PRIVATE SECTOR DISCUSSIONS Number 7

VIETNAM’S GARMENT INDUSTRY: Public Disclosure Authorized Moving Up the Value Chain

Prepared by:

Hassan Oteifa - Former Manager of the International Finance Corporation's Textile Department

Dietmar Stiel - SECO Consulting, Germany Public Disclosure Authorized Roger Fielding - Geoffrey Willis & Associates, UK

Peter Davies - Fielden-Cegos, UK

Hanoi University of Technology - Vietnam (HUT)

Vietnam Chamber of Commerce and Industry (VCCI)

And by:

Public Disclosure Authorized MPDF Staff

Public Disclosure Authorized January 1999 (Revised in March 2000)

i TABLE OF CONTENTS

ABBREVIATIONS AND ACRONYMS...... v PREFACE ...... vi INTRODUCTION ...... vii I. AN OVERVIEW: Past Success and Future Challenges...... 1 A. Introduction...... 1 B. Mission Objectives and Field Work ...... 3 C. Mission’s Findings ...... 3 D. Review of the Vietnamese Garment Market...... 4 1. Local Markets...... 4 2. Export Markets...... 5 3. Private Sector Weaknesses ...... 6 II. MARKETING ...... 7 A. Introduction...... 7 1. Background...... 7 2. Objectives ...... 7 B. Analysis of the Vietnamese Garment Sector...... 8 1. Local Markets...... 8 2. Export Markets...... 10 C. A Firm-level View ...... 15 1. Overview...... 15 2. Management...... 18 3. Marketing...... 20 4. Strengths and Weaknesses ...... 21 III. TRAINING...... 24 A. Introduction...... 24 B. Methodology...... 24 C. Findings...... 25 1. Firm-level Findings ...... 25 2. Visits to Ministries ...... 27 3. Visits to Service Providers...... 27 D. Summing Up...... 27

E. Recommendations______29 1. Introduction …………………………………………………………………………………………….29 2. Productivity ………………………………………………………………………………….30 3. Profile of the Training ……………………………………………………………………….30

ii 4. Training Components ………………………………………………………………………..31

IV. OPERATIONS...... 41 A. Introduction...... 41 B. Purpose of survey...... 41 C. Observations ...... 41 D. Conclusions ...... 42 V. PROFILES OF SERVICE PROVIDERS FOR GARMENT FIRMS ...... 44 A. Training and Education Services...... 44 B. Marketing Services...... 60 C. Production-Related Services ...... 69 D. Design Services ...... 74 E. Information Services...... 80 F. Advocacy Services ...... 85 G. Financial Services ...... 90 H. Research Services ...... 92 I. Procurement Services ...... 98 J. Investment Consulting Services ...... 112 K. Conclusions ...... 115

ANNEX 1: SWOT ANALYSIS OF VIETNAMESE GARMENT INDUSTRY...... 117 ANNEX 2: AN OVERVIEW OF THE KEY PROBLEMS FACING PRIVATE GARMENT MANUFACTURERS: Fishbone Diagrams ...... 118 Diagram 1: Inefficient Production Organisation...... 118 Diagram 2: Inadequate Business Management Skills ...... 119 Diagram 3: Difficulty Establishing Links with Buyers ...... 120 Diagram 4: Low Productivity of Labor Force...... 121 Diagram 5: Quality Problems ...... 122 ANNEX 3: Statistical Overview of the Garment Industry...... 123 Table 1: Number of Garment Production Units in Vietnam ...... 123 Table 2: Average Employment at Garment Production Units in Vietnam ...... 125 Table 3: Median Employment At Garment Production Units in Vietnam...... 127 Table 4: Number of Garment Exporters in Vietnam...... 127 Table 5: Volume and Value of Imported Fabrics and Exported Garments in Vietnam ....129 Table 6: Garment Export Value by Country ...... 130 Table 7: Percentage of Garment Export Value by Countries – Destinations ...... 132 Table 8: Export Value of Garment by Type of Production Unit, Vietnam...... 134 Table 9: Export of Garment and Textile Products to EU by Country...... 136

iii ANNEX 4: Comparison between FOB and CMT Business ...... 137 ANNEX 5: List of Private Sector Garment Co. with more than 100 workers ...... 138

