuan,DakLak,QuangNgai andDongNaiprovinces8. Polyester/syntheticfibers According to different news articles, the polyester production in Vietnam is increasing and big investmentsaremade.Atpresent(2008),thesupplyofpolyesterfiberproducedbyforeigninvested and private factories nationwide only meets around 4 percent of the Vietnamese demand. The VINATEX and the Vietnam National Oil and Gas Group (PetroVietnam) recently have jointly poured over 125 million USD into the development of facilities for producing polyester fiber from petrochemical products at the Hai Phongbased Dinh Vu Industrial Park. They plan to meet 1520 percentofthenationaldemandforpolyesterfiberby2009and50percentby2012.TheVINATEXand
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PetroVietnam have called for foreign investors to build three polyester fiber factories in southern DongNaiandBinhDuongprovinces. WereceivedmoreinformationabouttheproductionofpolyesterfromMr.Toan,ownerofYenBien Company in Hanoi. He told us that Taiwanese and Malaysian manufacturers produce polyester in Vietnambutonlyforreasonofexport.ThaiTuanisawellknownfabricproducerinVietnam(mainly for polyester), but their fabric is expensive in local terms. We visited the Thai Tuan Textile and GarmentCorporationatthe9thofMay2008.InVietnamthecompanyiswellknownforitsproduction ofpolyesterfabrics.Theyspecializeinproducingjacquard,plainfrompolyester,spandexandviscose, usingtechnologiestransferredfromJapanandtheEU.ThaiTuansuppliesavarietyoffabrics,ofwhich most is exported to surrounding Asian countries. Their capacity is15 million meters fabric per year with1.500workersemployed.Thedeliverytimeoftheirfabricsis5060daysbyship.Inhighpeaksin thebusinessthedeliverycantakeabout70days.WetookdifferentsampleswithustogiveBandolera insightintheVietnameselevelofquality. Silk TheVietnamesesilkproductionhasalonghistoryinwhichVietnamesesilkwasproducedlocallyfor royalfamiliesorpeopleofrank.VietnamsprovinceHaTay,wasknownasthebiggestandoldestsilk productioncentreinVietnam.ThemostpopularandbiggestvillagewasandstillisVanPhuc,10km southofthecentreofHanoi.VanPhucVillage,nowhas730householdswith1.600peopleearninga living by weaving silk. The village stocks a wide variety of silk products, and ships goods all over Vietnam, as well as exported overseas. Fabric made of 50% silk, 75% silk or 100% silk is priced depending on the quality of pattern and fabric thickness. Statistics show that 785 of all 1.343 householdsinVanPhuccommunetakepartinthecraft.Silksalesgenerateabout1.6millionUSDand make up 63% of the commune's economy each year. Given that each powerloom generates one weavingjob,thecraftvillagecancreatemorethan1.000jobseachyear9. WevisitedVanPhuconthe3rdofJune.Inthevillagewevisited2homeswherewewereshowedthe process of making silk and the silk market. Many shops sell garment, ties, and other accessories. Whiteyarn/silkcostsabout150.000VND(9USD)permeter.Theirproductcapacityisnothigh,they can i.e. make 4,5 meters (is 9 roles of yarn) per day. This concerns the thicker silk, which is more expensivebecausemorecocoonsandmorelaborareneededforproduction.Plusitsmoredifficultto putonarole.SilkfromtheVanPhucvillageisnotexportedforcommercialends.Cocoonsaresourced fromtheHaDongprovince:DanPhuong(HoaiDuc).ThereisasmallsilkproductioninVietnam,but stillinatraditionalwayandoflowquality.Japanesesilkhashigherqualitybecausetheyhavethinner yarnandbettermachines.Vietnamdoesnothavethemachineryandcapacitytoproducesilkforthe industrytoexport.Thesefindingswereinlinewithwhatwealreadyheardduringourinterviewwith Mr.Manning(ownerofapparelagency/supplierIndoPrideInternationalinHCMC).Hetoldusthat,in Vietnamyoucanfindsomesilk,butthismarketisverynarrow.TheaverageVietnamesedoesnot buysilk(toexpensive)andthesilkisnotasfineasthatfromJapanorevenasthatfromchina.
3.3
Conclusion
ThefirstresearchquestionconsiderstheavailabilityoffabricsinVietnam.Inthisconclusionwetryto answerthisquestionanditssubquestions.Subquestion1.1(WhatkindoffabricsdoesBandolerain generalusefortheproductionofhercollections?)hasbeendiscussedinchapter2.Bandoleradesign process starts with special fabrics of preferably high quality. Furthermore, it is important that the qualityofthefabricsisstable. The sub question1.2 discussed theavailability of fabrics in Vietnam.The question isWhat kind of fabricsareavailableinVietnam?Whichareproduceddomesticallyandwhichhavetobeimported? Concluding from the information as described in this chapter we can conclude that most common fabric found in Vietnam is cotton. There is some production of polyester and silk, but there is not much andthe quality is worse thanthat of competing, surrounding Asian countries.All fabrics that cant be bought from the local market are imported. This certainly counts for high quality fabrics
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whichstillneedtobeimportedfromcountrieslikeThailand,Taiwan,etc.Althoughthegovernment planstoexpandtheproductionoffabricswithincentivestheproductionofcottonisdecreasingdue toloweconomicefficiency.Furthermore, thedemandforlowquality,highquantity fabricsismuch biggerthantherequestforspecialfabricsofgoodquality. Subquestion 1.3discussed thedeliverytimesofthefabrics.Informationaboutdeliverytimeswere receivedduringcompanyvisits.IngeneralthedeliverytimeoffabricsimportedfromChina,Taiwan, Korea,etcis410daysifthefabricisavailable.Whencompaniesalsoproducetheirownfabrics,the timetoproducethemisonaverage2128days.Wehavelittleinformationaboutthedeliverytimeof domesticallyproducedfabric,butthebestestimationisabout25daysifthefabricisavailable.The lastsubquestionfocusesonthecomparisonofthequalityoffabricsproducedinVietnam,compared to the surrounding exporting Asian countries. The information we conducted during our literature study as well as the information we received in Vietnam self points to a lowtomid level quality fabrics.ComparedtosurroundingAsiancountries,Vietnamesefabricsareoflesserquality.Intermsof quality,VietnamcannotcompetewithcountriessuchasChina,TaiwanorJapan.AlthoughVietnamis heavilyinvestinginitsfabricproductioncapacity,thesestillfacemanydifficultiesandthemarketis unstable.
Chapter4 TheVietnameseGarmentIndustry
With a good insight in the Vietnamese fabrics industry, this chapter focuses on the Vietnamese garment industry.In 4.1 wegive a general overview of the Vietnamese economy.This paragraph is followedbyafocusontheexportofthetextileandgarmentindustryin4.2.Inparagraph4.3wegive a rough overview of the textile and garment enterprises settled in Vietnam. Many enterprises are member of the VITAS: a nongovernmental umbrella association working in the field of textile and garmentindustryinVietnam.Theirrolesandfutureplanswillbedescribedinparagraphs4.4and4.5. In4.6ashortconclusionwillbegivenabouttheVietnamesegarmentindustry.
4.1
Economy
Overthelastmanyyears,Vietnamtextileandgarmentindustryhaswitnessedstrongdevelopment. Products made in Vietnam have penetrated to the world market, thus it was contributing to the economicdevelopmentofthecountry.Theexportvaluesincreasedrapidly,andthissectorisoneof the industries thatis for many consecutive years ranked veryhigh interms of key export products. Theindustrycountsnear2.000companieswhohaveintotalmorethan2millionworkers.Overmany years,theindustrycontinuouslyinvestedandchangedequipmentandtechnologytomeetthemarket demandandtoimproveitscompetiveness. IngeneraltherearetwomajorfactorswhichcontributetoVietnamsremarkableperformance.The firstisthetransitionofcentralplanningtoanopenmarketsystemandthesecondistheincreasing integration between regions and countries by becoming a member of the Association of Southeast Asian Nations (ASEAN), ASEAN Free Trade Area (AFTA) and the World Trade Organization (WTO). These2factorsarestronglyrelatedtoeachother.TheVietnamesetextileandgarmentindustrymade significant achievements, thanks to the above mentioned factors and the political stability. The industry employs a large labor force, with low labor cost. Thanks to the open door policy, the government of Vietnam took bold reform measures to promote the economic development of the country. In1995,VietnambecameamemberoftheAssociationofSoutheastAsianNations(ASEAN).Vietnam activelyparticipatedinallactivitiesofthisorganizationandstepbystepintegratedintotheregional andglobaleconomyforthebenefitofthecountry(andregion).On1January1996Vietnamofficially joined the Commonly Effective Preferential Tariff (CEPT) and implemented the AFTA with the roadmapoftenyears(19962006).Inthatperiodalltariffontextileandgarmentproductsisdown to05%only. Giventhecurrenttrendofeconomicglobalizationandintegrationofcountriesaroundtheworld,the competition is hard in gaining market share. Vietnam (and other developing countries) has to cope with many difficulties: it is currently less developed in terms of machinery and equipment, technology,andlaborskills.Otherdifficultyisthehighinflation(2007:16%10)andeconomicgrowth (2007:8,5%11).Besidesthis,laborcostsarebecomingmorecompetitive.Therearemanyworkersin this sector, so companies compete with each other to get (the best) workers. On the other side, it couldbepossiblethatinfuturelaborcostsaregettinglessimportantwhenthereismoredemandfor technicalskills.However,nowadayseconomiesofscaleplayanimportantroleinalloftheseactivities. VietnamsaccessiontotheWTOon11January2007bringssignificantopportunitiestothegarment exporters.Theyarenotrestrictedanymorebyexportquotas(quantityrestriction).HowevertheWTO brings opportunities to enter markets of all countries, and therefore competition among the exportersisbecomingtougher.
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4.2
Exportoftextileandgarment
In short, the textile and garment sector has made a remarkable contribution to the economic development of Vietnam. With nearly 2 million people involved, the industry contributes 8,2% to Vietnams industrial value, 5 billion USD or 16,5% to the countrys export turnover for the year of 2006.Intable4.1anoverviewofthetotaltextileandgarmentexportofVietnamisgiven. Table4.1TotalTextileandGarmentExport1997200612
Value(USDmillion) Growthrate(%) 1997 1.349 17,3 1998 1.351 0,1 1999 1.747 29,3 2000 1.892 8,3 2001 1.962 3,7 2002 2.752 40,3 2003 3.654 32,8 2004 4.386 20,0 2005 4.838 10,3 2006 5.834 20,6
Export growth since 2001 has been steep. It was particularly strong in 2003 at 33% and in 2002 at 40%,butgrowthslowedin2005tojust10%.Thiswasduemainlytothefactthatquotasrestricting importsfromotherAsiancountrieswereeliminatedatthebeginningoftheyear,butimportsfrom VietnamintotheUSAVietnam'slargestexportmarketwerestillsubjecttoquotas.USretailbuyers thereforeturnedtocountriessuchasChinaandIndiafortheirclothing.In2006,however,theUSA implementedsafeguardquotasonseveralcategoriesofChinesetextilesandclothing,withtheresult that buyers returned to Vietnam. As a result, Vietnamese exports soared by 20,6% to USD 5.834 million. AsmentionedbeforeVietnamjoinedtheWTOin2007,andtheUSAwasobligedtoremoveallquotas on textile and clothing imports from the country. The removal of quotas boosted US demand for Vietnameseclothing,especiallyforlowerendproducts. In Table 4.2 an overview is given of the export divided to several markets: EU, US, Japan, or other countries. Table4.2TextileandGarmentExport(bymarket)13
2006 2005 2004 2003 2002 EU 21% 16% 18% 18% US 52% 56% 57% 55% Japan 11% 13% 13% 14% Others 16% 15% 12% 13% TotalUSD(million) 5.834 4.838 4.836 3.654 2.752
VietnamplanstodoublethevalueofitstextileandgarmentexportsfromUSD4.8billionin2005to USD10billion,accordingtoanewreportbyTextilesIntelligence.Atthesametimeithopestodouble thenumberofpeopleworkingintheindustryfrom2millionto4millionworkers.Vietnamstextile andgarmentindustryplanstoachievethesetargetsbystreamliningproductionandtherebyreducing unitcoststo boostinternationalcompetitiveness.Onthe waytowardsachievingits2010objective, theindustryhassetanexporttargetfor2007ofUSD7billion14.
4.3
Overviewofcompanies
Asmentionedbeforethereareonaverage2.000textileandgarmentcompaniesinVietnam.Intable 4.3anoverviewisgivenofthecompaniessplitupbylocationsorbyproductcategories.Especiallyin the South of Vietnam (near HCMC) most enterprises (70%) are established. In the North are (near Hanoi) 10% of the companies located, and in the rest and Central Vietnam the other 20% are established.InAppendix4a mapoftheprovincesofVietnamisattached.InVietnamare50state owned companies, the others are limited liability companies, joint stock companies, and private companies(onaverage1.500).Theremainingenterprisesare(foreign)investmentprojectsandjoint ventures.
VietnamTextileandApparelAssociation,Directory2006,p.9 VietnamTextileandApparelAssociation,QualityCredibility,2007 14 th th www.juststyle.com,4 June2008(articleof8 August2007)
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Table4.3Numberofenterprises(updated2006)15 Bylocation Byproductcategories HoChiMinhCity 1090 Materialsandspinning 96 HanoiCity 157 Woven 382 DongNaiprovince 142 Nonwoven 6 BinhDuongprovince 116 Garment 1446 LongAnprovince 27 Accessories 35 DaNangcityandsurroundings 55 Services 265 Others 364 Themaindifferencebetweenstateownedcompaniesandprivatecompaniesisthedecisionmaking processandthesizeofthecompany.Instateownedcompaniesthedecisionmakingisratherslow. Thisisbecausethesecompaniesarereallybig,andthatthereismuchmorehierarchythaninprivate companies. In these enterprises there is more decentralization, like less hierarchy, faster decision makingprocess,andhavingthepossibilitytodecideonyourown. Many garment factories cooperate with another factory. They have subcontracts. Most factories cannot do every activity to finish a garment product. That is a main reason why companies have subcontractsandwhytheyaremoredependentofeachother.
4.4
TheVietnamTextileandApparelAssociation
The Vietnam Textile and Apparel Association (VITAS) is a nongovernmental umbrella association workinginthefieldoftextileandgarmentindustryinVietnam.Theyhave15branchesinVietnamand intotal635members.Thesemembersaccountfor70%ofthetotalcapacityoftheindustry. The role of VITAS is to promote business and investment cooperation as well as exchanging informationamongmembers,betweenmembers,andtheoutside.Furthermore,VITASrepresentsits members and consults the State and Government bodies that are relevant and comforting policies and mechanisms relating to the development of the Textile and Garment industry in Vietnam. The VITAS is representing the Vietnam textile and garment industry in international organizations and triestobeabridgeofcooperationbetweenthedomesticindustryandtheoutsideworld.TheVITAS alsosupportsforeigncompaniesinlookingforVietnamesetextileandgarmentproducers. OneofthebiggestmembersofVITASisTheVietnamTextileandGarmentGroup(VINATEX),whichis thebiggestgroupofcompaniesinthefieldoftextileandgarmentinVietnam.Ithasover90member companiesinVietnamwhichtogethercoveractivitiesfromspinning,knitting,weaving,anddyeingto finishing. The total labor force of the VINATEX is nearly 100.000 employees and another 35.000 employees work in jointventures with foreign and local partners. The production capacity of the VINATEX is 100.000 tons of spun yarn, 250 million square meters of fabrics, 350 million pieces of wovengarment,80millionpiecesofknitting,200millionpiecesofgarment,and15.000tonsofraw cotton(datafrom200616). The VITAS gives advice to the government, and together with the big stakeholders they set some plansforfuturetoincreasedevelopment,competition,andexport.Inthenextparagraphthoseplans aredescribed.
