Vietnamese garment firms can set only one foot in US market

VietNamNet Bridge – Being one of the five biggest garment suppliers in the world, but Vietnam’s garment export turnover only accounts for 4-5 percent of the global market share. In the US, the biggest export market, Vietnamese products hold 8 percent of the market share.


garment firm, us market, export



Since 2011, textile and garment has become one of the biggest business fields with 4,000 businesses set up, which brings the turnover of $20 billion, make up 15 percent of GDP, and leading export items in the export turnover.

About 50 percent of Vietnam’s garment exports go to the US, 26 percent to the EU, 12 percent to Japan and 6 percent to South Korea.

As such, the US is the biggest market for Vietnam. The statistics released by the General Department of Customs also show the steady growth in the garment exports to the US market year after year. In the first five months of the year, Vietnam exported $3.24 billion worth of garments to the market, an increase of 16.5 percent in comparison with the same period of the last year.

Nevertheless, according to Nguyen Van Tuan, Deputy Secretary General of the Vietnam Textile and Apparel Association (Vinatas), not many Vietnamese companies can bring goods to the US under their names. The majority of the enterprises have been doing the outsourcing for the enterprises from South Korea, Hong Kong and Taiwan which have relocated their factories from China to Vietnam to take full advantage of the Vietnamese low labor cost.

The representative from Vitas confirmed that in fact, Vietnamese enterprises can only pocket modest money from their exports to the US market, because they have to export products through third parties, estimated at 3 percent of the total turnover.

According to Le Trung Hoan, Director of Tan Minh Garment and Trade Company, less than 8 percent of the 6,000 existing garment companies and households can export their products directly to the US market, the cake which has been shared by the enterprises from South Korea, Hong Kong and Taiwan.

Tan Minh has five-year experience in exporting products to the US market, specializing in fashionable wear for women, such as suits, dresses and shirts (imported fabric and domestic materials). Its products have been exported directly to New York under the FOB mode.

Hoan said, though 90 percent of Tan Minh’s products have been exported to the US, its factories have been running at 60 percent of the designed capacity only.

“We have just begun successfully penetrating the US market, though we know the large market has great potentials which is the targeted market for all manufacturers,” Hoan said.

He went on to say that the US is a market difficult to be pleased because of the strict requirements on the quality, delivery schedules and businesses’ prestige.

Therefore, Vietnamese garment products have only two ways to penetrate the US market. Vietnamese garment companies either have to do the outsourcing for other companies, or sell products to intermediary companies.

Tan Minh once followed the former way – making products for other enterprises. Later, since 2007, some US clients contacted Tan Minh and began placing orders directly with Tan Minh.

Despite the big challenges, Vietnamese enterprises still strive to head for the US market.

Garmex Saigon, for example, opened an office in California which is in charge of introducing the company’s products and learn about the demand and the taste of the market. It has been running the programs to offers products to the retailers in the country.

DNSG

garment firm, us market, export
 
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