VITAS SUSTAINABILITY CONFERENCE

(VSC)-REPORT

Reported by : Ivan_Compliance Manager

 VSC TOPICS

❑ Day 1 ❑ Day 2
- About VITAS - Textile Exchange Introduction

- Openning Statement of VITAS Chairman ❑ OCS/GOTS

❑ RCS/GRS
- World Textile Export & VN Textile Impact during Pandemic ❑ Accredited Structure
❑ Standard Scheme
- Puma Sales 2020 & Sustainability Goal ❑ Accreditation Procedure
❑ What is TC?
- H & M Group Sustainability Goal
❑ What is SC?
- US Cotton Protocol ❑ Accreditation Scope

- Conclusion of VITAS Chairman - ZDHC chemical introduction

- ZDHC wastewater introduction

 DAY 01

❑ About VITAS
- VITAS organization - International organizations are VITAS’s members:

❑ International Clothing & Textile Bureaus (ICTB)

❑ International Apparel Federation (IAF)
❑ ASIAN Apparel Federation (AAF)
❑ ASEAN Federation Textile (AFTEX)
❑ ASIAN Fashion Federation (AFF)
❑ International Textile Manufacturers Federation (ITMF)
❑ Sustainable Apparel Coalition (SAC)

- Head office: Ha Noi

- Representative office: Ho Chi Minh

VITAS website: http://www.vietnamtextile.org.vn

 DAY 01

❑ Openning Statement of VITAS’s Chairman (Mr. Vu Duc Giang)

- To report all members about Textile Situation & Update of market
demand
- Drive Sustainability Development in Textile Industry in VN
- To Connect VITAS membership together with brands
- Listen factory (ies) difficulties & expectations
- To Consult to Prime ministers proper policy to adapt world market
approach for VN textiles
- Approach Brands to share Win-Win solution to factories due to cov
19 affection ( extending orders delivery date instead of order cancel
- Encourage factory (ies) to study products manufacturing
diversification in cov 19 period
- Promote brands to include costing with adding sustainability cost
into costing for factory offering
- Salary increase in 2022
- Revision of investment law, labor law & Environmental Law 2020
and effective date 2022
 DAY 01

❑ World Textile Export & VN Textile Impact

- World Textile Demand big Dropped down
2020 Export US Europe
Apparel 40% 45%
Footwear 21% 27%
- Import tax for Textile to US reduced 13% in 2020
- Textile orders from US & Europe transferred from China to Vietnam & some Asian countries
- VN overcame China and became biggest Textile Exporter to US Market in 2020
- Forecasted Export room to Europe for VN is huge from now to 2025

Europe Market 2020 2021 - 2025

Apparel 45% 67%
Footwear 27% 50%
 DAY 01

❑ World Textile Export & VN Textile Impact

- VN Textile Export Dropped down till Sep 2020
World
Apparel -10.2%
Footwear -9.6%

- More than 1,000,000 employees are retrenched in 2020

 DAY 01

❑ World Textile Export & VN Textile Impact

- Cov 19 impacted VN Apparel & Footwear industries
❑ Cov 19 is as a chemical testing for exposing real enterprise characteristic
capabilities
❑ Footwear is affected stronger than Apparel
❑ Yarn enterprises was affected strongest in 2020 and yet run in recovery
trending
❑ Group factories with 1000 workers above have been ongoing recovery
❑ Group factories with 300-1000 workers have been struggling until this moment
❑ Group factories with below 300 workers they was flexible on domestic market
❑ More than 40% Footwear factories are deep dive situation
- Operating cost Reduction
❑ Majority of factories was keeping basic salary for workers & jobs
❑ 90% of group factories reduced working hours & 65% of group factories
reduced Wages allowance→ Sustain this action till mid 2021
❑ 40.7% of group factories arranged leave day for 20-50% of their workers
without payment
❑ For group facilities from 300-1000 terminated 11 – 20% of their workers
→ Sustain this action till mid 2021
 DAY 01