4.5
Futureplans
The industry needs government support to accelerate its development to shorten the gap to other large exporters in the world. Together with the VITAS the government made investment plans to increaseexports.Toachievethosegoalsthegovernmentcameupwithtwomainpolicyobjectives:(1) shift the focus in garment manufacturing from CMT (cut, make and trim) to FOB(free on board) production, and (2) increase the domestic content of garment production by investing in cotton production, and in spinning and weaving facilities. The government has also identified three other aimsfortheindustry:
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VietnamTextileandApparelAssociation,QualityCredibility,2007 VietnamTextileandApparelAssociation,QualityCredibility,2007
1. 2.
3.
Theindustrymustbuildonitsexistingreputationforhighqualitybymovingfromthelower endofthemarkettothemidrangeandthehighendofthemarket. The industry must become more efficient in the sourcing of materials. This should be achievedby: increasingVietnamesefabricsproduction; implementingmoreefficientimportsourcingmethods; achievingfurtherverticalintegrationbyaddingupstreamcapacity. Thecompetencyandproductivityoftheindustrymustbeincreasedbyenhancingresearch, traininganddevelopment.
The government is planning to invest around USD 3 billion in developing the textile and garment sector during the runup to 2010. It is envisaged that USD 180 million will be spent on projects to expand raw material supplies, USD 2.27 billion on textile and dyeing projects, USD 443 million on garmentprojects,andUSD200millionontradecentersandpersonneltraining. Meanwhile,stateownedVINATEXplanstoinvestoverUSD1billionin24keyexpansionprojectsfrom 2006 to 2010. According to VINATEX, these projects aim to develop production and distribution systems,fashiondesignandinfrastructure. One sector targeted for expansion is raw cotton production. To process the additional cotton produced,VINATEXplanstoinvestUSD26,7millionintheconstructionoffivenewcottonprocessing millsduringthenexttwoyearsinabidtosatisfydemandforrawmaterialsfromthecountry'stextile producers. Further down the supply chain, VINATEX expects to produce over 400 million square metersoffabricperannumby2010,including270millionsquaremetersforexport. There are also projects of the industry with the goal to invest in upgrading the productivity. These specialprogramsareinlinewiththeindustrialstrategiesandtheWTOframework.Theseprograms include: Investmentinrawmaterialdevelopment; Investmentinfiberproduction; Investmentinclothweaving; Investmentinknittingdevelopment; Investmentindevelopingcolorprinting,dyeingandfinishing; Investmentinproducingsyntheticcloth; Investmentinproducingindustrialtextiles; Investmentinmechanicalindustryfortextileandgarment; Investmentinenvironmentprotectionandsocialresponsibility; Investmentinproducinggarmentaccessories. TheVietnamesetextileandgarmentsectorisrapidlycatchingupwithsurroundingcountriessuchas ChinaandTaiwan.Theinvestmentsofthegovernmentandthelowlaborcostsattractmanyforeign investors and customers. However, earlier investment plans of the Vietnamese government have often shown to go wrong or get mixed up at the implementation phase due to lack of funds or planning and communication problems. At the moment high inflations and economic growth are affectingtheVietnameseindustriesnegatively.AnotherproblemisthatmanyindustriesinVietnam aredevelopingfasterthantheinfrastructure,causinglogisticdifficulties.
Chapter5 EvaluationofGarmentProducers InthischapterwewillgiveanoverviewofthevisitedgarmentproducersinVietnam.Asmentioned before we visited 17 companies both stateowned and private companies. In general stateowned companies have a very large production capacity and most of the times they only produce basic garment (with less details and embroidery). In general, small orders are more easily accepted by privatecompanieswhicharemoreflexibleinmakingdetailedgarment.Inthefirstparagraphwegive adescriptionofthevisitedcompanies.Inparagraph5.2weevaluatethecompaniespotentialitybased on 5 prior requirements. Because we did not have price estimations from all companies for all samples,wedidnottakethepricelevelinconsiderationinthisevaluation.Generalpricecomparisons are made in paragraph 5.3with Bandoleras current producers.Inparagraph 5.4 we shortly discuss theexcludedcompaniesandthereasonforrejection.Thechapterendswithageneralconclusionon theVietnamesegarmentmarket.
5.1 Descriptionofvisitedgarmentcompaniesandfactories
Ofeachgarmentproducerwegiveashortoverviewofthecompanyvisitinwhichwefirstdiscussa fewdetailsabouttheestablishmentofthecompany,theirexportexperience,thefabricstheywork with,andthekindofgarmentproductsthey(can)make.Afterthatwegiveashortsummaryofthe keydetailsofthecompany:capacity,certificates,customers,factorycapability,useofothermaterials anddeliverytimes.Weconcludeeverycompanydescriptionwiththepaymenttermsandminimum orderquantitytheyandaconclusion.Itmustbenoticedthatacoupleofcompaniesmisssomedetails onwhichtheywillbecomparedtoothers.Therearethreemainreasonswhythishappened.Firstly, there were some company visits during which the companies were not able to answer all of our questions.Anotherreasonisthatduringsomecompanyvisitstherewassimplynotimetoaskabout allcriteriaselections.Andlastofall,thereweresomeselectioncriteriaofBandolerathatwereceived afterwealreadyvisitedsomecompanies(i.e.minimumorderquantity). Complete reports of interviews/observations are on the attached DVD, including the directories of thispresentedreport. 1. AGTEX28COMPANY Agtex is a state owned company, established in 1975. In HCMC they have 6 factories, in total they have5.500employees.Ofthetotalproduction,60%isexportedtotheUS,20%totheEU,andabout 10%tootherAsiancountries. At Agtex they make fabrics and garment. Of the fabric production they have a spinning capacity of 100%cottoncombedyarn,T/Cyarn.Furthermore,theyhaveaweavingcapacitytomakehighquality wool,woolblend,T/C,T/Rand100%cottonfabric.Dyeingisdoneintheirownfabric,theydyehigh qualitywool,woolblend,T/C,T/R,100%cottonfabric.Theycanproducefinefabricsuntilaweightof 500 gram. Microfibers are imported from Thailand. 100% cotton yarn is produced in own factory, polyesterandwoolenyarnareimportedfromKorea.Thewashingofgarmentisoutsourced.Forthe garment,theyarespecializedinmakingjackets,trousers,ladysuitsandblazers. Capacity: mens shirts and ladies blouses (3 million pcs/per year), Trousers and pants (2 million pcs/peryear),Uniform(3millionsets/peryear),Mensandladiessuit(1 millionsets/peryear)andSportsuit(500.000sets/peryear Certificates: ISO9001:2000 Customers: United Colours of Beneton (pants), Alfred Dunner (jackets) and Dorthoty Perkins (jacketsforUSD$1012). Factory: spinning,weaving,dyeing,cutting,sewing,finishing Othermaterials: interlining(Korea);shoulderpads(UK);YKKandYBSzippers;buttonssourcedlocal Deliverytimes: micro fibers: 30 days; Interlining: 15 days; Shoulder pads: 20 days. Production of prototype takes 5 7 days; production of fitting sample 2 days; production lead timeis30days.
TheymainlyworkwithFOBpricing.Minimumorderquantityis1.000pcs,minimumpercoloris1.000 metersoffabric. Conclusion:thisispossiblyapotentialcompanybecauseofthejacketsandsuitstheycanmake,but we have not seen very special fabrics or embroidery machines. Also this is a stateowned company whichusuallyguaranteesthattheyonlytakebigorders.Theyhavesentusfabricswhichwewillsend toBandoleraforfurtherjudgment. 2. CHOLIMEXGARMENTJOINTSTOCKCOMPANY Established in 1986, belongs for 50% to the government and is for 50% a joint stock company. In HCMC they have 2 factories, but they also have subcontracts with other factories. They have 500 workers in 1 factory, in total 700/800 workers. They export to Europe, (The Netherlands, France, Germany,Russia,Hungary,Bulgaria),theUS,CanadaandsomeAsiancountries. Mainfabricstheyworkwitharecottonanddenim.Theysourceitpartlylocal,andalsoimportfrom China. For high quality fabrics,the customerhasto supplythe fabric.For the garment,theymainly producepants,jeansandalsoshirts.Theyarespecializedinsewing(theyhave800sewingmachines). Capacity: 1line/400pcs/day Certificates: ISO9001:2000,SA8000 Factory: printing,weaving,sewing Othermaterials: YKKzippers Customers: Nike,Wallmart,Steve&Barrysdenim,raiderjeanco,Dickies,Adidas,Leesports, PierreCardin Deliverytimes: normally it takes 40 days to import fabric from China. Other information not available TheyusuallyworkwithCMPTprices,buttheyalsoworkwithFOBpricing.Minimumorderquantityof trousersis6.000pcs. Conclusion:thisisnotapotentialcompany,becausetheirminimumorderquantityistoohigh. 3. DONGPHUONGKNITTINGCOMPANY(DOPIMEX) DOPIMEX is a stateowned company, established in 1973. Now they have 2 factories: knitting, and dyeing&sewing.Theywillexpandthesewingfactorytohaveatotalof3factories.Currentnumberof employees is 700. They export to the US 40%; EU 30%: Germany (2 customers), England, Holland, Switzerland.Theyproducebothfabricsandgarment. Thefabricstheyproduceareofmiddlequality.MostoftheyarnsaresourcedinVietnam.Sometimes itisimportedfromKorea(higherquality).Thefabricstheyproduceareelasthan,spandex,cotton,and polyester.TheyimportMELANDYARNfromKorea. Main garment products are knitted products like tshirts, poloshirts, fleece, and uniforms. Printing, embroidery,washingareallsubcontracted.Accessoriesareboughtfromlocalmarket. Capacity: 3.000.000pcs/year(sewingcapacity) Certificates: ISO9001:2000 Customers: US:Target,JCPenney,C&L;Holland:TNT(poloshirts). Factory: cutting,dyeing,knitting,sewing Othermaterials: YKKzippers,MelandYarn Deliverytimes: MelandYarnimportfromKoreatakes20days.Makingprotosampletakes37days. First(sample)order:30days,nextorders4060daysperpart.With4colorsand6 sizesittakes90daysforthefirstpartoftheorder.Nextpartsoftheordertake60 days. Pricing is usually on FOB (80%), but can also be done on CMP (20%). They can also do on C&F/CIF (theydidthisbeforefortheUS).Minimumorderquantityis30.000pcs.Theythinkthatanorderof 5.000pcswith2or3colorsisverysmall.
Conclusion: based on the above mentioned this is not a potential company because their minimum orderquantityistoohigh. 4. DUYTHINHCOMPANY,LTD Thiscompanyhasintotal3factoriesandabout750workers.TheheadofficeisinHCMC,buttheyalso haveofficesinShanghaiandThailand.Thiscompanysuppliesgarmenttothelocalmarketandexport it mainly to the US. They can weave the yarns to fabrics. Fabrics they use are cotton (20/40 gms), elasthanandpolyester.Theysourcethefabricslocal,butdoalsoimportthefabricsfromChinaand Thailand(higherquality).Mainproductwesawareshirts.Toplaceanordercustomershavetobook space in advance: 3 6 months before. This is because many buyers from China move their productionordertoVietnam.AtthemomenttheirfactorycapacityisoccupieduntilSeptember2008. Capacity: 500.000pcs/month(shirts) noISOnorms Certificates: Customers: mainlywarehouses,Vanity,2AmazeU Factory: weaving,cutting,sewing,finishing,printing Othermaterials: YKKzippers;buttonssourcedlocal Deliverytimes: 710 days to make counter sample.Production of completeorder depends on the quantity;306090days(fabric+CMPT+thread+button+printing+packing). Pricing is done on FOB terms. Their Payment term is T/T 30% deposit, 70% before shipment. The minimumorderquantityis3.000pcswithaminimumof1.000pcs/color. Conclusion: this company is only potential for production of simple shirts in larger quantities, we haventseenanydetailedfashionablegarment. 5. HOAMYTRADINGSERVICE&MANUFACTURECOMPANY,LTD. This company produces underwear for men and women and also underwear dresses. Main fabrics theyusefortheproductionofunderweariscottonandpolyester,andsometimessilk.Theyproduce underwear for the higher segment of the industry. The largest part of their products is sold in big warehousesinJapan.Someoftheirproductsareproducedforthelocalmarket.Theydonotexportto theUSortheEU. Thecapacityoftheirfactoryisabout20.000piecesperweek.Theyhaveabout50employeesworking in theirfactory.They alsohave their own cutting room and a design team ofabout 8 people. They mainlyimport their fabrics from Taiwan andforthe rest use some local fabric suppliers. The home madefabricsareofmoderateandnotalwaysstablequality. Conclusion:thisisnotapotentialcompany,becauseBandoleraisnotinterestedinunderwear. 6. MAILANANHGARMENTANDTRADINGCO.,LTD. Thisprivatecompanyisestablishedin1990.Theyhave2factoriesandabout700workersinfactory. Thevisitedfactoryhas5lines.Theotherhas10,ofwhich3linesarereservedforJapanandtheother 7areusedfortheUScustomer.MaiLanAnhexportstotheEU(30%),US(50%)andJapan(20%). Fabricstheyareworkingwitharedenim,whichisimportedfromChina,HongKongandsomefrom Taiwan(higherqualityandhigherprice).Theyproducemainlypantsforwomen:denimjeans.Theydo also khaki trousers. They only make garment. They can make denim jackets, but prefer pants. Embroideryandwashing/laundryisdonebysubcontractor. Capacity: 100.000pcs/month Certificates: noISOnorms Customers: C&A(Germany) Factory: cutting,sewing,spinning,knitting Othermaterials: YKK zippers; buttons imported from China; COATS; also many accessory sourced local Deliverytimes: basedon5.000pcsfabricdelivery(Taiwan/China)takes1month;iffabricinstore shipmenttakes9/10days
PricingisonCMPT,FOBorC&F.Theminimumorderquantityis5.000pcs/model. Conclusion:thisisnotapotentialcompany,becausetheminimumorderquantityistoohigh. 7. MINHANHCORPORATION Companyestablishedin2001(renamedin2007).TheyexporttoUS(35%),Japan(20%),Taiwanand Europe (40%). In Europe they export to Spain, Paris, Italy, Belgium. They have 1 factory with 150 workersandtheyuse8workshopsoutsidetheirfactoryforextrasewingofgarment.Theprintingand embroideryisdonebysubcontractor. MostofthefabricsareboughtfromafabricsupplierinVietnam.SomeisimportedfromChinaand Taiwan.Theyonlyworkwithknittedfabric.NotfromKorea,becausedeliverytimesaretoohigh.Main usedfabricsarespandexandcotton.The(cotton)ribtheyuseis1x1and2x2.Theydonotworkwith polyesteranymore.Theymainlyproducesimple,basicgarmentlikepolosandshirts. Capacity: basicgarment200.000400.000pcs/month,nonbasicgarment100.000pcs/month Certificates: noISOnorms Customers: JCPenny,Polo,CanadaHouses Factory: cutting,sewingandfinishing Othermaterials: COATS(sourcedfromPhongPhu),Interliningsourcedlocal Deliverytimes: protosample1day;importoffabricsfromChinatakes2months;dyeingyarntakes 45days;requiredleadtimeis30days TheymostlyworkonFOBbase,buttheysaythatpricingonC&Fbaseisalsopossible. Conclusion:thisisnotapotentialcompanybecausetheydonothaveISOnormsanddonotproduce detailedclothes. 8. NHABEGARMENTJOINTSTOCKCOMPANY(NHABECO) Thejointstockcompanyisestablishedin1957.Theyhaveover12.000workersand27factories(15in HCMC,restinprovinceswhichare14hoursdrivingfromHCMC).Turnoverof2007was170million USD.TheyexporttoEU(3545%),US(4550%),Japan(15%)andlocalmarket.EUexportcountriesare Germany,FranceandUK.FabricsareimportedfromChina,Korea,Taiwan,Pakistan,Bangladeshand sometimesevenItaly.Theyalsosourcefabricslocal.However,thesearenotofhighquality,itisjust acceptable. Quality of the used fabrics is stable. Fabrics used are polyester (imported and local), polarfleece,cotton(localandimportedfromBangladesh,Pakistan)andknittedfabrics. NHA BE is mainly specialized in suits and pants for suits. They do not make small, detailed orders because they have to keep the machinery running and buy bigger quantities of fabric. They have a laundryfactory(washing)at1,5hoursdrivingfromHCMC. Capacity: 5millionpcsofshirts,jacketsandcoatsperyear;1millionsetsofladiesandmens suitperyear;5,5millionfashiongarmentperyear Certificates: ISO9001:2000,ISO9002 Customers: C&A,FifthAvenue,Zara,Tayroma,NewLook,C.K.,ColombiaSportswear,PerryEllis, Wallmart Factory: cutting,sewing,finishing,washing Othermaterials: COATS;Interlining:Kufner,Freudenberg,PicardieandPCC(localinterliningis used for simple not important parts of the garment); shoulderpads: HELSA, SANKEI (Japan)andlocal;YKK,YKKandYCCzippers;buttonsofRubyandsourcedlocalfrom manysuppliers Deliverytimes: importoffabricstakes50days;sampleleadtimeis1week;productleadtimeis30 45days. TheyonlydoFOBprices,butC&Fispossible.Minimumorderquantityis2.000pcs. Conclusion:thiscouldpossiblybeapotentialcompanyifBandoleraiswillingtodoanorderforsuitsor pantsforsuitswithouttoomanydetails.
