The Fashion Knowledge Report
I’m trill to have Ching Leng Tang (Justin), Owner of Sinwah Apparel, a jersey & polo factory in Vietnam to share some tips on sourcing in Vietnam with us on this issue of The Fashion Knowledge Report™! This regular publication will provide you with ideas, strategies and information to help you succeed in your fashion business.
1) Can you name four product categories that Vietnam has advantage over China? Are these advantages all mainly because of labor cost?
It is hard to pin point which product categories that Vietnam has an advantage over China as you need do some cost exercise and look at other factors. Labour Costs is definitely lower vs. China, which is why many factories has relocated from China to Vietnam. The infrastructure – logistics, power and rule of law is reasonably stable in Vietnam, without any serious disruptions like labour strikes in Cambodia.
2) What products categories that Vietnam doesn’t have advantage on?
Vietnam still lack a strong fabric support, which is why most fabric/trims are still imported, especially from China so minimums may be an issue hence. However, this is slowly changing with the opening of many new mills.
3) How fast is production cost raising in your own terms in Vietnam in terms of same product you quoted two years ago and now?
Labour costs increases between 12-17% each year, depending on the government’s mandated increase in minimum wages.
4) What are the two biggest sustainability challenges you face at your factory? How do you solve them?
Labour supply is increasingly difficult to secure. This is the most crucial issue we have. It is increasingly hard to secure adequate labour, as Vietnam is also attracting many mid to high tech companies to invest in. Hightech industry factories such as semi-conductor, electrical appliances etc, offers a higher salaries vs. garment factories. So workers are moving to these industries.
5) With the huge investment in Vietnam’s textile industry, how will this impact Vietnam production cost, leadtime, and sustainability?
Vietnam requires more fabric mills, which will cut short lead time and offer a better competitive edge against China and it may also reduce production costs.
Logistics costs – forwarding/road transports/customs clearance are quite high in Vietnam – hence, if Vietnam can have stronger local fabric supply, these can be saved.
– Yes, the owner is brave!
6) For buyers who want to source in Vietnam, what are do’s and don’ts that will help them to succeed in Vietnam?
Look for factories that has complied with all the government and environmental regulations. Vietnam has a strong regulatory framework. If you source from a factory that does not fulfill all these requirements, they may be subjected to official action. Ensure the factory has experience and track record in exporting. Many factories are CMT entities, who may not know what is Compliance, CTPAT, etc. They do not understand the complexities of the US or EU standards. Their prices may be cheap because they do not invest in Product Safety, Health & Safety, etc. Other than fabric, other accessories like cartons/labels/thread/polybags/silk screen/embroidery/etc are readily available in Vietnam, whether from local or foreign companies. There is not much issue in sourcing for these items. Sample making leadtime again depends on fabric support. Without a strong local fabric presence, sampling making leadtime is still not as good as China, who can readily source all materials from the local market. Vietnam celebrates a long holiday called Tet, which is similar Chinese New Year. The dates are exactly the same. Usually, factories will close for at least 2 weeks, as many workers will go back to their hometowns.
Thanks Justin for making this newsletter happening!