❑ World Textile Export & VN Textile Impact

Brand behaviors
2020 Survey

Brands’ Practices during Pandemic % of Factories

Late Payment 51.0%
No Support 32.4%
Un full payment for cancelled orders 16.6%
No PO clearance 29.9%
 DAY 01

❑ World Textile Export & VN Textile Impact

Factories Strategies Survey for 2021 – 2025 plan ( Unit: % of factories)
As Chart gives us trending of a group
Next Year 1- 3 years 3 years later of factories are tending to make CMT
orders due to low investment even
although less profit earned→ This
create Big barriers for VN textiles, the
circle of non-growth and non-
sustainable business are leading not
achieving sustainability goal, labor
condition & business chance

Mission of VITAS to drive all factories

not downgrade factories itself---→

Reduce
CMT
orders
Increase
CMT
orders
Invest more
Green
Technologies
Invest more
Automation
No plan
How to do ?
 DAY 01

❑ World Textile Export & VN Textile Impact

VITAS Mission
❑ Connect Brands vs Factories
❑ Provide Best practices/Lesson case study to VITAS members
 DAY 01

❑ World Textile Export & VN Textile Impact

Lesson 01- Minimize Crisis vs Long term business
❑ Keep long term business between Brands and Factories by Sharing Win-Win
solution during Cov 19 period
❑ Actively regularly meeting about solution for PO agreement if have any factor
affected
Concrete term possibilities for both side if have order cancel ( Discount price/Late
Delivery Date Acceptance/
❑ Sharing risks into both in order to sustain workers benefits & labor conditions
 DAY 01

❑ World Textile Export & VN Textile Impact

Lesson 02- Sustainability vs Product Value Enhancement
Productivity
Improvement
Working
Condition
Improvement

Business Product Product

Transfers Value Quality

Environmental
Improvement

Functional
Product
 DAY 01

❑ World Textile Export & VN Textile Impact

Lesson 03-Order placement policy vs Factory Compliance
❑ Priority in order placement for which suppliers follow labor & Environmental
compliance→ Encourage continual sustainability improvement
❑ Sharing Compliance cost between factories & brands
❑ Brands consider improper requirements cause factories compliance down

Orders ❑ Information sharing Compliance

Placement ❑ Audit Scoring & CSR
Commitment ❑ Order buying decision
Improvement
 DAY 01

❑ World Textile Export & VN Textile Impact

Lesson 04- Create business opportunity for VN factories in order to not let
race to bottom

❑ VN factories should drive Sustainable business strategies

❑ VN government supported many factories
❑ Brands should provide more management training, technology management
approach…

❑ Race to bottom- The Dead way for which small size factories with CMT order
- Less profit
- No opportunity of sustainable business
- Non-compliance for labor condition and environment Race to
Bottom
 DAY 01

❑ Puma Sustainability Goal

❑ 2021 – 2025 plan
❑ Higg FEM vs SLCP
❑ Sustainability Projects
RCS & GRS – Recycled Content Standard & Global Recycled Standard

ZDHC ( Chemical & Wastewater) for Chemical formulator & fabrication

factories, LTV shall apply ZDHC when set up printing inhouse only

OCS & GOTS – Organic Content Standard & Global Organic Textile
Standard ( Introduce in Day 02 of Training)
 DAY 01

❑ Puma Sales Growth in 2020

 DAY 01

❑ US Cotton Protocol

US Enterprise & Certificate Cotton Sales Growth Sales Goals

Origins
 DAY 01

❑ Conclusion of VITAS Chairman

- VITAS goals for 2021 – 2025 to strengthen relationship between Brand-Manufacturer-Materials
- Factory shall enhance more facilities improvement
- VITAS takes main role in consulting VN Congress to come out Sustainable Policy for Textile enterprises
- VITAS is under negotiating to Primine Minister regarding 10% Tax reduction for Textile factories as impacted by Cov 19
- Factories drives Sustainable Roadmap
- VITAS provides condition for factories to visit best practices factories in order to make everybody closer
- In coming soon time VITAS is going to arrange a visit to Fabric Mill in Long An/Nam Dinh, Factories shall take care cost itself
 DAY 02

❑ Textile Exchange Introduction

Textile Exchange is a global nonprofit that creates leaders in
the preferred fiber and materials industry.