9. PHONGPHUCORPORATION PhongPhuCorporationisestablishedin1968.Itisastateownedcompanyandisoneofthebiggest textile companies in the industry with 5.000 workers, and nearly 80 million USD of annual sales turnover.Theyproduceyarns,towels,denimfabrics,garmentsandsewingthreadsofallkinds.They doonlycuttingandsewing. Main garment product is basic denim jeans (cotton denim, straight denim, twill, khaki, calico) with specializations in manufacturing denim with fashion values as slub, crosshatch and jacquard. They cannotdoalotofdetail,theydonotprintondenim. Since1988theyhaveajointventurewithCOATSPltofEngland.Theyalsohaveamodernspinning mill with the technologies of Muratec and Rieter. They say that the quality of fabric used is stable. Theydonotimportfabrics,deliverytimewhennotinstockis15days. Theyexportfor3040%toJapan,50%toUSand10%toothercountries.Exportingcountriesinthe EUareGermany,FranceandBelgium.Theyhaveexportexperienceof5years,buttheydonothave experiencewithexportingsmallfashionableorders.Infuturetheywanttoexpandandkeep12lines forfashionableorders. Capacity: 6millionjeans/year Certificates: ISO9001:2000,NFENISO9002:1994 Factory: spinning(3factories),weaving(2;1forfabricand1forfurrytowels),finishingand dyeing(1)andmakegarment(2).LocatedinHCMC,Hanoi,DanangandNhaTrang. Othermaterials: COATS;YKKzippers Customers: DKNY,Benneton,ENYU,OKD Deliverytimes: garment production 30 days if fabric available; 4560 days including fabric production;makingsample5days;afterapprovalittakes10daystostarttheorder whichtakes1530daystocutandsewonly;shipmenttoTheNetherlands25days ThepricingforexportisbasedonFOBandC&F.Minimumorderquantityis10.000or20.000. Conclusion: Phong Phu is a company which offers high quality products. However, their minimum orderrequirementistoohighforBandolera.Otherwiseitcouldhavebeenapotentialcompany. 10. PHUONGDONGGARMENTJOINTSTOCKCOMPANY Phuong Dong was established 10 years ago and is a member of the VINATEX. They have 4.000 workers.Intotaltheyhave8factories(3.500machines)andtheyhave1factoryforwomensfashion. Theymakepants,shirts,skirts,jacketsanddresses(smallorders).Wedidnotseethemproducingit all. Theyonlyworkwithwovenfabrics.Fabricisimported(60%)fromChina,Pakistan,Taiwan,Malaysia, Indonesia and Sweden. Fabrics which they source local (40%) is 100% cotton, 70% cotton/30% polyester,spandexandelasthan.Importedfabricsaremainlycotton,polyesterand100%nylon.They donotworkwithwoolandsilk.Aboutlinentheyarenotsure.FabricsuppliersareTungShinFabric Company, Wool Italy, and for washing (also stonewashing) they have subcontract with Do Thanh Company. Accessories and elastics are sourced local. For dyeing it is not clear, but is probably no activityofPhuongDongbecausetheyonlyproducegarment.ThelevelofEnglishspeakingwasbelow average,becausethemanagerwasnotavailable. Capacity: large Certificates; ISO9001:2000,SA8000 Factory: cutting,sewing,finishing.Printinginsideandsubcontract Othermaterials:COATS;Interlining:PCC,Kuffner,Chargeur;shoulderpads:local;YKKzippers Customers: Nike ACG, ProJob (Sweden), Columbia Sports, SJB Active, Chiros, Boys Scouts of America, Titanium, Nautica, PerryEllis, Grand Slam, Eddie Bauer, Worthington, LA Conduct(kids) Deliverytime: importing fabric from China to HCMC by sea 12 months; making proto sample 1 week,for50pcsthisis12weeks PricingisonC&M,CMT,FOBandC&F.Minimumorderquantityis3.000pcsand1.000pcs/color.
Conclusion:thiscompanyisonlypotentialforbasicclothsorsuits 11. PROTRADEGARMENTCORPORATIONLTD. GarmentExportEnterprisesituatedintheBinhDuongProvince.Theyhavemanyfactoriesandeach hasitsownspecialization.Theyarespecializedinwovenproductsandfocusmainlyonjeans,casual pantsandshirts.Theyshowedverygoodsamples(brandnames:Marveus,Expressdesignstudio,Lei denimjeans)includingmanydetails(belt,prints,glitters). Theyhave2.500workers.Theyhaveexcellentworkconditionsandallnewemployeesgetatraining of35daysintheirowntraininginstitute. TheyexporttotheUS(30%:AMF,NFPolyester,Express,PacificSunwear).Exportingcountriesinthe EU(65%)areGermany,France,UK,andSweden.FabricsareimportedfromKorea,JapanandTaiwan. Theyonlyworkwithwovenfabricslikecotton,polyesteranddenim.Wesawbigstocksoffabric.They source a little local. Production of denim jeans (including embroidery) looks really good. Also lining and interlining are of good quality. We saw production of rib trousers (Abercrombie) and blouses (Marks&Spencer),mainlyformales.Alsoforwomen,butonlywhenitissimple/basic.Alsoshirtsare produced here. Protrade has a partnership with Alan lee Washing Company LTD. This washing companyis15minutesdrivingfromProtrade. Capacity: jeans 200.000 pcs/month; casual jeans 180.000 pcs/month; shirts 300.000 pcs/month Certificates: ISO9001:2000 Factory: cutting,sewing,finishing,designing,embroidery Othermaterials: YKKzippers,COATS Customers: Marks&Spencer,Decathlon,Tchibo,Refuge,Abercrombie,JCPenney,Kohls,Walt Disney,Sears,Haggar Deliverytimes: noinformationavailableatthemomentoftheinterview,becausetheinterviewwas partofthevisitoftheUniversityofHCMCatthiscompany PricingisbasedonFOB.TheydonothaveexperiencewithC&F,butmaybecandoinfuture.Thereis nominimumorderquantity(from100200pcsto1million).Theycanalsodosmallorders. Conclusion: this could be a potential company for Bandolera. They have good specialties in embroidery. 12. SAIGON3GARMENTJOINTSTOCKCOMPANY(GATEXIM) Saigon3isestablishedin1986.Fromthattimetheyfocusedonjacketsandsportswear,butnowtheir mainfocusisonmaking(denim)jeansand(khaki)pants.Theyhaveintotal6(sewing)factorieswith 33 sewing lines (2.600 machines). The factories are divided between different customers. Saigon 3 Garment Company has a fashion centre: they design garment for local market. They have 2.800 workersinfactory. TheyexporttoUSA40%,EU5%,Japan50%and5%toothers.ThereislessexporttoEuropebecause customersinEuropeordertoosmallandtoodetailedquantities.Theyexport10millionpcs/year.You havetoreserveproductionlinesfor6monthsoryouhavetoplaceorder6monthsinadvance. This company only makes garment, mainly jeans and pants. They only work with woven fabrics, no knittedfabrics.Theyprefertomakepantswithamaximumof5pockets.Otherwiseitistoodetailed. Theycandoembroidery,butoutside(subcontract). Fabricisimported(80%)fromJapan,HongKong,China,Taiwan(denim,khaki,canvas,poplin).Local (20%) they supply the same fabrics but with less quality. Local fabric suppliers in Vietnam are TCE, Pangnim, Choorgnaw (all Korean of origin) and Phong Phu (company we also visited). Most of the timefabricsareinstock. Capacity: 600.000pcs/month Certificates: ISO9001:2000 Factory: cutting,sewing,finishing Othermaterials: interlining:Kufner,BCC,Vilene(allimported)andsomelocal;COATS(deliveredby PhongPhu);YKKandHKKzippers;buttonssourcedfromHongKong(Kudhom,also locatedinItalyandSweden)
Arizona,Esprit/EDC,Levis(formanyyears),DKNY,BoyFriendJeans,UniQLO,Style up, Emilio Shorts, Stockholm (Sweden), Columbia, C&A, Nike, JC Penney, Tropical Sportswear Deliverytimes: importfabricsfromChinaorTaiwantakes4daysbysea;Ifsupplierdoesnothave fabricsinstockittakesanextra2weeks;Productionleadtimefor20.000pcsis4 weeks; Making first sample 4 days (including washing subcontract); Making fittingsamples414days The pricing is only on CMP and FOB. C&F is possible in future when relationship is established. Minimum order quantity is 5.000 pcs per style/color. Smaller orders are acceptable when you also placeordersof>5.000pcs.UsuallytheordersofEuropearesmallerbecauseofthemanydetails. Conclusion: this can be a potential company for Bandolera, but only for pants without too many details.ChanceexiststhattheydontwanttoproduceforBandolera,becausetheordersaretoosmall. 13. THANHCONGTEXTILEGARMENTJSCOMPANY Thiscompanyisestablishedin1976.ThanhCongproducesfabricsandgarment.Intotaltheyhave7 factories and 5.500 workers. Their recent turnover is USD 65 million/year. They export to the US (60%),EU(15%)andJapan(25%).Theyexportmainlyshirts(likeEDC/Esprit),knitteduniforms.They alsosellatlocalmarket. Theyusemanyfabrics:combedcotton,polyester,viscose,TC/CVC,polyester/viscoseyarn,OE100% cottonyarn,andslubyarnforgivingspecialeffectsonfabrics.Theweightofthefabricstheyproduce isfrom2060gms.Thisisthefinesttheycando.Theycanmakewovenfabricsandknittedfabrics,but cannotmakewovengarmentbecausetheydonothavethemachineryforthat.Fabricstheyimport aremostlyfromCOOLMARK(Taiwan),othersaresourcedlocal.Theysaythatqualityofthefabricsis stable.AccordingtoMr.DuyThaiofHCMCUniversitythequalityoffabricsismidlevel.Theknitted fabricforEDCisimportedfromHongKong. Printingandwashingissubcontracted.Howevertheycanonlydosimpledesignprinting.Buttonsare importedanddyedintheirowncompany.Accessoriesaresourcedatthelocalmarket.Garmentthey make are mainly shirts. They cannot make jeans. They only can make garment of knitted fabrics. Cottonisthemainfabricforgarment. Capacity: large Certificates: ISO9001:2000,SA8000 Factory: spinning lines, weaving looms, knitting machines, dyeing, sewing, finishing, embroidery Othermaterials: YKKzippers;Interlining:Freudenberg,Vilene; Customers: EU: EDC, Melcosa, Marubeni, Visconti, H.T. Hughes, Canada House; US: Columbia, EddieBauer,Haggar,JCPenney Deliverytimes: iffabricnotinstockatsupplierdeliverytimeis60days;dyeingtakes3days;proto types 3 days if fabric is available (capacity sample room 300 pcs/month); product lead time 45 days till shipment (based on 1.00020.000 pcs); Shipment 30 days (costsareUSD2.500) PricingismostlyonFOB,butC&Fisalsopossible.Minimumorderquantityis1.000pcs/color. Conclusion: this company is interestingforshirts like EDC/Esprit,but we haventseen anything with manydetailsandaccordingtoourcontactpersonqualityofthefabricsismidlevel. 14. THANGLOIINTERNATIONALGARMENTJSC(VIGATEXCO) This company is established in 1959.They areastateowned company and the main productsthey offerarewovenfabrics,bedsheets,jackets(Dockers),shirts,pants,andnurseuniforms.Theyhave3 factoriesandthereareworkingonaverage1.050employees. Mostgarmentissoldonthelocalmarket,buttheyalsoexport(isincreasing).TheyexporttotheUS market for 60/70%, and to the EU for 30% (mainly Germany, 3rd producer of Thang Loi), other exportingcountriesareIsland,Japan,andHongKong.
Customers:
ThangLoionlymakeswovenfabricsthemselves.TheyimportpromaterialfromAfrica.Furthermore theyimportfromChina,ThailandandKorea.Mainfabricsareimportedwithstablequality.Theorder repeats all the time. It takes 7 days to import fabrics from Thailand to HCMC. They import 20.000 meters. 247.000pcs/month Capacity: Certificates: ISO9002:1994,SA8000:1997 Factory: cutting,sewing,finishing Othermaterials: YKKzippers;accessories,lables,interlining,sewingthread,buttonsallsourcedlocal Customers: Dockers,Hangar,Dickies,Mervin,Nautica,PNG,Puma,PacificTrail Deliverytimes 7daystoimportfabrics(20.000m.fromThailand); TheyespeciallydoCMPTprice,butinfuturetheywilldoFOB.Theywanttobelessdependentonthe customerandprovidethefabricsbytheirselves. Conclusion: this is not a potential company. They are mainly specialized in uniforms and dont have experiencewithproducingfashionable(womens)fashion. 15. VIETFASHIONCOMPANY(NINOMAXX) This fashion company, established in 1998, has 64 shops in Vietnam and 2 shops in the US. This company is leading the Vietnamese fashion (casual wear, 22% market share) industry, and is still expanding.Theywanttoopenshopsinforeigncountriesbuttheyalsowanttoproducefashioncloths for other companies without using their brand name. Their brand is the most used and sold in Vietnam.NinomaxxhasafactoryinHCMC,districtVinhLoc,industrialzone(C18VinhLocIndustrial zone,2Fstreet)whichhas13productionlines.Theyhave1.000workers,ofwhich600infactory. Ninomaxxwantstoproduceforotherbrandsandsheisdevelopingthisforthenearfuture.Nowthey alreadydeliverforotherbrandsinGermanyandItalysince2006.Theymainlyusefabricslikedenim, cotton, polyester and linen. Fabrics are imported from Thailand, Korea, Hong Kong and some are sourced local. Quality of fabrics is very good because they have a reputation of the best, leading garmentfashionstoreintheindustryinVietnam. They are specialized in womens fashion. They mainly sell jeans, casual wear, tshirts. Printing is outsourced,buttheycanattachpearlsbytailor.Theydoembroideriesinownfactory. Capacity: 1,21,4millionpcs/year Certificates: nocertificates Factory: cutting,sewing,finishing,embroidery Othermaterials: YKKzippers;buttonslocalsourced, Customers: ONeill(sportclothes),GIODANOinItaly(jeans&khakipants) Deliverytimes: noinformationavailable Pricing is on FOB.Theydo not do C&F, but maybe in future when they havemore experiencewith exporting.Minimumorderquantityis1.000pcs,buttheycanalsodoordersrangingfrom5003.000 pcs. They can make everything: of simple pieces they can make 2.0003.000 pcs/week, of complex pieces (i.e. the black/white dress of Bandolera summer 2008 collection) they can make 2.000 pcs/week. Conclusion: this company can be interesting because they already produce fashionable garment for women with some details. Downside is that their main business is producing and selling their own brandinVietnam. 16. VIETTHANGGARMENTJOINTSTOCKCOMPANY(VIGACO) Viet Thang was established in 1991 and became a private company in 2005. Viet Thang has 1.500 workers.Theyhave6factories;oneforspinningandweaving,onefordyeingandfinishingand4for garment.Thedifferentfactoriesworktogetherbutdonotbelongtothesamecompany.VietThang mainlyproduceswrinklefreepantsandshirtsandblousesformen.Theyexportabout30%totheEU (UK,SpainandGermany)and40%totheUS.
