Pros and Cons of Vietnam Clothing manufacturing

Advantages of Vietnam Manufacturing

Price

Vietnam is one of the cheapest countries to manufacture clothing, textiles, and apparel without sacrificing quality.

Free trade and tariff advantages

Vietnam has Free trade agreements with All of Southeast Asia, as part of ASEAN, as well as Japan, South Korea, India, Australia. It should have a new free trade agreement with the E.U. this year and has a bilateral trade agreement that's just short of free trade with the United States. We discuss this more below.

Very high production quality

When it comes to the quality of finished goods for clothing, Vietnam is among the top 90% in the world.

Lead time

In the fast fashion industry, there is a term called Speed to Market, also called Make to Market, which is the rate that an item goes from the start of production and into a retail store ready to be sold. Vietnam has one of the fastest rates in the world when it comes to Fashions and Clothing. For this reason, Vietnam is the largest supplier of stores such as Uniqlo and marks and SPencer

Disadvantages of Vietnam Manufacturing

Lack of flexibility with Order Quantity

Vietnamese manufacturers are less willing to do small orders, often less than 2000, and small sample runs. The low M.O.Q.s can cause some headaches for those who wish to start small and scale-up.

Many components come from China.

Even though Vietnam has a decent base to source raw materials in-country, many components such as buttons and zippers still need to be sourced and imported from China. This added step can often add as much as a month to the production time. The delays due to shipping from China mainly affect the first order; by the second-order, the supplier can order earlier so that you can have a faster lead time.

Logistics of Shipping Clothing From Vietnam

Vietnam has an extensive network of ports that allows for quick shipping to the U.S. west coast in 3 weeks, U.S. East coast in 4-6 weeks, Europe in 4 weeks. One thing to keep in mind is that logistics in-country are less developed than they are in China. For instance, as a result, there may be delays in getting a container from the factory to a port. Ports are often overcrowded, and it's not uncommon for a week-long delay before the container can enter the port.

The effect of Tariffs and Free Trade Agreements in Vietnam

Vietnam is arguably the most significant single winner in the trade war. Since the first tariffs, manufacturers, including clothing manufacturers, have rushed to Vietnam, causing a massive surge in demand and investments.

EU-Vietnam Free Trade Agreement

The European Union-Vietnam Free Trade Agreement was ratified in 2015 and will go entirely into effect by the end of the year. The Agreement will grant Vietnam manufacturers and E.U. buyers to trade freely as well as allows European businesses and investors to set up manufacturing operations without many restrictions in Vietnam. Beyond the E.U. agreement, Vietnam has been aggressively seeking to get into more free trade agreements with several other countries as well. Vietnam is a founding member of the Association of Southeast Asian Nations (ASEAN) and has a free trade agreement with South Korea. As a result, Samsung alone produces $58 Billion worth of goods in Vietnam a year. They're also in talks to join the revised Trans-Pacific Partnership agreement.