Vietnam Seen as Manufacturing Hub for Global Brands | Business

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This decision was taken in order to reduce transport costs and to adapt to the disruption of the supply chain, which has become a major concern for many import-export companies. Nonetheless, Vietnam remains a huge manufacturing hub for several global fashion giants.

Vietnam’s role in the supply chain

Japanese fashion brand Uniqlo is familiar to many Vietnamese consumers. It opened its first store in Vietnam in December 2019 and has since opened nine retail stores in Hanoi and Ho Chi Minh City, as well as a recently opened online store. Uniqlo will certainly expand its business in Vietnam in the next few years, as Vietnam is considered a large market by the company due to its young and large population, high per capita income, and growing middle class. .

Additionally, Vietnam is Uniqlo’s second largest manufacturing base. In particular, Uniqlo purchases the products of 45 Vietnamese clothing companies for the domestic and international markets. The company attaches great importance to improving the quality of the Vietnamese workforce.

Vietnam’s textile and footwear industry has become increasingly important in the global supply chain of several international giants. World famous brands Nike and Adidas are buyers of around 200 Vietnamese suppliers. For example, Vietnam supplies 30 percent of the products Adidas supplies to the global market. Even at the height of the Covid-19 pandemic in southern Vietnam, Nike still trusted Vietnamese suppliers the most. Viettien Garment Corporation, for example, has not lost any orders from Nike despite the impact of the Covid-19 pandemic.

The latest figures from the World Trade Statistical Review 2021 released by the World Trade Organization show that Vietnam has overtaken Bangladesh to become the world’s second-largest exporter of ready-to-wear clothing, reaching a market value of $ 29 billion. dollars in 2020, just behind China. Clothing made in Vietnam represents 4.6% of the world market. Vietnam has produced many high quality garments recently due to the improvement in the quality of its workforce.

Along with the clothing industry, Vietnamese footwear products are playing an increasingly important role on the world stage. The Vietnam Industry and Trade Information Center of the Ministry of Industry and Trade cited data from the World Footwear Yearbook, showing that Vietnam ranked second in the world for footwear exports, reaching 1 , 23 billion pairs in 2020.

With this result, for the first time, Vietnam exceeded 10% of total world footwear exports by reaching 10.2%, and increasing by 4.4 times compared to 2011 when it was only 2.3%. , with 316 million pairs of shoes exported. Vietnam has become the world’s largest exporter of canvas shoes by value, even overtaking China. This is the first time that China has not been the leader in exports of a particular type of footwear.

Several world famous shoe brands like Nike, Adidas, Reebok and Puma have had large quantities of their products manufactured in Vietnam. The prospect of Vietnam’s footwear industry is very likely to go even further, as China continues to reduce incentives for footwear investment in order to focus on advanced technology, pushing through international footwear orders. from China to Vietnam.

Vietnamese companies’ commitment

Despite the advantage of lower than reasonable labor costs, companies are also making great efforts to invest more in technology to meet increasingly stringent requirements from purchasing partners.

Mr. Vu Duc Giang, President of the Vietnamese Textile and Clothing Association, explained why Nike did not transfer any orders previously placed to Viettien Garment Corporation, because in October, when we reopened, Nike had not yet found another manufacturer capable of meeting its requirements. in terms of time, quality and quality control like in Vietnam. He also pointed out that it is only when the pressure of delivery time is too high, making it impossible to balance delivery and sale times, that famous brands transfer their orders to manufacturers located in countries that can meet these requirements.

However, a number of seasonal orders have been moved out of Vietnam to ensure year-end shopping season deliveries to major markets. Mr Vu Duc Giang said that during the period of social distancing, Vietnamese textile and garment companies failed to meet the delivery schedule, so a number of orders due in November and December have carried over, by about 13% to 14%. Yet now there are signs of a return to orders. Likewise, the shoe industry has also seen a small number of seasonal orders leaving Vietnam.

The commitment and reputation of Vietnamese companies could also be one of the most important factors for foreign partners to feel secure for long-term cooperation. The fourth wave of the Covid-19 pandemic which lasted from June to September in Vietnam obviously proved it. As soon as businesses reopened in early October, factories immediately let workers work overtime, and some even arranged for products to be delivered by air at a cost several times higher than by sea, in order to have their products delivered. produced on time, especially for the holiday season and the upcoming New Year.

In the long run, Vietnam’s participation in many major Free Trade Agreements (FTAs) such as CPTPP or EVFTA will also be the reason why world famous brands prioritize Vietnam as a production base. vital, as they can take advantage of tax incentives under these FTAs ​​when products are exported from Vietnam. Buying partners are also prioritizing Vietnamese suppliers due to ensuring on-time delivery, despite numerous supply chain disruptions due to the ongoing Covid-19 pandemic.

Thanh Dung


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