They can produce fabrics until weight 50 grams. Good quality fabrics are imported from China, Thailand,Korea,andJapan.Fabricstheyworkwitharecotton,polyester,T/R.Infuturetheyaregoing toworkwithelasthan.Theydonotusesilk,woolandlinen.Theyonlyworkwithwovenfabrics,they cannot make knitted garment. At this moment they produce shirts, blouses and pants. They do producefashionablegarment,butonlyforlocalmarketandtheydonotwanttoexportthesekindof garment.Theyarenotabletodostonewashingforthetrousers. Capacity: 300.000pcs/month Certificates: ISO9001:2000,ISO14100;SA8000 Customers: JackWolfskin,SeidenSticker,JohnHarris,Canada(C&A),PiereCardin,Vossen&Co (Belgium),LonnekerTextilesBV(TheNetherlands),GruppoCoinSpa(Italy) Factory: spinning,weaving,dyeing,cutting,sewing,finishing Othermaterials: YKKzippers;accessorysourcedlocal;buttonssourcedlocal;metalbuttonsimported Deliverytimes: fit sample 1 week (if fabric available); import fabric from China 30 days; product leadtime3045days Pricing is on CMPT or FOB. They can also do C&F. The minimum order quantity is 1.500 pcs/color. However,thanitisrequiredthatthereisplacedanorderofatleast5.000pcs.3.000pcsispossible, butthenpricingishigher. Conclusion: this is not a potential company, because they produce only large batches and were not abletoshowproductionofgarmentforwomen. 17. VIETTHYFASHIONCOMPANY,LTD This company is established in 1995. They have 100 workers, but the employment is not stable, becauseitishardtogetworkersinHCMC.Theyhaveover30subfactories.AtthemomentVietThy Fashion exports to Spain, Sweden, Brazil and a little to Japan. Fabrics they use are imported from Taiwan,Korea,HongKong(30%),andsourcedlocal(70%).YarnisimportedfromKorea(Toonkook). Theyworkwithknittedfabrics:cottonandkhaki.Garmentproductstheymakearechildrenswear, shirtsandpullovers.Mainlyknittedproducts:knittedshirtsandkhakitrousers.Thewashing,printing andaccessoriesaredoneindifferentsubfactories. Capacity: 5.00010.000shirts/month;600.000pcs/year Certificates: noISOnorms(expectednextyear) Factory: cutting,sewing,finishing Othermaterials: COATS;Interlining:Freudenberg,Wendler(HongKong),I&A(Vietnam) Customers: New Portland, New Mix USA, Ruehl no 925 Greenwich St. New York City, No BoudariesL/G,PahladiumSweden,AsiaBay(USA),Gimeno(Spain),Bibitas Deliverytimes: makefabricstakes34weeks;productleadtime(incl.makingfabric)5.000pcsin2 months, 10.000 pcs in 3 months; proto 1 week, dyeing fabric 2 weeks; delivery importedfabrics3weeks,shipment5months(costsUSD1.500) Conclusion:thisisnotapotentialcompany,becausethecompanyisnotabletomakeveryfashionable garment,manyactivitiesareoutsourcedandthelevelofEnglishispoor.
5.2
Finalevaluationofgarmentproducers
Bandolerahasgivenmanycriteriatoselectpotentialgarmentproducers.Ofthesecriteria,5canbe regardedaspriorconditions.Inthisparagraphthegarmentproducerswillbeevaluatedontheseprior conditions and their potential. We will discuss these 5 conditions and summarize the scores of the companiesintable5.1. 1. Communication The grade/level of English of the contact person we spoke of the garment company. The grade of Englishrangesfrom:(poorly)to++(verygood).
2. Minimumorderquantity Each garment factory has a minimum order quantity which judges if an order will be accepted. Quantitiesshowedinthecolumnareperstyle/model. 3. Capabilityoffactory Mostvisitedgarmentproducersoutsourceseveralactivitiesrelatedtofinishingthegarmentproduct. This could include dyeing (if they also produce their own fabric), washing, embroidery, attaching buttonsandzippers,andprinting.Intable5.1thefollowingabbreviationsareused: D :dyeing W :washing E :embroidery :attachingbuttons/zippers A P :printing 4. Exportexperience Strongrequirementinevaluatinggarmentproducersisthattheyhaveexperiencewithexportingto foreigncountries,especiallyEuropeandtheUS.Intable5.1isshowedthepercentageofexporttothe EUandtheUS. In the column we show the number of sources who recommended the garment producer. This columnisfollowedbyanotheronewhichcontainsthenamesofthepersonswhorecommendedthe garmentproducer.
Table5.1JudgmentofVietnamesegarmentproducers
Communication Minimum order quantity 1.000 6.000 Capabilityoffactory D + W E A + + P + Export EU USA 60% 20% + + Recommendedby numberofcontact persons 0 1 Potential company Y N University
1 28Company/AGTEX28 2 CholimexGarmentJoinstockCompany /TradingServiceEnterprise 3 DongPhuongKnittingCompany (DOPIMEX) 4 DuyThinhCompany,ltd. 5 HoaMyTradingService& ManufactureCompany,ltd. 6 MaiLanAnhGarmentandTrading Company 7 MinhAnhCorporation 8 NhabeGarmentCompany(NHABECO) 9 PhongPhuCorporation 10 PhuongDong 11 ProtradeGarmentCompany,ltd. 12 Saigon3GarmentJointStock Company(GATEXIM) 13 ThanhCongTextileGarmentJS Company 14 ThangLoiInternationalGarmentJSC (VIGATEXCO) 15 VietFashionCompany(Ninomaxx) 16 VietThangGarmentJointStock Company(VIGACO) 17 VietThyFashionCompany,ltd.
++ ++
++ ++ ++ + ++ + ++ ++ + + +
30.000 5.000 2.000 10.000or 20.000 3.000 100200 5.000 1.000 500or1.000 3.000
+ + + +
+ + + + +
+ + + + + + + + + +
+ + +
40% 30% + +
0 0 1 1 1 1 1 2 1 2 1 0 1 1 0
N N N N N Y N N Y Y Y N Y N N
University Mrs.Huong University VITAS Mrs.Huong University,Mrs. Huong University Interpreter,VITAS University Interpreter University
30% 50% 35% 40% 40% 50% + + + +
65% 30% 5% 40%
15% 60% 30% 65% 100% 0% 30% 40%
5.3
ComparisonstocurrentproducersofBandolera
Inthisparagraphthevisitedgarmentcompaniesarecomparedtothecurrentgarmentproducersof Bandolera.NowadaysBandolerasgarmentisproducedinChinaandIndia.Theyalsohaveafactoryin Turkey,butwedonotcomparewiththiscountry,becausethisfactoryissituatedinatotaldifferent area.Comparisonswillbemadeonavailabilityoffabrics,qualityandprice. Asmentionedinchapter3,lessandlessfabricsareproducedinVietnam.Mostfabricsareimported from other Asian countries such as China (Hong Kong), Taiwan, Korea or Japan. This is because the fabrics abroad are of higher, more stable quality than the homemade fabrics (lowtomiddle level quality).Thisisprobablyduetothelessadvancedmachineryandthelowproductionoffabricsources inVietnam.Themainlyusedfabrics,forexportaswellaslocalmarket,arecotton,spandex/elasthan, denim, and polyester. For local market sometimes linen and silk are also used. A weakness of the Vietnamese textile and garment industryis that thereis suchasmall production of (middletohigh quality)fabrics.Thereforetheindustrystaysdependentofotherforeignfabricsuppliers. Concluding, compared to China and India, homemade fabrics are of less and unstable quality. If Bandolera has the intention to let their garment be produced in Vietnam, they should import the fabrics. Pricingofgarmentproducts We asked the visited garment producers to estimate the FOB price of some samples of Bandolera. PriceestimationsofBandoleragarmentisshowedintable5.2andfortheNTSgarmentitisshowedin table 5.3. There must be made some remarks before showing the tables, because we do not have priceestimationsofallfactoriesofallitems: 1. Duringthefirstweekwehadjust3samplestoshowtotheproducer; 2. Ithappenedmanytimesthatproducersjustcanmakeonepiece(shirtortrouser/knittedor woven)ofgarment,sotheycannotestimatepricesofallsamples; 3. WhenwenoticedthatitisnotapotentialcompanyforBandolerawedidnotshowsamples anddidnotaskpriceestimations; 4. Havingshorttimeresultedinnotbeingabletoaskpriceestimations. Table5.2Pricecomparisons(inUSD)ofBandoleragarment (nondisclosure) Table5.3Pricecomparisons(inUSD)ofNTSgarment (nondisclosure) Although we do not have price estimations from every company or for every sample, the general conclusion that we can draw from table 5.2 and 5.3 is that the price level of Vietnamese garment producersissignificantlylowerthanthepricesofBandolerascurrentproducers.Probablythisisdue to the low labor costs of Vietnamese workers, and due to the economies of scale factories have because of the large productions. Also should be taken in consideration that the above mentioned FOB prices are estimations based on the minimum order quantities of the companies. Also the exchangerateeuroUSDisverypositiveforEurope,andhasalsoindirect(positive)effectsonthe FOBpricesforBandolera.
5.4
Excludedgarmentproducers
During our desk research in The Netherlands as well as our field research in Vietnam we excluded many garment factories from our research. In The Netherlands main reasons were that we cannot communicatewiththecompaniesbecausetheydonotspeakEnglish,orwecouldnotgetincontact withthem.Emailsfailedtobedelivered,websitesdidnotwork,andwealsocannotreachthemby phone.However,duringthedeskresearchcompanieswererejectedbecausetheyhavenoexperience withwomenfashionorexport.Intotalweexcluded50companiesduringourdeskresearch.
During the field research we excluded many garment factories based on their minimum order quantity.Iftheirminimumorderquantityisabove1.0002.000wedidnotvisitthecompanies.Our interpreter helped us in selecting the right companies by calling. We checked some rejected companies of the desk research and checked new companies which were i.e. recommended by experts/agents.Intotalwerejected65companiesduringourdeskandfieldresearch.InAppendix6 thereisalistofthecompaniesweexcluded.Concluding,mainreasonsofexclusionsarethesameas thecriteriadisplayedintable5.1.
5.5
Expertsandagents
Besides the company visits, we also interviewed several experts and agents about the Vietnamese garment industry. During our stay in Ho Chi Minh City we contacted lecturer Duy Thai, of the departmentofTextileEngineeringattheUniversityofTechnologyinHCMC.Hehelpedusfindingand visitingdifferentgarmentproducers.Healreadywarnedusatdayonethatitisadifficultprocessto find a garment producer, especially when you want to use local fabrics. Factories cannot offer everything, including middletohigh quality fabrics and accessories. Vietnamese producers cannot guaranteethatthequalitywillbestable. We interviewed Mr. Toan (owner of Yen Bien Company) in Hanoi. He has 13 years of business experience and gives us more information about where to find a producer for the production of fashionable orders. According to him, Vietnamese garment producers can produce the garment of Bandolera, but these will be private, small companies in which they often do not speak English and whichneedallmaterialstobedelivered.Usuallythere willbemaybeoneortwowhocanspeaka littleEnglish,buttheywillnothaveexperiencewithexport.IfBandolerawantstolettheirgarment beproducedinVietnamtheyshouldfindsomeonewhocanarrangetherightcompaniesforthemand alsothematerials.IfBandoleracantellthecompanieswheretobuythefabricfrom,thisshouldnotbe a problem. He explains that the production is mainly for massive quantities of low to midlevel quality.ThesemassivequantitiesareneededbecausethemainreasonforcustomerstogotoVietnam for production of garment is its low pricing. There are a lot of big quantities of low quality fabrics availableforlowprices,whichhastheinterestofhugecorporationsmostlyfromtheUS. Mr.ToanhasandsometimesstillcooperateswithMr.J.Somers(ownerofprivatecompanyVenture InternationalinHanoi).HestartedhisbusinessinVietnam25yearsagoandknowsthebusinessquite well.Hestoppedproducingfashionorders,becauseyoumainlycopewiththesmallquantitiesand quickturnsaround.Nexttothat,theleadtimeislongerbecauseyouhavetosupplyalot,forexample fabrics and buttons. To produce fashionable orders of small size, you have to look for a small private entrepreneur (max. 250 machines) and you should not work with a stateowned company becauseeverythingwhereisdealtwithgoesveryslowly.Hewarnedusthatfabricsofmiddleto highqualitystillneedtobeimported.ManybigcompaniesmovetoVietnambecauseofthelowlabor costs(sellingprices),buttheystillbuythefabricsinChina. From a more formal perspective, we spoke with Mr. Le Van Dao (vice chairman of the VITAS). He provideduswithgeneral,macroinformationaboutthetextileandgarmentsector.Inthisinterviewit becameclearthatVietnamisespeciallyinterestingfortheU.S.,becauseofitsneedforhighquantities for low prices. Huge American corporations even go factory hopping to search for the cheapest producer.ThisisinbigcontrasttomostEuropeancompanieswhoexperiencegreatdifficultylooking foraproducerthatwillproducesmallquantitiesofhighqualityforthem.Themostimportantaspect inthissearchisfindingandsustainingagoodrelationshipwiththefactory. Overall,theagentsandexpertsthatwecontactedpaintasimilarpicture.Thesearchforagood,fitting garment producer for fashionable garment is constraint by aspects as quantity, price, (un)stable qualityandimportoffabricsandaccessories.
5.6
Conclusion
Summarizing Chapter 5 it can be stated that the fabrics made in Vietnam are of lowtomedium quality.Thatiswhyalmostallexportinggarmentfactorieswevisitedimporttheirfabricsfromforeign countriesasChina,HongKong,TaiwanandKorea. Research question 2 asks the question whether Vietnamese garment producers can meet the selection criteria provided by Bandolera. With the information of this chapter we can answer this question.Subquestion2.1,whichcompaniesareadvisedtousbyourcontactpersons,wasalready answered in table 5.1. Sub question 2.2 asks whether Vietnamese garment producers have the capacity, machinery, experience and certificates to produce for Bandolera. In general Vietnamese garment producers do have the capacity and machinery to produce fashionable cloths. There are many high (technical) skilled people who can make the garment, but the order size is of decisive influenceinacceptinganorder(minimumorderquantityofBandolerais500pcs/model).Theywant the machines keep running and therefore detailed garment is not preferable, and often rejected. Producing fashionable cloths take a longer production time, more labor and workers need more exercise to make the garment. However, letting basic garment be produced in Vietnam with a minimumordersizeof5.00010.000ispossible. We have not visited companies that were already producing garment similar to Bandoleras collections. This gives answer to sub question 2.3; Vietnamese garment may be able to produce fashionablegarmentproductssimilartothecurrentBandoleracollection,butwehavenotseenthem producingit. Subquestion2.4focusesontheavailabilityofadditionalitemsandaccessories,suchasbuttonsand YKKzippers.Besidesthatfabricsofmiddletohighqualityshouldbeimported,Vietnamesegarment producers source all kind of accessory. Many additional items are sourced locally, but Vietnamese garmentproducersalsouse(andimport)internationalbrandsasYKKzippers,COATS(sewingthread), Kufner,FreudenbergandVilene(interlining).Wecanconcludethatadditionalitemsareavailable,for exampleYKKhasanofficeinVietnam,butitemssuchasfashionablebuttonsarestillmainlyimported fromChinaorTaiwan. Subquestion2.5focusesontheproductiontimeandestimatedpriceofcounterandfittingsamples. These differ per company and are all described in the company visits and tables 5.2 and 5.3. On averagetheproductiontimeiswithinthetimelimitof60daysandestimatedpricesarelowerthan Bandoleras current prices. In general the production lead time of garment is about 30 45 days. Importing the fabrics or making the fabrics ranges from 530 days. Depending on the kind of shipment to The Netherlands, the lead time is about 2530 days. Concluding, Vietnamese garment producersareabletodelivertheproductsintime.Thisgivespartlyanswertosubquestion2.6,which focusesontheleadtimesandpaymenttermsforcompleteordersVietnamesegarmentproducersin generalworkwith.MostpaymenttermsVietnamesegarmentproducersworkwithareCMPTorFOB prices.BandoleraisusedtoworkwithpaymenttermsonC&Fbasedpricing.Thisishighlyunusualin Vietnam. Inparagraph5.5expertsandagentsgenerallyconcludedthatquantity,price,(un)stablequalityand import of fabrics and accessories play a main role in deciding and finding a garment producer in Vietnam.Theiropinionsareinlinewiththefindingsofthefactoryvisits. The minimum order quantity is of decisive influence in determining which company could be potentialforBandolera.Lookingatthemarkettrendsandtheeconomicdevelopmentofthisindustry in Vietnam, it is very difficultforBandolera tofind a producer who can makethe garment product (fromsourcingfabrictillfinishingtheproduct).However,whenlookingatthepricecomparisonswith Bandoleras current producers show that at a financial level, the Vietnamese market shows a very interestingpicture.Vietnamesegarmentproducershavesignificantlylowerprices,eveniftheyhave to import fabrics and accessories. Information about the financials in this report is based on price estimationsgivenbyVietnamesegarmentproducers.Tomakevalidpricecomparisons,moreresearch
