From China to Vietnam - Drivers for Relocating Fashion Manufacturing: By Ammar Saif

From China to Vietnam - Drivers for Relocating Fashion Manufacturing

Introduction/Scope

Apparel is one of the oldest and largest export industries in the world. Apparel production is the springboard for the national development, and often it is the starter industry for countries engaged in export-oriented industrialization due to its low fixed costs and emphasized on labor intensive manufacturing.

Global fashion industry has been expanding at a rapid speed through the time. Fashion industry has experienced major shifts globally from Western Europe, USA and Japan to South Europe and Central Europe and China. In recent China, India and Bangladesh has emerged as the largest players in apparel manufacturing suppliers and China has the biggest share among all due to the continuous investments in apparel industry and cheap labor costs. Chinese industry has a growing interest of shifting to more high-tech products rather than to low profit and intensive labor oriented textile industry. Also Chinese apparel producers are transforming themselves from producer to brand manufacturer due to the involvement of higher profits and growing home fashion industry, beside these factors labor cost in China has also increased to three folds in its shore cities like Shanghai. All these factors are combinedly resulting in shifting of apparel fashion industry to new markets for apparel production in-order to compete with rival brands and companies.

Some countries have taken benefit from the shifting trends of apparel manufacturing industry. Bangladesh, India, Sri Lanka, Cambodia and Vietnam are taking full advantage of this trend and trying to grab the biggest share in apparel exports. Although Bangladesh and India are working excellent job and producing high quality products, but still they are not able to replace China in producing high fashion products. On the other hand Chinese industry owners are choosing nearby options for cheap labor, ease of travel and managing factory operations to overcome the issue of increased labor costs in China. This has resulted in more and more interest in some Far-East countries like Cambodia, Vietnam and Laos. The biggest advantage of shifting textile industry to Vietnam and Cambodia is the location, cheap labor costs, good infrastructure, high labor productivity and capability and ease of raw material availability from Hong-Kong, China and self-fabric manufacturing industry.

Vietnam has emerged as key player in apparel manufacturing supplier in last a few years. Vietnam has exported US$ 4.2 Billion to US$8.5 Billion and US$ 13 Billion, which is double in three years. It is the result of high labor productivity and capability, continuous investment infrastructure by the Govt. of Vietnam and trade agreements to EU and USA. One of the key advantages of sourcing apparels from Vietnam is its capability of producing high fashion products which is same like China and capacity of handling small and medium sized orders which is unlikely not being easily accepted in China. These factors make Vietnam as the most favorable emerging markets for apparel and fashion manufacturing.

Vietnam is an emerging fashion supplier market gives a great opportunity to be explored by small and medium sized brands and importers and especially small sized markets. Scandinavia still imports highest share of apparels from China and due to low volume of orders, Scandinavian brands lacks in negotiation power and usually have to accept the terms of shipment and prices offered by the supplier in China. New emerging markets like Vietnam makes a great opportunity for Scandinavian brands and importers as they can

From China to Vietnam - Drivers for Relocating Fashion Manufacturing: By Ammar Saif

gain power of negotiation for prices and volumes with the supplier in Vietnam and in return they can get high quality products with the higher quality of services. Also good infrastructure of transportation and seaports make it possible to get undisturbed shipments. One of the biggest advantages of working with Vietnam is the capability of Vietnamese supplier to communicate in English, which makes the supplier and buyer bringing on the same level of understanding for better communication, co-ordination and understandings.

All these aspects made me keen interested in new emerging markets for fashion and apparel manufacturing and especially Vietnam has performed extraordinarily among them. In this research work I will analyze the current situation of fashion and apparel manufacturing in China and Vietnam and compare costs, quality, services, infrastructure and capabilities of producing apparels oriented for Scandinavia especially Finland.