Part 2: Analysis

I. External analysis

1. PESTEL

1.1. Political
- Despite many difficulties due to the impact of the Covid-19 epidemic, the
demand for consumption dropped sharply and orders were canceled, but with the
acumen and transformation of manufactured goods, Vietnam's textile and garment
industry has gradually overcome difficulties, reaching an export turnover of 26.73
billion dollars in 2020. The number of textile and garment orders has grown again
in the first months of 2021 after the Covid-19 vaccine was gradually injected
massively.
-Signing and implementing a Free Trade Agreement with the EU (EVFTA) opens
up great market opportunities and increases the competitive advantage in the price
of Vietnamese goods in this market. When the EVFTA comes into effect, 42.5% of
import tax lines for Vietnam's textile and garment export products will be removed
immediately (mainly for textile materials), the rest (main taxes on with final textile
products) will gradually decrease to 0% within 3-7 years from a starting level of
12%.
- In addition, the Comprehensive and Progressive Agreement for Trans-Pacific
Partnership (CPTPP) is considered to create favorable conditions to promote the
industry to link production and business stages and participate in the global supply
chain due to regulations on the origin...etc. Currently, with the general provisions
of the CPTPP, goods made from textiles and garments must ensure the principle
from the fabric onwards (that is, the source of fabric materials for sewing products
must originate from 11 CPTPP member countries). Currently, Vietnam has
promoted the use of fabrics from many countries in the bloc such as Malaysia,
Singapore, and Japan.
- The trade war caused great disturbances with many opportunities for exports and
at the same time promoted investment attraction in weak parts of the textile and
garment industry. The US-China trade war may create a trend for Chinese and
foreign investors to shift investment from China to Vietnam, especially in the raw
material stage to both avoid high taxes and meet requirements origin to enjoy low
tax rates of CPTPP and EVFTA. At the same time, FTAs such as CPTPP and
EVFTA will create conditions for businesses to expand export markets and attract
investment in weak stages such as weaving and dyeing in the near future.
1.2. Economic
- Over the past years, Vietnam's textile and garment industry has made strong
progress and played an increasingly important role in the growth of the economy.
Of all the industrial exports today, textiles are the industry with high export
turnover and growth rate.
- Export turnover of textiles and garments in recent years:
+ 2017: 31 billion dollars, accounting for 14.5% of the total national export
turnover
+ 2018: 36 billion dollars, growing by more than 16% compared to 2017
+ 2019: Approximately 39 billion dollars, an increase of 7.75% compared to 2018
- Export turnover of textiles and garments in eleven months of 2020 reached the
26.73 billion dollars, accounting for 10.5% of the total export turnover, down
10.5% over the same period last year. Although the export turnover of textile and
garment products has decreased, this reduction is still lower than that of many
other countries, especially in the context of a 25% decrease in world textile and
apparel demand.
- Textile and garment industry is one of the industries heavily affected by the
Covid-19 epidemic. The interrupted supply chain of input materials, the import
markets had to close due to the implementation of social blockades to prevent
epidemic, the decrease in demand for products was the difficulties that the industry
faced during the year.
- In the coming time, textile and garment enterprises need to have new measures to
change their production and business methods to suit the new situation, especially
when the implementation of the Vietnam - EU Free Trade Agreement (EVFTA)
will be a great opportunity for the industry export market expands.
1.3. Sociocultural

- The more economic development, the life and the income are getting higher, the
more people pay attention to consumer products, including clothes. In addition, the
aesthetic trends and tastes of consumers for both apparel products also change
continuously. If businesses do not invest properly in design work, they will quickly
fall behind in this fierce competition.
- At present, Chinese garments with cheap prices and diverse designs are often
changed and quite suitable to the tastes of Vietnamese who dominate the domestic
garment market. However, Vietnamese people still have the mentality of "eat
firmly, wear durable", so the good quality products of domestic enterprises are still
trusted by many Vietnamese people. This is an advantage for domestic businesses
who want to retake the domestic market that is currently attacked and dominated
by Chinese products.
1.4. Technological
- From the practice of technology models deployed in factories in Vietnam and
future technologies for the textile and garment industry, we can see the main
changes in technology applied in the textile industry as follows:
+ Currently, the fiber industry focuses on developing digital machinery and
equipment with a high degree of automation, using robots in some stages;
automatic quality management through intelligent automatic equipment
management, monitoring software, and maintenance.
+ Enterprises providing equipment and solutions in the textile and dyeing industry
mainly focus on smart fabric design software, using big data, in-lines to connect
things, connect with most all existing textile machines; intelligent textile factory
management software, automatic control of the whole production process.
+ Technology of the garment industry in the past period focused on automatic
management solutions, digital sewing equipment, 3D printing and sewing robots.
1.5. Environmental