or experience is necessary. If Bandolera decides to explore the Vietnamese market and take for grantedsomerestrictionswecanrecommendthefivemostpotentialcompaniesforBandolera: Agtex28 VietFashionCompany(Ninomaxx) ProtradeGarmentCompany,ltd. Saigon3GarmentJointStockCompany(GATEXIM) ThanhCongTextileGarmentJSCompany
Chapter6 LogisticsandLegislation
In this chapter we give insight in relevant legislation and the available logistic services to export garmentfromVietnamtoTheNetherlands.Inthefirstparagraph6.1wediscussthelegislationand rulesaboutexportinggarmenttotheEU.Inparagraph6.2wediscussthepricingofgarmentandused payment terms in more detail. Paragraph 6.3 gives an overview of the logistic service companies positionedinVietnamprovidingexpressservicestoTheNetherlands.Inparagraph6.4wegivesome practicalinsightsinhowtodobusinessinTheVietnamesegarmentindustry.Weconcludethechapter withaconclusioninwhichweanswerthethirdresearchquestion.
6.1
LegislationandrulesaboutexportinggarmenttotheEU
If Bandolera is able to find a satisfying garment producer Vietnam, the cooperation between both companiescanturnintoalongtermrelationship.Bandoleradoesnothavetheintenttoinvestinthe developmentoftheproductionforBandolerainVietnam.Theintendedcooperationwithapotential garment producer is one of placing orders only. This cooperation starts by placing the first order, whichisdonebyagreeingonthedealandsigningthecontract.Therearefewformalitiesneededfor establishingacontract. Vietnamese factories have a business certificate legislation to export. Currently, the textile and garmentsectorisencouragedbythegovernmenttoexportitsproducts.Therearenorestrictionson theexportofgarmentproducts,whichhavemadeitsimpleforVietnameseenterprisestoarrangethe exportoftheirproducts.TheycandealdirectlywiththeCustomsDepartment.Vietnamesefactories haveaGSPFormA.GSPstandsforGeneralizeSystemofPreference.WiththisGSPFormAcertificate producershavealowertax comparedto normal.Withthecertificate,theexporttaxforjacketand trousersisonly10%.WithouttheGSPFormtheexporttaxis14or15%.Toarrangetheexport,the documentsaresentbytheproducerto(1)theBankforLCpaymentand(2)tothebuyertoshowto the customs department when goods arrive. Furthermore the GSP form should be sent to the ChamberofCommerceandIndustry.Theexportpartandsendingofrequireddocumentstotheright institutions is arrangedontheVietnamesesideand isnodifferentthanthe procedureofexporting any other product. Any Vietnamese company with export experience will be able to arrange all necessarydocuments.
6.2
Pricingandpayment
There are an estimated 250 private manufacturers and 90 stateowned enterprises producing garments in Vietnam. The majority of private firms make garments for the CutMakeTrim (CMT) business.CMTentailsthatthecustomerissupplyingalloftherawmaterials,accessoriesandsewing threads,ifnecessary.Thecompanythencuts,andsewsthefabric(oftenofanindustrialnature)and makesupthe finished productswhichare thenreturned tothecustomer.Insomecasesfirmsdeal directly with buyers, while in others they rely on subcontracts from stateowned enterprises. The CMTprocessaddsaslittleas20percenttothevalueofthefinalproductsincethemanufacturer/sub contractordoesnotsourcethefabric,i.e.,theagent/buyerdeliversthepattern,fabricandtrimmings tothelocalmanufacturer/subcontractorwhothenconstructsthegarment.Themanufacturerorthe agent then reexports the finished product17. A more extended version is payment of CMPT (Cut, Make,Pack,andTrim)terms,whichonlyaddsapackingservice. ProducinggarmentsonFOB(FreeOnBoard)termsrequirestheproducertodelivergoodsonboarda vesseldesignatedbythebuyer.Thesellerfulfillsitsobligationstodeliverwhenthegoodshavepassed overtheship'srail.Whenusedintradeterms,theword"free"meansthesellerhasanobligationto deliver goods to a named place for transfer to a carrier. Producing garments for FOB business generatessignificantlyhighermarginssincethemanufacturersourcesthefabrichim/herselfand,in somecases, contributestothepatterndesign.However,duetotheskillsand capital required,FOB businessisstilltooriskyformostprivateandstateownedVietnameseproducers.Contractsinvolving
17
http://www.bytesoftware.com,2 June2008
nd
internationaltransportationoftencontainabbreviatedtradetermsthatdescribematterssuchasthe timeandplaceofdeliveryandpayment,whentheriskoflossshiftsfromthesellertothebuyer,as wellaswhopaysthecostsoffreightandinsurance. BandolerausuallyworksonCostandFreight(C&F)terms,whichmeansthatthesellerdeliverswhen thegoodspasstheshipsvessel(ortruck/vessel/airplane)atthenamedportofshipment.Theseller takescareofallcostsandfreightnecessarytobringthegoodstothenamedportofdestination.The riskoflossofordamagetothegoods,aswellasanyotheradditionalcostsduetoeventsoccurring afterthetimeofdelivery,isforthebuyer.C&Ftermsrequirethesellertoclearthegoodsforexport18.
6.3
LogisticservicecompaniesVietnamTheNetherlands
In total Vietnam offers over 30 enterprises that deliver services in logistics, shipment and transportation.Inthe2008membershipdirectoryoftheEuropeanChamberofCommerceinVietnam we found 8 large enterprises and 21 small and medium enterprises operating in the logistics and transportationservices.Ofthe8largeenterprises,wehavecontactedthreewellknowncouriersthat provideexpressandlogisticservices,namelyDHL,FedExandTNT.Wewilldiscussthembelow. DHListheDeutschePostWorldNetbrand.Thisisaglobalmarketleaderoftheinternationalexpress and logistics industry, specializing in customized solutions. DHL offers expertise in express, air and ocean freight, overland transport, contract logistics solutions as well as international mail services. ThenetworkofDHLisinternationallylinkedtomorethan220countriesandterritories.InVietnam they have around 350 employees, with their Country office in HCMC and their Branch office in 19 Hanoi .Boxessendbyairhaveamaximumsizeof66x49x38cm.whichhasavolumeof16kg.The costsofsendingsuchaboxfromVietnamtoTheNetherlandsareabout383,09US$.Bandoleramainly usesboxeswithsizes60x40x40cmwithaweightof10kg.DHLcustomerscanalsoprovidetheirown boxes.Thecostsofsendingaboxwithavolumeof10kgfromVietnamtoTheNetherlandsareabout 301,59 US$. Boxes will be delivered within 23 days, but in the weekends and with holidays the packagecanarriveafewdayslater.Paymentexecutedbythecustomerinaforeigncountrycanoccur throughaccountnumber.WhenthepackageispickedupinVietnamfromhomeoroffice,thecosts shouldbepaiddirectly. Fed Ex Corporation is a logistics services company, based in the United States. FedEx provides customers and businesses worldwide with a broad portfolio of transportation, ecommerce and businessservices.FedExhasmorethan290,000employeesandcontractorsworldwide.Theaverage dailyvolumeismorethan7.5millionshipmentsforexpress,ground,andfreight.FedExservesmore than220countriesandterritories,includingeveryaddressintheUnitedStates.TheFedExwebsite has over 15 million visitors monthly; more than 3 million package tracking requests daily and 15 millionpackagesshippedviaFedExShipManagermonthly.FedExairservicesaresupportedwith671 aircraft,coveringmorethan375airportsservedworldwide20.BoxesprovidedbyFedExhavesizesof 60x40x35 cm or 70x46x35 cm. For a volume of 10 kg, they use boxes with 41x34x27 cm sizes. The costsofsendingsuchaboxwithoutacontractfromVietnamtoTheNetherlandsareaboutUS$160,+ 22% petrol tax. In total the costs of sending a box of 41x34x27 cm to the Netherlands will be US$195,20.Boxeswillbedeliveredwithin23daysifthereisnodelayattheairport.Forpayment,the customer can give his/her account number which will be checked by Fed Ex. Payment from this accountnumberhappenswhenpackageisarrivedatplaceofdestination.Whenthepackageispicked up in Vietnam from home or office, the costs should be paid directly. Fed Ex can only arrange transportbyair,notbysea. TNTisaglobalexpressandlogisticservice.TNToffersnetworkinfrastructuresinEuropeandAsiaand isexpandingoperationsworldwide.TNTservesmorethan200countrieshasabout500employeesin Vietnam.TNTisheadquarteredintheNetherlandsandhasestablishedajointventure,TNTViettrans Express Company Ltd. in 1997. At the moment they have operations in 23 cities and provinces in
18 19
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nd
Vietnam. TNTViettrans is a subsidiary of TNT Global which is one of the four leading couriers that provideexpress,logisticsandinternationalmailingservices21.BoxesdeliveredbyTNTforshipmentby airwithavolumeofabout10kghavesizesof50x40x30cm.Customerscanalsoprovidetheirown boxes.ThecostsofsendingsuchaboxfromVietnamtoTheNetherlandsareaboutUS$269,86.Thisis afastdeliveryserviceandwilldeliverthepackagewithin23days.TNTcanalsoprovidethecustomer withaslowdeliveryserviceinwhichthepackagewillbedeliveredwithinabout7days.Thecostsof sendingaboxwiththisslowdeliveryservicefromVietnamtoTheNetherlandsareaboutUS$148,83. Payment under signed contract can be done through an account at the end of the month or right away. Without a signed contract, the costs can be paid in cash when the package is picked up in Vietnamfromhomeoroffice.TNTdoesnotshippackagesbysea. Concluding from the information given above, we can recommend TNT as a good express service giving the best price. This company has a lot of experience with national as well as international expressandlogisticservicesandhasahighreputation. For the shipment of large orders by sea, Bandolera is already cooperating with Unique Logistics. UniqueLogisticsBVstartedin1994asforwardingagentatSchipholairportandisinthiscapacitypart ofUniqueLogisticsInternational(ULI).UniqueLogisticshas55officesworldwide,coveringover200 countries. They offer customers a complete pack oflogistic services, acting independently from the Netherlands.UniqueLogisticsisalreadyactiveinexportinggoodsfromVietnamtotheNetherlands. TransportbyseafromHCMCtoRotterdamtakesabout32days,byairtransporttakesabout2448 hours. Unique Logistics can provide Bandolera with shipment of large orders from Vietnam to The Netherlands,shouldBandoleradecidetosignacontractwithaVietnamesegarmentproducer.
6.4
InformaltradebarriersintheVietnamesegarmentindustry
Asmentionedearlier,thereisahighlaborcompetitiongoingoninVietnamduetolowlaborcosts, andtheincreasingdemandformoretechnicalskilledworkers.Theworkforceisyoungandmobileand a trend of job hopping is developing. This makes it difficult for enterprises to maintain a stable, capableworkforce. AbouthowtodobusinessinVietnamitismainlyimportanttoestablishagoodrelationshipwiththe seller. Although the Vietnamese garment industry is a busy one, the people are open, friendly and wellwillingtostartanewinterestingbusinessrelationship.However,therearesomedifficulties.Just likejobhoppingthereisalsoatrendnoticedthatbigcustomershopbetweengarmentfactories, becausetheysearchforthelowestprice.Garmentfactoriesareawareofthis,buildingarelationship willtaketime.BecausetheVietnamesegarmentmarketismainlyruledbybigcustomers,itismore difficultforsmaller(mainlyEuropean)customerstobuildarelationship.Becauseoftheboominthe industry,Vietnamesebusinesspeoplearebecomingmoreandmoreshorttermmindedanditcan be very difficult to arrange meetings. When established, meetings or appointments should be confirmednumerouslytoavoidthemtobeforgotten. Inafewofourinterviewswereceivedmorepracticalinformationaboutthewayofdoingbusinessin the Vietnamese garment industry. Mr. J. Somers (Venture International), advices to avoid working with stateowned companies, because they are slow, especially in making decisions. Private companies can decide themselves and are much faster. When selecting a garment producer, they shouldbevisitedtocheckwhetheritispossibletobuildarelationship. According to Mr. M. Manning (Indo Pride International) the Vietnamese do business the way they driveamotorbike.Theyturnandturn,cutoff,justforafewminutesextratimespare.Ittakesvery hardworktoachievegoodqualityinVietnam.SomeofthebestlookingfactoriesinVietnamarethe worsttodealwith.ContractsdonotmeanmuchtotheVietnamese.Stateownedcompaniesarethe worsttodealwith.TheVINATEXisaverylargeorganization,owning80%ofthemarket.Thisisavery difficultorganizationtogetinandalsoverydifficulttogetingoodrelationshipwith.Thelongeryou are dealing with them, the less they are willing to do business. They are mostly just interested in gettingonedeal.
21
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6.5
Conclusion
Thethirdresearchquestionstatedthefollowingquestion:WhichVietnameselegislationsandlogistic servicesinfluencetheexportofgarmenttoTheNetherlands? Sub question 3.1 about which Vietnamese legislations influence the export of different kinds of Vietnamese garment products to the EU, can be answered shortly. As described in paragraph 6.1 thereis norestrictionontheexportofgarmentandverylittlelegislationexists.Thegovernment is promoting the export of garment and therefore there is no barrier formed by formalities and documents. Subquestion3.2focusesontheavailabilityofVietnamesecompaniesandlogisticservicestofacilitate inmattersoflogistics.Paragraph6.2and6.3havedisplayedthatformostprivateandstateowned Vietnamese producers it is still too risky to take responsibility of financing the transport of the productsuntiltheyareonboardoftheshippingvessel.DoingbusinessonFOBisbecomingmoreand moretheregulartermsofpricing,butdoingbusinessonthe,byBandolerarequested,C&Fpricingis yethighlyunusualinVietnam.However,reliable,wellknowncourierssuchasDHL,FedExandTNT arerepresentedinVietnamandofferquickdeliveryofsmallerpackagesbyair. Sub question 3.3 focuses on the costs and delivery times of logistic services from Vietnam to the Netherlands.Byairwehaveconcludedthatdeliverytimesallarewithin23days.Costsforshipment ofboxeswithvolumesofabout10kgrangebetweenUS$301andUS$149.DHLhasbeenfoundtobe themostexpensivecourierandTNTthecheapestoption. The chapter concludes with some information on the informal trade barriers in the Vietnamese garmentindustry.ConcludingfromthischapterwecanseethattheVietnamesegarmentindustryhas somebarrierswhichmakeitdifficultforacompanysuchasBandoleratodobusiness.Althoughthere arenorestrictionsonthelegalsideofthedeal,inpracticeweseethatmanycompaniesstillfindit riskytodobusinessonFOBpricing,nottomentiontheC&Fpricing.Thereforethemattersoflogistics canbecomeabarrier,theneedformoreagentsorenterprisestoarrangethelogisticscanresultin delay, which can deliver big problems in Bandoleras tight delivery schedules. Furthermore we see that there are informal trade barriers in Vietnam. Because employment in the textile and garment industryishighandtheworkforceismobile,garmentproducerscanhavetroubletofindandkeep good workers. Next to that, the different Vietnamese way of doing business and the low level of English has a good change of resulting in misunderstandings. All together we see a mixed of both negativeandpositiveresultsonthethirdresearchquestion,butinthelightoftheresultsonthefirst andthesecondresearchquestionwedonotrecommendBandoleratodobusinessinVietnam.
Chapter7 ConclusionandRecommendation Inthischapterwewillfirstgiveourconclusionoftheexecutedresearchinthetextileandgarment marketinVietnam.Afterthat,wewillgiverecommendationstoBandoleraabouttheproductionof garmentinVietnam.