- RCS (Recycled Content Standard)

- GRS (Global Recycled Standard)
- OCS (Organic Content Standard )
- GOTS (Global Organic Textile Standard)

https://textileexchange.org/about-us
http://Ltvnas-1.quickconnect.to/d/f/611555107902890293
 DAY 02

❑ Textile Exchange Introduction

Textile Exchange Standard
 DAY 02

❑ Textile Exchange Introduction

Textile Exchange Standard
5% at least
 DAY 02

❑ Textile Exchange Introduction

Textile Exchange Standard
 DAY 02

❑ Textile Exchange Introduction

Textile Exchange Standard
 DAY 02

❑ Textile Exchange Introduction Accreditation Body for 3rd parties

Standard Written Bodies 3rd parties: BV, ITS, SGS…

Accreditation Structure

Factories
 DAY 02

❑ Textile Exchange Introduction

Standard Scheme
RCS- Prove Material Contents
GRS- Prove material content and Labor
and HSE

RCS GRS
 DAY 02

❑ Textile Exchange Introduction

Accreditation Procedure
For Textile Supply Chain

BV Technical Staff
 DAY 02

❑ Textile Exchange Introduction

Factory Preparation
TC – Transaction Certificate
SC – Scope Certificate ( Factory could apply SC advanced to TC)

What is TC ?
Example:
- T2 material suppliers supply Luckytex material thus they have to provide us materials ingredients and TC report verified by 3 rd
party
- Luckytex Ships goods to Brands we have to issue TC ( Goods manufacturing Details) which verified by 3rd party. It depends on
Brand’s requirements that ONE TC possible applies for No. of Shipments

What is SC?
Example:
- Luckytex invite 3rd party to verify manufacturing facilities and product flows which include all sub-process onsite
 DAY 02

❑ Textile Exchange Introduction

SCOPE TO CERTIFICATE OF RCS & GRS
- Manufacturing
- Warehouse
- Transportation
- Labeling & Packing
- Trading & Distributing
 DAY 02

❑ Textile Exchange Introduction

ZDHC (Chemical)
- Dying mill
- Footwear factory
- Garment washing
- Regular Apparel

NOTE: LUCKYTEX NOT REQUIRED LIST TO JOIN

ZDHC CHEMICAL UNTIL SETTING UP INHOUSE
PRINTING
 DAY 02

❑ Textile Exchange Introduction

ZDHC (Chemical)
Certification bodies

NOTE: LUCKYTEX NOT REQUIRED LIST TO JOIN

ZDHC CHEMICAL UNTIL SETTING UP INHOUSE
PRINTING
 DAY 02

❑ Textile Exchange Introduction

ZDHC (Chemical)
Facilities Implementation Roadmap

NOTE: LUCKYTEX NOT REQUIRED LIST TO JOIN

ZDHC CHEMICAL UNTIL SETTING UP INHOUSE
PRINTING
 DAY 02

❑ Textile Exchange Introduction

ZDHC (Wastewater)
- Dying mill
- Footwear factory
- Garment washing
- Regular Apparel

NOTE: LUCKYTEX NOT REQUIRED LIST TO JOIN ZDHC

WASTEWATER UNTIL SETTING UP INHOUSE PRINTING
 SUMMARY FOR LUCKYTEX ACTION

❑ Sustainability Projects

Higg FEM 3.0 SLCP RCS GRS ZDHC ZDHC

Chemical Wastewater

Join Join Join Later Later Later

Thank You