- Our country is located in the monsoon tropics, which is very suitable for the
development of industrial crops such as cotton, jute, mulberry, and silkworm,
which is an input factor for the textile and garment industry.
- In addition, Vietnam is located on the international traffic route, located in a
vibrant developing area, so it is very convenient for the trade exchange of products,
raw materials, machinery, and scientific technology art in the region and around
the world.
- The ecological environment pollution, caused by many factories discharging
industrial and domestic wastes, toxic substances of the production process are not
treated seriously but put directly into the environment, causing pollution ecological
environment, causing diseases to people. The free trade agreements (FTAs) signed
by Vietnam all have barriers to the environment, sustainable development, and
green development. This requires businesses to make efforts to improve not only
the quality of products but also the production process.
- Currently, many provinces have established their industrial zones for textile and
garment activities. In particular, the industrial zones have invested and put into
operation the wastewater treatment system, helping enterprises to improve their
environmental responsibility in the production process. In addition, the
specialization in waste treatment in industrial zones has also helped businesses
focus more on the field of professional activities.
1.6. Legal
- Decision 3218 of the Ministry of Industry and Trade approving the development
planning of Vietnam's textile and garment industry to 2020, vision to 2030:
+ To develop the textile and garment industry in the direction of modernity,
efficiency, and sustainability; strongly shifting production from processing to
purchasing raw materials and semi-finished products, ensuring quality
improvement and diversifying export products.
+ Taking export as the basis for the development of the industry, and at the same
time satisfying the needs of the domestic market to the fullest; focusing on strongly
developing supporting industry products, producing raw materials and auxiliary
materials, enhancing the added value of products in the industry.
+ The development of the textile and garment industry must be associated with
environmental protection and the trend of the labor movement in agriculture and
rural areas. To develop concentrated textile dyeing industry zones and clusters to
facilitate environmental treatment. Moving labor-intensive textile and garment
enterprises to rural areas, and at the same time developing the textile and fashion
market in urban areas and big cities.
+ Developing human resources in both quantity and quality for the sustainable
development of the textile and garment industry, focusing on training managers,
technicians, and skilled workers to create a team of entrepreneurs good, skilled,
in-depth cadres and workers.
+ Mobilize resources to invest in textile development, call on foreign investors to
invest in areas where domestic enterprises are still weak and inexperienced.
- According to laws, workers in Vietnam enjoy the rights and privileges of jobs,
such as fixed working hours, work shifts, holidays, and maternity leave. In
addition, businesses are also required to register compulsory life plans, insurance
coverage, unemployment compensation, and workers' injury compensation
insurance for their employees.

2. Five Forces

2.1. Threat of new entrants: High

- Trademark loyalty: current company's product preference, through continuous

trademark advertising, product copyright protection, product advertising,
companies emphasis on product quality and after-sales service will make it
difficult for new entrants who want to dominate the market of the company today.
- In addition, Viettien also uses the absolute cost advantage by operating superior
production thanks to its long experience and input control, access to cheaper
capital sources, which will pose a threat from the importer decline.
- The company also implements a conversion cost policy related to the cost of
purchasing additional equipment, the cost of training staff to use the machine ...
- In addition, the demand for human clothing is increasing, so the garment market
is also vibrant, which is the reason that attracts the attention of many domestic and
foreign investors. . Due to the emergence of new businesses in this sector, the
market share of existing businesses which also includes Viettien will be reduced.
The intensity of competition in the industry has also become more intense.
2.2. Rivalry Among Existing Competitors: High
- The level of competition in the industry is considered high because there are a
large number of businesses racing with Viettien such as May 10, An Phuoc, Nha
Be Garment, Thanh Cong ... It is available from some other countries and has a big
brand name being introduced into Vietnam, which makes Viettien have a suitable
strategy to be able to stand firmly in the market.
- The Vietnamese economy is integrating deeply, famous fashion brands such as
Gucci, Burberry, Dior ... flooded into the high-end market segment while Chinese
goods also strongly attacked the affordable segment quota. This causes many
difficulties for domestic products.
2.3. The bargaining power of suppliers
- As we know the main difficulty of the textile and garment industry in Vietnam in
general as well as Viettien's garment is that it has not created raw materials for
production, but mostly due to imports from abroad. Therefore, businesses will be
under pressure from suppliers because they depend on them.
- In addition, the current situation of Covid 19 in the world is still complicated, it
is difficult for Viet Tien when importing raw materials.
- However, Vietnam's textile and garment industry is developing agricultural
regions and expanding industrial zones in Ninh Binh, Long An ... to serve the
domestic supply and attract domestic and foreign investment for the textile
industry.
2.4. Bargaining Power of Buyers
- It is a fact that we can never fulfill all the requirements of the customer.They not
only want the product to be of high quality but also to be beautiful in appearance,
style, low price, reasonable ... Because in business we have to sell what the market
needs, not what to sell. We have, so Viettien, as well as other businesses, must try
to meet customers' requirements. So the bargaining power from the customer side
is higher than that of the business.
- Viettien currently has more than 1304 stores and agents evenly distributed
throughout the provinces and cities nationwide. Thanks to its quality and good
after-sales service, Viettien has made a good impression on many loyal customers.
- To retain customers, the company develops in the direction of "multi-price",
creating many choices for customers. And to increase the number of sales, Viettien
did not reduce product prices but launched products with average value like the
office fashion products of Viet Long Company.
2.5. Threat of substitute products: High
- Due to the low import tax on garments (20%), domestic manufacturers including
Viettien will have to compete fiercely when foreign products flow into Vietnam
such as China, Japan, and Korea ... Especially when Chinese products are both
cheap, diverse and popular with many customers, especially the younger
generation.

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