7.1 Conclusion
DuringourfieldresearchinVietnamwehadmanyappointments.Duringthefirst3weeksinHoChi MinhCitywehad19appointments,ofwhich17appointmentswithgarmentproducers.InHanoiwe mostly had appointments with contact persons who gave us market information.In total we had 8 contact persons: Mr. Dao Duy Thai from the HCMC University, Mrs. Ngiem Huong who wrote a relevantthesisabouttheVietnamesegarmentindustry,Ms.NgaandMr.Cuongwhowroteathesis about the difference between stateowned and private companies in the Vietnamese garment industry,Mr.LeVanDaoasViceChairmanoftheVITAS,Mr.Somerswhoisownerofprivatecompany VentureInternational,Mr.Manningwhoisownerofapparelagency/supplierIndoPrideInternational, Mr.ToanwhoisownerofYenBienCompanyandMrs.PhanThiDieuHaoftheMinistryofIndustry& Tradedepartmentoftextileandengineering. Wevisitedstateownedcompaniesaswellasprivatecompanies.Maindifferenceisthatthedecision making process in private companies is much faster. The decisionmaking process in stateowned companiesismorecontrolledbyhierarchy,andingeneralproducehigherquantities. Mostgarmentcompanies(70%)arelocatedinthesouthofVietnam.TheprovincesDongNaiandBinh Duongareboth(industrial)developmentzoneswherenewfactoriesareestablished.Theselocations arewithin2hoursdrivingfromthecentreofHoChiMinhCity,wherealsotheharbor(andairport)is located. This is an advantage for short deliver times to the harbor/airportforexport ofgarment as well as import of fabrics (or other materials) etc. In Hanoi and the province Long An 10% of the garment companies are located. These are mainly specialized in childrens wear and working wear. Womenfashionisnotmadeinthisregion. At this moment there is much competition in the textile and garment industry in Vietnam. This industry employs a large labor force (over 2 million workers), with low labor costs, and which is abundantinskilledmanuallabor.Thereisalsoatrendnoticedthatpeopledojobhopping,evento otherkindofindustries.Theadvantageofabundantandcheaplaborwillbecomelessimportantand lessattractiveovertime,whenthereismoredemandfortechnicalskills.NowadaystheVietnamese textileandgarmentindustryislessdevelopedintermsofmachineryandequipment,technology,and laborskills,comparedtootherAsiancountries. Thefactthatpeopleinthisindustryarenotspecializedinmakingdetailedgarmentisrelatedtothe abovementionedsubjects.Garmentfactoriesnamelydonothavetheresourcesandmaterials,and capitaltoinvestintomachineryneededforproducingfashioncloth. Besidestheabovementioned,theVietnamesefactoriesarenotabletomake/producemiddletohigh qualityfabrics.Thisisbecausetheycannotcontrolthequalityoffabricsontheirown.Thequalityis lowandnotstable.Whenfabricsofmiddletohighqualityareneeded,theseareimportedfromChina andTaiwan(alsoKoreaandJapan). TheVietnameseproductionofthemainfabrics(suchascotton,polyesterandsilk)areinsufficientand oflowquality tofulfillthe needsofthelocalgarmentproducers.Theproductionofsomefabrics is even decreasing, despite of big investments by the government. Therefore it seems likely that VietnamwillstaydependentonfabricsfromsurroundingAsiancountriesforthenextcoupleofyears. Nexttosupplyingfabricsfromotherforeigncountriesbuttons,sewingthreads,interlining,shoulder pads,andotherembroideryareimportedaswell.Thesecouldalsobesourcedlocal.Sometimesthe supplier cooperates with a foreign company as Coats. Alsothe brands, Kufner, Freudenberg, Vilene are noticed here. Due to the fact that most must be sourced from other Asian countries, the lead/deliverytimeofgarmentaswellasthecostpriceofgarmentincreases.
EspeciallyforEuropeancountriesitisdifficulttoentertheVietnamesegarmentmarketbecausethey ordermostofthetimessmallquantities.Besidesthat,theyhavequickturnarounds(Bandolerahas 16 collections per year) and want also high quality. For American customers it is easier to find a producer becausetheywantbigquantitiesforlowprices.Alsoexperts,agents,theVITASandeven thegovernmentnoticetheproblemthatitismuchmoredifficultforEuropeancompaniestofinda Vietnamese garment producer. They do notice the problem, but at this moment there are no concreteplanstosolvethis. Inthetextileandgarmentindustryisacertainbusinessculturenoticed.Companieswanttomake high turnovers with high profit margins. Therefore they prefer large batches/quantities of basic garmentwithlessdetails/embroidery.Becauseoftheseactivitiestheycankeepthemachinesrunning andrealizeeconomiesofscale.Garmentproducersalsopreferthatthecustomersuppliesall.Pricing on FOB is becoming more common, but is still considered as a risky business. Let stand the C&F pricingmethodpreferredbyBandolera.Wealsonoticedbyobservationsandinterviewsthatpeople in the North of Vietnam are more conservative and pragmatic. You have to remind people continuouslyofappointmentsyouhavemadewiththem.Generalinformaltradebarriersinformsof languageandcommunicationproblemshaveanegativeinfluenceontheeaseofdoingbusinesswith Vietnameseproducers.ThelevelofEnglishissometimesverypoorandVietnamesewillrathergivea random answer than admitting not to understand the question or not knowing the answer to the question.
7.2
Recommendation
Itseemstobethattherearetwonichesinthegarmentindustry.Onesmallnichewhichisfocusedon smallquantities/highpricesandonebignichewhichisfocusedonhighquantities/lowprices.Within these niches you can distinguish the private companies and stateowned companies. Especially private companies are smaller and are possible more willing to produce fashionable clothes for Bandolera.HoweveritshouldbetakeninconsiderationthatinthesecompaniesthelevelofEnglishis low,theyhavenoorlittleexperiencewithexport,andthatBandolerahastosupplythefabricsand accessories.Itisalsodifficulttofindtherightprivatecompany,becausetheydonothaveawebsiteor arenomemberoftheVITAS. IfBandolerawantsaVietnamesegarmentproducerwhocanproduceordersof5.00010.000pieces ofbasiccottonshirtsorbasicjeans,theycanalsocontactstateownedcompanies.Howeverthereisa chance that their order would be rejected because it is too small. US companies prevail in this big nicheandplaceordersof>100.000pieces.EvenifBandoleralettheirgarmentbeproducedinastate owned company and the company arranges the import of middletohigh quality fabrics, pricing in Vietnam is cheaper than in China and India (based on price estimations). However, if Bandolera let theirgarmentbeproducedinVietnam,theimportoffabricsandaccessoriescanincreasethedeliver times.Probablytheycanarrangeeverythingin90days,butintheworsecasescenariothese90days canbecrossed. Besidestheorderquantities,astrongrequirementofBandoleraisthatgarmentproducerscantake care of all the extra activities related to producing garment: (producing) fabric, buttons, zippers, embroidery, accessories, printing, washing, and arranging export. In Vietnam we did not see any companywhocanofferalltheseactivitiesbythemselves.Fabricsofmiddletohighqualityaremost of the times (90%) imported, and all the other activities besides cutting, sewing and finishing the product, are outsourced. Based on the requirements we got several advices from different persons andcompaniesthatBandolerashouldgotoHongKong(ortheareaswithin800kmfromHongKong). BandoleraisalreadyparticipatingintheChineseandIndianmarket. BasedontheabovementionedwedonotrecommendBandoleratolettheirgarmentbeproducedin Vietnam. This mainly applies for the fashionable products (with many details). Bandolera could producebasicgarmentinVietnam,butrisksthefactthatnotallgarmentproducerswillaccepttheir small order quantities for a reasonable price. Moreover, when producing in Vietnam, it will be necessarytokeepacloseeyeontheproduction,becauselanguageandculturaldifferencemightlead
to mistakes and misunderstandings. Therefore we believe that Bandolera should consider carefully whethershewantstoinvesttimeandenergyinenteringthisnewandstillunstablemarket.
References
Books VietnamTextileandApparelAssociation,Directory2006 VietnamTextileandApparelAssociation,QualityCredibility,2007 Firstselectionusedlistsofcompanies Directory of companies in Vietnam (Business in Asia.com) Textile and garments (www.businessinvietnam.net/vietnam/exporttextile.html) http://itpc.hochiminhcity.gov.vn/en/directory/section4_chapter/textiles ListofmembersofVinatex(receivedfromMrs.NghiemHuong) Mekongresearch,companydirectorygarments(www.mekongsources.com/industry9.htm) http://asemconnectvietnam.gov.vn/highquality/Det%20maygiay%20dep.htm) ReportVITAS Vietnam Textile and Garment Industry plays a very important role in the Economy of our Country Presented by Mr. Le van Dao, Vice Chairman Vietnam Textile and Apparel Association(VITAS) Theses: NghiemLien Huong (2006),Work culture, genderand class in Vietnam : ethnographies of threegarmentworkshopsinHanoi,UniversiteitvanAmsterdam. Nguyen Manh Cuong (2004), Does ownership matter to enterprise performance?: a comparative study of private and state enterprises in Vietnams textilegarment industry, Thesis,InstituteofSocialStudies,TheHague. Websitesarticles http://english.vietnamnet.vn http://findarticles.com http://moeaitc.tier.org.tw http://vietnamnews.vnanet.vn http://zoek.volkskrant.nl/artikel?text=kleding%20vietnam&FDOC=0&SORT www.2.gtz.de/vietnam www.alphatrans.com www.bytesoftware.com www.businessinasia.com www.delvnm.ec.europa.eu www.english.vietnamnet.vn/biz www.euromonitor.com www.fibre2fashion.com/news www.iht.com www.juststyle.com www.textilenepal.com/garment www.thingsasian.com www.vfabric.com/sgtextile www.vietpartners.com www.vinatex.com www.wikipedia.com
OverviewofAppendixes
1. 2. 3. 4. 5. 6. 7. Abbreviationlist Processoffabricproduction Processofgarmentproduction MapofprovincesofVietnam AgendainVietnamandcontactdetailsofvisitedcompanies/contactpersons Listofrejectedgarmentcompanies Checklist
Appendix1 AbbreviationList
C&F CIF CMP CMPT EU FOB HCMC ISS US VITAS VN YKK CostandFreight Cost,InsuranceandFreight Cutting,MakingandPacking Cutting,Making,PackingandTrimming Europe FreeonBoard HoChiMinhCity InternationalSocialStudies UnitedStatesofAmerica VietnamTextileandApparelAssociation Vietnam recognized International
zipper
Brand
Appendix2 ProcessofFabricProduction
Weaving is the process of making cloth, rugs, blankets, and other products by crossing two sets of threadsoverandundereachother.Weaversusethreadsspunfromnaturalfiberslikecotton,silk,and wool and synthetic fibers such as nylon and Orlon. But thin, narrow strips of almost any flexible material can be woven. People learned to weave thousands of years ago using natural grasses, leafstalks,palmleaves,andthinstripsofwood. Today weaving ranks as a major industry in many countries. Weaving is often completed on high speed looms. But weaving is not limited to cloth and textile products. Weaving plays an important partinthemanufactureofscreens,metalfences,andrubbertirecord.Craftworkersalsousevaried fiberstoweavebasketsandhats. Spinning is an ancient textile art in which plant, animal or synthetic fibers are twisted together to formyarn.Characteristicsofspunyarnvarybasedonthematerialused,fiberlengthandalignment, quantityoffiberused,anddegreeoftwist.Amoderntechniquetospinistheuseopenend,orrotor, spinning.Theprincipalbehindthetechniqueissimilartoaclothesdryerspinningfullofsheets.Ifyou couldopenthedoorandpulloutasheet,itwouldspintogetherasyoupulleditout.Sliverfromthe cardgoesintotherotor,isspunaroundintoyarnandcomesout,wrappeduponapackage,allready to go to the next step. Several design of rotors are in use by different manufacturers of spinning equipmentandarespecializedfordifferenttypesoffibers. knitting is a method by which thread or yarn may be turned into cloth. Knitting consists of loops calledstitchespulledthrougheachother.Theactivestitchesareheldonaneedleuntilanotherloop canbepassedthroughthem.Differentyarnsandknittingneedlesmaybeusedtoachievedifferent endproducts,bygivingthefinalpiecedifferentcolor,texture,weight,orintegrity MachineProcessing:yarnformation Themachinesusedfordifferentfibersvaryslightlyintheinitialsteps,butoncethefiberisreadyto spintheprocessandmachineryisprettymuchuniversal.Slightchangesaremadedependingonthe coarsenessofthefiberoryarndesired. Thecottonbolliswhite,roughlysphericalandfluffy.Afterbeingharvested,thecottonissentthrough acottonginbecausetheseedshavetoberemovedbeforecarding.Amoderndaycottonginlooks similartoacardingmachine,inthatthefibergoesthroughmanydifferentrollers.Theteethonthe ginaredifferentfromthoseonacardingmachine.Theginningprocessremovestheseedsfromthe cottonfiber.ThefirstcottonginwasproducedbyEliWhitney. Atthispoint,theginnedcottonisnormallyputintobales,andshippedtothecottonmill. Whenthecottoncomesoutofabale,itisallpackedtogetherandstillcontainsvegetablematter.In ordertofluffupthecottonandremovethevegetablematter,thecottonissentthroughapicker.A pickerlookssimilartothecardingmachineandthecottongin,butisslightlydifferent.Thecottonis fedintothemachineandgetsbeatenwithabeaterbar,toloosenitup.Thecottonthencollectsona screenandgetsfedthroughvariousrollers,whichservetoremovethevegetablematter. Thecottoncomesoffthepickingmachineinlargebats,andisthentakentocardingmachines.The carderslineupthefibersnicelytomakethemeasiertospin.Thecardingmachineconsistsmainlyof onebigrollerwithsmalleronessurroundingit.Alloftherollersarecoveredinsmallteeth,andasthe cottonprogressesfurtherontheteethgetfiner(i.e.closertogether).Thecottonleavesthecarding machineintheformofasliver;alargeropeoffibers. Next,severalsliversarecombined.Eachsliverwillhavethinandthickspots,andbycombiningseveral slivers together a more consistent size can be reached. Since combining several slivers produces a verythickropeofcottonfibers,directlyafterbeingcombinedthesliversareseparatedintorovings. These rovings are then what are used in the spinning process. Generally speaking, for machine processingarovingisaboutthewidthofapencil.
Spinning: Thespinningmachinesstaketheroving,thinitandtwistit,creatingyarn.Therovingispulledoffa bobbin and fed through some rollers, which are feeding at several different speeds. This thins the rovingataconsistentrate.Iftherovingwasnotaconsistentsize,thenthisstepcouldcauseabreakin theyarn,orcouldjamthemachine.Theyarnistwistedthroughthespinningofthebobbinitisrolled on,exactlylikeaspinningwheelbutjustinadifferentconfiguration.Thisprocesswasimprovedinthe 1950swiththeinventionoftheWilsonYarnClearer.
Appendix3 ProcessofGarmentProduction
Inthisappendixwegiveaquickoverviewofanaverageproductionflowofgarmentmaking.Firstthe garmentisdesignedandapatternismadeandmarked.ThepatternisdigitizedintoagarmentCAD systemwhichdirectsplottersandcutters.Thenthepatternisusedtocutfabricwhichissewnintothe finishedgarment.Ingeneraltherecanbedistinguished9steps: 1. Firstsamplesaremade.Thisincludes;testingwashingeffect,checkingcolorshadingandwashing effect,makingsamples,summitforcustomerapprovalandwashingprocessrecords; 2. Fabriclotsseparation.Washingfabricforseparatingfabriclots.Recordingandworkwithgarment factorytoseparategarmentsaccordingtocolorshadingandshrinkage; 3. Makingfirstlotinbulkproduction,analyzecolorshadingandwashingeffect; 4. Receivinggarmentsandprewashedinspection; 5. Pretreatment; 6. Wetprocesses; 7. Rinseanddrying; 8. Finalinspection; 9. Packinganddelivery.
Appendix4 MapsofVietnam
Appendix4.1 ProvincesofVietnam22
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Appendix4.2 IndustrialzonesofVietnam23
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Appendix5 AgendainVietnamandContactDetails
Appendix5.1 AgendainVietnam
AppointmentsinHoChiMinhCity(523May2008)

