Vietnam: An Attractive Fashion Manufacturing Hub for Global Brands

Mar 12

Written By ZV

1. Cost-effective Manufacturing Process

A crucial consideration for all brands when choosing a manufacturer is the affordability of production, which happens to be a highly regarded trait of the Vietnamese market.

According to Project SGN, “'Vietnam continues to maintain reasonable prices for manufactured goods without compromising quality. The quality of finished products manufactured in Vietnam ranks within the top 10% globally.”'

Vietnam's low manufacturing costs can be attributed to the following factors:

Affordable labor costs: In 2023, the minimum monthly wage in Vietnam ranges from $137 to $197, with the highest rates in major cities such as Ho Chi Minh City and Hanoi. This indicates that labor wages in Vietnam are somewhat lower than in other Southeast Asian nations, such as Thailand ($379), the Philippines ($226), and Indonesia ($323).
Inexpensive raw materials: Vietnam's fabric sources come from nearby countries such as China and South Korea, reducing the overall cost compared to other nations.
Logistic expenditures: Vietnam's strategic geographical position on the world map offers a competitive advantage in terms of logistics and supply chain management. Situated in Southeast Asia, Vietnam enjoys easy access to key markets like China, Japan, South Korea, EU, and the US. This strategic location facilitates global import and export, making the country more convenient and cost-effective than others.

2. High Manufacturing Quality

Defining 'good quality' is a complex task. Quality should be determined by customers through technological packages, material standards, specific certifications for the market, target prices, and order quantities.

However, it's evident that Vietnamese manufacturers possess ample experience and capabilities, with advanced technology and modern production processes spanning from design to mass production. This enables them to meet the demands for quality and diverse design preferences of various brands.

According to Mr. Lucas Vũ, Sales and Marketing Director at Mipex Global Co., Ltd., “'When it comes to the production quality of clothing, Vietnam ranks within the top 90% globally. Vietnamese workers are trained by tightly managed brands or sourcing agents from countries such as Japan, South Korea, and the US. Thus, Vietnamese workers are of exceptionally high quality, compared to Bangladesh’s or Pakistan’s, etc.'"

3. Swift Turnaround Time

When discussing time in manufacturing in general and the garment industry in particular, we often consider two factors: 'Make to Market' and 'Speed to Market.'

'Make to Market' (MTM): A production mode based on market demand, where products are manufactured either based on specific orders or predicted market needs. The goal is to ensure that products are produced when there's a specific request from the customer. According to Mr. Lucas Vu, 'Vietnam has one of the fastest turnaround rates in the world when it comes to fashion and clothing. For this reason, Vietnam is a major supplier to stores like Uniqlo and Marks and Spencer...'
'Speed to Market' (STM): This strategy focuses on rapidly and efficiently bringing products to the market to capitalize on market opportunities. Due to Vietnam's consistently fast manufacturing turnaround time, it has become a destination for large brands such as Marks and Spencer, Mango, Gap, and Nike.

4. Free Trade Agreements

Vietnam - European Union Free Trade Agreement (EVFTA)
Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)

These are two of the many bilateral free trade agreements that Vietnam has signed with major trading partners like the EU, Japan, and South Korea. Vietnam is also a member of ASEAN, allowing for free trade with other ASEAN member countries.

Additionally, Vietnam maintains flexible and advantageous trade relations with the United States, although it lacks a comprehensive free trade agreement.

Due to these reasons, more and more companies are inclined to diversify and shift at least a portion of their production to Vietnam to avoid import taxes stemming from the U.S.-China trade war.

5. Vietnam’s Political Stability Supports Production

An increasing number of world-leading brands have moved a significant portion of their production chains to Vietnam, and this trend is not solely driven by cost-effectiveness but also by the country's stability.

Vietnam operates as a single-party state under the leadership of the National Congress of Vietnamese Communist Party (NCVCP)- which formulates policies and strategic directions. Thanks to this political framework, Vietnam stands out as one of the most politically stable nations in the Southeast Asian region.

In comparison to neighboring countries like Thailand, Cambodia and Myanmar, which has a constitutional monarchy and a history of complex political shifts between civilian and military governments, Vietnam's political stability has positioned the country as an attractive destination for capital investment in manufacturing, including garment production.

How to Find Quality Manufacturing Partners in Vietnam?

For the aforementioned reasons, it's clear that Vietnam is a rapidly developing country in the fashion manufacturing industry. But how can you approach and select the most suitable suppliers in this market?

There are several effective methods to find quality manufacturers. The following list ranges those methods from easy to more challenging approaches:

One of the initial methods is to use search tools like Google to explore available suppliers in the market. However, it's important to note that not all suppliers might have strong English communication skills and a robust online presence (such as websites and social media, which may not be regularly updated and responsive).

Another method is to participate in trade shows. These are great opportunities to connect with reputable and well-established companies in the industry, making it easier to access and learn about their capabilities. Nevertheless, it's worth noting that the number of textile and footwear trade shows in Vietnam each year is limited. Additionally, some trade shows tend to have mainly large manufacturers. These suppliers might often require high minimum order quantities, which could pose challenges for small and medium-sized enterprises. If you intend to use this approach, you can keep track of information on the official websites of exhibition centers such as SECC (Saigon Exhibition and Convention Center), IEC (International Exhibition Center), etc., for quick updates.

Another option is to network through local cooperatives in the textile and footwear industries. However, the assurance of receiving feedback and finding suitable partners through this method isn't always guaranteed, and the process can be time-consuming.

For a more professional and efficient approach, you can collaborate with a local expert experienced in this field. An expert can help you find the best manufacturers, conduct assessments, quality checks, and product testing.