Contactpersonsatcompany Msc.DaoDuyThai,Mrs.NguyenLeNga Mr.BuiLuongHoa,Mrs.NgoThiNgocMy Mr.VoSonDien Mr.NguyenTuongVu Mrs.PhamThiKimLoan,Mrs.DangThi NgocBich Mr.TranvanTan Mr.PhungDung Mrs.LeThanhXuan Date&Time Companyname Monday 5May 09.00AM HCMCUniversityofTechnology, DepartmentofTextileEngineering 11.00AM HoaMyTradingService& ManufactureCompany,ltd. Tuesday 6May Wednesday 7May 07.30AM MeetingBecamexIDCCorp.Binh DuongProvince 02.00PM VietThyFashionCompany,ltd. Thursday 8May 10.00AM ThanhCongTextileGarmentJS Company 11.30AM ThangLoiInternationalGarmentJSC (VIGATEXCO) 02.00PM DuyThinhCompany,ltd. 07.00PM NghiemHuong(contactperson) Friday 9May 09.00AM CholimexGarmentJoinstock Company/TradingService Enterprise 11.00AM ThaiTuanTextile&Garment Company(fabricsproducer) Monday Tuesday Wednesday Thursday Friday Date&Time Companyname
Mrs.NguyenThiNgocTruong Contactpersonsatcompany MrsNguyenThiAnhHong Mr.NguyenHuuTam Mr.NguyenThanhHai Mr.TranDucDinh Mr.NguyenTuyenQuang,Mr.PhanMinh Dung Mrs.DuongThiBichLan Mrs.ChristinaNguyen Mrs.NguyenThiKimDung Contactpersonsatcompany Mr.NgoHungQuy(Peter) Mr.MarcusW.Manning Mrs.PhanThiKimHong Mrs.NguyenHaNhuLieu,Mr.Nguyen ThanhLuan
12May 13May 09.30AM PhongPhuCorporation NhabeGarmentCompany 03.00PM (NHABECO) 14May 09.30AM 28Company/AGTEX28 VietThangGarmentJointStock 02.00PM Company(VIGACO) DongPhuongKnittingCompany 15May 08.30AM (DOPIMEX) NghiemHuong(contactperson)/ 05.30PM MaiLanAnh(company) 16May 09.00AM MinhAnhCorporation 11.00AM PhuongDong 07.00AM 02.00PM 09.00AM Companyname ProtradeGarmentCompany,ltd. IndoPrideInternational,ltd. Saigon3GarmentJointStock Company(GATEXIM) VietFashionCompany(Ninomaxx)
Date&Time Monday 19May Tuesday 20May Wednesday 21May Thursday Friday
22May 09.00PM 23May
AppointmentsinHanoi*(26May06June2008)
Companyname VITAS DutchEmbassy VentureInternational MinistryofIndustryandTrade,Export Importdepartment Companyname Visitto'VanPhucVillage'(silkvillage) DutchEmbassay YenBienCompany Contactpersonsatcompany Mr.LeVanDao AmbassadorMr.Haspel Mr.J.Somers(senior),Mr.J.F. Somers(junior) Mrs.PhanThiDieuHa Contactpersonsatcompany Mr.Toan Date&Time Monday 26 09.30AM May 06.00PM Tuesday 27 09.00AM May Wednesday 28 May Thursday 29 09.00AM May Friday 30 May Date&Time Monday 31 May Tuesday 1Jun 09.00AM 02.00PM Wednesday 2Jun 08.30AM Thursday 3Jun Friday 4Jun
*NomanycompanyvisitsinHanoibecauseofnegativeadviceofmanycontactpersons/experts
ofthegarmentmarket
Appendix5.2 ContactDetails
Inthecontactlistonlythenameofthecontactperson,includingtheirmobilenumberandemail addressareshown.Completeinformationcanbefoundontheattachedbusinesscards. Listofaddressesofvisitedfactories: AGTEX2828Company,HCMC NguyenThanhHai,assistantforR&DDept. Mobile :0919976065 Email :agtexhcm@gmail.vnn.vn Website:www.agtex.com.vn CholimexGarmentJointstockCompany,TradingServiceEnterprise,HCMC Mrs.LeThanhXuan,saleexecutive Mobile :0906836365 Email :trading@cholimexgarment.com Website:www.cholimexgarment.com DongPhuongKnittingCompany,HCMC NguyenTuyenQuang,director Mobile :0906639068 Email :tuyenquang@dopimex.net PhanMinhDung,deputymanagersalesandmarketingdept Mobile :0903397367 Email :dopimex@hcm.fpt.vnphandunghcm@yahoo.com.vn Website:www.dongphuong.com.vn
DuyThinhCompany,HCMC Mr.PhungDung,CEO Mobile :0903939648 Email :phungdung@duythinh.com.vn Website:www.duythinh.com.vn HaoMyTradingService&ManufactureCompany,HCMC BuiLuongHoa,director Mobile :0918030258 Email :hoamygwens@vnn.vn Website:www.hoamyunderwear.com.vn MaiLanAnhGarmentandTradingCompany,HCMC DuongThiBichLan,managerassistant Mobile :0908227783 Email :sales@mailananh.comoanh@mailananh.com Website:www.mailananh.com MinhAnhCorporation,HCMC ChristinaNguyen,sales Mobile :0916306060 Email :Christina@minhanhcorp.com NhabeGarmentCompany,HCMC Mr.NguyenHuuTam,teammanager Mobile :0903706438 Email :tam@nhabe.com.vn Website:www.nhabe.com.vn Ninomaxx,VietFashionCompany,HCMC PhuTrchTuongHieu Mobile :0983279038 Email :thanhluan@ninomaxx.com.vn Website:www.ninomaxx.com.vn PhongPhuTrading&InvestmentPromotionJointStockCorporation(PPP),HCMC Mrs.NguyenThiAnhHong,marketingexecutive Mobile :0908262890 Email :Hong.Nguyen@phongphupromotion.com Website:www.phongphupromotion.com PhuongDongGarmentJointStockCompany,HCMC NguyenThiKimDung,merchandiser Mobile :0983869184 Email :dung.nguyen@pdg.com.vn ProtradeGarmentCompany,HCMC Mr.NgoHungQuyPeter,marketingmanager Mobile :0913657376 Email :peter.ngo@protradegarment.com Website:www.protradegarment.com Saigon3GarmentJointStockCompany,HCMC PhanThiKimHong,tradingmanager Mobile :0918397707
Email :kimhong@saigon3.com.vn Website:www.saigon3.com.vn ThaiTuanTextile&GarmentCompany,HCMC NguyenThiNgocTruong,deputyexportmanager Mobile :0913925035 Email :thaituaninfo@taituan.com.vnnguyentruong@thaituan.com.vn Website:www.thaituanfashion.com ThangLoiInternationalGarmentJSC,HCMC TranVanTan,merchandiserofplanningimportexportdept. Mobile :0903698032 Email :tranvantan2000@yahoo.comtrantan@thangloi.com.vndetthangloi@hcm.vnn.vn ThanhCongTextileGarmentJSCompany,HCMC Mrs.DangThiNgocBich,exportdirector Mobile :0918101536 Email :bich,imex@thanhcong.net Mrs.PhamThiKimLoan,exportexecutive Mobile :0909461145 Email :loan.imex@thanhcong.net Website:www.thanhcong.com.vn VietThangGarmentJointStockCompany,HCMC TranDucDinh,vicemanagerofbusinessdept. Mobile :0903310006 Email :dinh@vigaco.comvigaco@vnn.vn Website:www.vietthang.com VietThyFashionCompany,HCMC Mr.NguyenTuongVu,director Mobile :0903910952 Email :vity@mail.saigonnet.vn Website:www.vietthy.com Listofaddressesofcontactpersons(experts) HoChiMinhCityUniversityofTechnology(HCMUT),departmentoftextileengineering Mr.DaoDuyThai,lecturer Mobile :0918189345 Email :duythaidm@yahoo.com IndoPrideInternationa.,HCMC Mr.MarcusW.Manning,managingdirector Phone :(84)88300404 Email :marcus@indoprideapparel.com Website:www.indoprideapparel.com InstituteforSocialStudies,Hanoi Mrs.DuongThiNga Mobile :0912440508 Email :duongnga.iss.@gmail.comVietnam.iss@gmail.com MinistryofIndustryandTrade,Hanoi PhanThiDieuHa,deputydirectorgeneral,exportimportdepartment Phone :(84.4)2205437
Email :haptd@moit.gov.vn VietnamTextile&ApparelAssociation(VITAS),Hanoi Mr.LeVanDao,vicechairman Mobile :0913219514 Email :daolv@vinatex.com.vninfo@vietnamtextile.org.vn Website:www.vietnamtextile.org.vn YenBienCompanyLTD,Hanoi Mr.NguyenKhanhToan,director Mobile :0903444019 Email :gotohanoi@gmail.com Website:www.garment.vn
Appendix6 ListofRejectedGarmentCompanies
NorthofVietnam
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Companyname AsiaQueenSilkCompany BinhMinhCompany ChienThangGarmentCompany(CHIGARMEX) DapCauGarmentCompany(DAGARCO) DongXuanKnittingCompany(DOXIMEX) DucGiangGarmentCompany(DUGACO) Fsilk HanoiTextileGarmentCompany(HANOSIMEX) HaNoiIndustrialCanvasTextileCo.(HAICATEX) HoGuomJointStockGarmentCompany HoaVietSyntheticFiberCo.Ltd. HoangThiLoanKnittingCompany HopThanhCompany HungYenGarmentCompany(HUGARCO) March8TextileCompany(EMTEXCO) NamDinhGarmentCompany(NAGACO) NamDinhTextileCompany(NATEXCO) NguyenHoangEximCompany SongHongGarmentCompany ThangLongGarmentCompany(THALOGA) Trade&ServiceCompanyNo1(TRASCO) VinhPhuTextileCompany(VITEXCO)
Place Hanoi Hanoi Hanoi BacNinhTown Hanoi Hanoi Hanoi Hanoi Hanoi Hanoi Hanoi VinhCity ThaiBinh HungYenTown Hanoi NamDinhCity NamDinhCity Hanoi NamDinh Hanoi Hanoi VietTriCity
noemailor telephonereply/ webisteerror X X X X X X X X X X X X X X X X X X X X
noEnglish speaking X
toobigminimum orderquantity X X
nowomen fashion X X X
produces fabrics
CentralVietnam
23 24 25 26 27 28 29 Companyname DanangTextile DanangSilkandAgricultulutalCompany HoaThoTextileGarmentCompany(HOTEXCO) HueTextileCompany(HUTEXCO) March29Textile&GarmentCompany NhatHoaSilk NhaTrangTextileCompany(NHATEXCO)
Place DaNang DaNang DaNang HueCity DaNang DaNang NhaTrangCity
noemailor telephonereply/ webisteerror X X X X X X X
noEnglish speaking
toobigminimum orderquantity
nowomen fashion
produces fabrics
SouthofVietnam
30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 Companyname ANPHUOCGarment,Embroidery&ShoesCo.,Ltd. BachTuyetCottonCorporation BinhDinhExportTextile&GarmentCompany D.KSaigonNCCK.Wear DocLapGarmentCompany(DOLIMEX) DongATextileCompany(DATEXCO) DongNaiGarmentCompany(DONAGAMEX) DongNamTextileCompany(DONATEXCO) DongTienImportExportCompany(DOTIMEX) FashionTradingManufacturing GarmentCompanyNo.10(GARCO10) GiaDinhTextile HoaBinhGarmentCompany(PEGARIMEX) HungNgaFashionCompany HungThanhDatCompany HungXuongCompany HuuNghiGarmentCompany(HUGAMEX)
Place HCMC HCMC HCMC HCMC HCMC HCMC HCMC HCMC CanTho HCMC HCMC HCMC HCMC HCMC HCMC HCMC HCMC
noemailor telephonereply/ webisteerror X X X X X X X X X X
noEnglish speaking
toobigminimum orderquantity X X
nowomen fashion X X X X
produces fabrics X
47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65
Legamexcompany MyNgaGarmentCo. NghePhongTextileCompany NinhBinhGarmentCompany PhanTietGarmentCompany PhuocLongTextileCompany(FULTEX) PhuongNamGarmentCompany(FUNAGAMEX) SaigonTextileGarmentCo.(TEXGAMEX) SaigonWool&TradingCorporation SaoMaiCorporation SentiFashion(ladies) ThoiTrangHanCo. TralyJuteCompany(TRAJUCO) VietHungCompany VietTienGarmentCompanyVTEC VietnamBlanketWoolCompany(BLATEX) VietnamCottonCompany(VCC) VietsunCo.,ltd VinhHungTextileGarmentPte
HCMC HCMC HCMC HCMC PhanTiet HCMC HCMC HCMC HCMC DongThap HCMC HCMC ThaiBinhCity HCMC HCMC HCMC HCMC HCMC HCMC
X X X X X X X X X X X X X X
X X
X X X
Appendix7Checklist
Thischecklistisusedduringallthecompany(factory)interviews/visits.OntheattachedDVDthechecklistsperfactoryareincluded. CriteriajudgementofVietnamesegarmentproducers
General Visitedtheheadoffice Visitedthefactory Dotheyhaveacompanyprofile? PricingonFOB PricingonCMPT PricingonC&F Producesgarment(finished) Producestextiles/fabrics Numberofworkers Productioncapacityperweek Productioncapacitypermodel Whatkindofmachinerydotheyhave spinninglines weavinglooms knittingmachines dyeingmachines finishingmachines sewingmachines multiheadembroideringmachines othermachines isitalworking Howcleanisthefactory Dotheyworkorganized ISO9001:2000 ISO14000 SA8000 yes/no 1 2 rating 3 4 5 when+address,(andaccompaniedbylecturer?) when+address,(andaccompaniedbylecturer?) ifyes,includeattachment specifykindofgarment<>period specifykindofgarment<>period specifybrandnamesofmachinery
Communication/Internationalization GradeofEnglish Useoflinguist ExporttotheEU/US Whoaretheircustomers Fabrics/Textiles Whichfabricsaretheyworkingwith Aretextileshomemade Whatisthequality Isqualitystable Dotheyhaveinventoryofhomemadetextiles Aretextilesimported Isqualitystable ImportedfromChina? Alsofromothercountries? Delivertimeswhentextilesarenotinstock Garment Whichkindofgarmentdo/cantheymake Dotheyunderstandourproductspecifications Whichbrandofyarnsdotheyusetostitch Whichbrandofinterliningdotheyworkwith Whatisthequalityofthelining Whatisthequalityoftheshoulderpads/whichbrand Whatisthequalityoftheworkmenship Dotheyhaveaownlaundry(garmentwashed) Dotheymakepatternsbythereselfs ifyes,onwhichcomputersystem?orbyhand? ifno,whoismakingthem?customer? Accesoires/Trims Whichaccesoryaretheyworkingwith
specifywhichcountries specifythecompanies specify,takesamplesoffabrics middlepricelevel,notcheapshit,nothighendpricelevel specifyfromwhichcompanies specifyfromwhichcountries,andwhichcompanies specify specify specify('plakvaseline') voering'>ifsample,judgedbyBandolera ifsample,judgedbyBandolera ifsample,judgedbyBandolera specify specify
DotheyuseYKKzippers Whatkindofbuttonsdotheyuse Samples Dotheyhaveasampleroom Howmanypeopleareworkingthere Howbigiscapacityofsampleroom Cantheyshowussamples Cantheyalsoshowthecurrentproduction Aretheymakingnewsamples Didtheymakeaproductionofthesesamples Howmanyproto'scantheymakein1day Cantheymakesamplesforus DotheysendittoBandolera? Canwetakesampleswithus(i.e.Bchoice) Delivertimes Delivertimesoffabricwhennotinstock Delivertimesfromscratch Delivertimeofprotowithin21days? Totalproductiondelivertimewithin90days? Pricing Pricesofalreadyproducedarticles Pricesofourproductspecificationsbasedon1500pcs. Concluding Generalinterpretationofthefactory Picturesmadeoffactory? Picturesmadeofdifferentstylesofgarment? PotentialcompanyforBandolera?
specify,maybewithpictures specifyamount (meansfromthebeginningofdrawingtillfinalproductionsample) ifno,specify specify,andcomparewithChina/India specify,andcomparewithChina/India

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Textile&Garment IndustryinVietnam

6.5 Chapter7 7.1 7.2

Sample(s) Production lines Order

Airmail Bandolera Shipment

www.iht.com,5 June2008 th www.english.vietnamnet.vn/biz,5 June2008

30% 50% 35% 40% 40% 50% + + + +

65% 30% 5% 40%

15% 60% 30% 65% 100% 0% 30% 40%

http://www.alphatrans.com,2 June2008 th http://www.dhl.com,4 June2008 20 th http://www.fedex.com,4 June2008

Chapter7 ConclusionandRecommendation Inthischapterwewillfirstgiveourconclusionoftheexecutedresearchinthetextileandgarment marketinVietnam.Afterthat,wewillgiverecommendationstoBandoleraabouttheproductionof garmentinVietnam.

Date&Time Monday 19May Tuesday 20May Wednesday 21May Thursday Friday

22May 09.00PM 23May

noemailor telephonereply/ webisteerror X X X X X X X X X X X X X X X X X X X X

Place DaNang DaNang DaNang HueCity DaNang DaNang NhaTrangCity

noemailor telephonereply/ webisteerror X X X X X X X

noemailor telephonereply/ webisteerror X X X X X X X X X X

specify,maybewithpictures specifyamount (meansfromthebeginningofdrawingtillfinalproductionsample) ifno,specify specify,andcomparewithChina/India specify,andcomparewithChina/India

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