iv ABBREVIATIONS AND ACRONYMS

AFTA Asian Free Trade Area CAD Computer-Aided Design CAM Computer-Aided Manufacturing CM Cut-Make CMT Cut-Make-Trim EU European Union FOB Free on Board FADIN Vietnamese Fashion Design Institute HCMC Ho Chi Minh City HUT Hanoi University of Technology IFC International Finance Corporation JV Joint Venture MFA Multi-Fiber Agreement MFN Most Favored Nation Status (“normal” trade relations with the United States) MPDF Mekong Project Development Facility N/A Not Applicable NAFTA North American Free Trade Agreement ODA Overseas Development Assistance OPT Outward Processing Traffic (additional quota for companies that use raw materials imported from the EU) PDS Pattern Design System SME Small and Medium-Sized Enterprises SOE State-Owned Enterprise SWOT Strengths-Weaknesses-Opportunities-Threats analysis TQM Total Quality Management UK United Kingdom UN United Nations UNDP United Nations Development Programme UNIDO United Nations Industrial Development Organization US United States VCCI Vietnamese Chamber of Commerce and Industry VND Vietnamese Dong WTO World Trade Organization

v PREFACE

The Mekong Project Development Facility (MPDF) is a $25 million project managed by the International Finance Corporation (IFC) and financed by multiple donors. The Facility is designed to promote the development of small and medium sized private enterprises in Vietnam, Cambodia and Lao PDR. It provides assistance through two core programs: investment appraisal and promotion (Part A) and business support services (Part B).

MPDF’s Part B program is interested in providing specialized assistance to garment manufacturers, in part because of the large numbers of private firms already operating in this industry and in part because this industry offers strong growth opportunities for Vietnamese entrepreneurs. MPDF commissioned a series of studies to identify key issues facing private garment manufacturers in Vietnam and to determine the availability of business support services for the garment industry.

This report is a compendium of these studies. Most are products of a diagnostic study commissioned by MPDF and undertaken by four international garment specialists in December 1998. These comprise: (i) an overview of key findings; (ii) marketing issues; (iii) training issues; (iv) operations issues; and (v) profiles of service providers. Annexes contain a SWOT analysis and “fishbone” diagrams of the key problems facing private garment manufacturers, national statistics relating to garment exports, a chart showing the difference between FOB and CMT, and a list of private Vietnamese garment manufacturers.

vi INTRODUCTION

The Vietnamese garment industry is at somewhat of a crossroads. Until recently, the outlook was bright: exports had risen dramatically, quadrupling in value between 1992 and 1997, and with the establishment of new factories, over 300,000 jobs had been created. Buyers and trading agents were flooding in, eager to take advantage of the country’s untapped potential and industrious workforce.

However, with hordes of manufacturers jumping on the bandwagon and establishing new factories, and the Asian crisis setting in, the outlook has changed. Orders have been reduced, regional producers have become more competitive due to devalued currencies, and smaller private Vietnamese manufacturers are floundering and in many cases closing down. In an environment of “less honey, more flies,” questions arise as to how the industry, and particularly private garment manufacturers, will fare in both the near and long term.

There are an estimated 250 private manufacturers and 90 state-owned enterprises producing garments in Vietnam. The state-owned enterprises are generally better equipped than their private counterparts and receive more foreign investment.1 The majority of private firms make garments for the CM/CMT (cut-make-trim) business. In some cases firms deal directly with buyers/agents while in others, they rely on sub-contracts from state-owned enterprises. The CMT process adds as little as 20 percent to the value of the final product since the manufacturer/sub-contractor does not source the fabric, i.e., the agent/buyer delivers the pattern, fabric and trimmings to the local manufacturer/subcontractor who then constructs the garment. The manufacturer or the agent then re-exports the finished product. Producing garments for FOB (free on board) business generates significantly higher margins since the manufacturer sources the fabric him/herself and, in some cases, contributes to the pattern design. However, due to the skills and capital required, FOB business is too risky for most private Vietnamese producers to consider.

Some larger private manufacturers doing FOB business are proving successful. Their success comes from developing strong links with buyers who provide investment, equipment, training and on-site assistance. They source materials through local and regional contacts and, in many cases, generate their own designs. While their main business is export-oriented, a number of these firms have also made inroads into the domestic garment market. Their advantage over their state-owned counterparts rests on their relatively low investment and greater flexibility.

Despite some success stories, in light of the recent crisis, private manufacturers will have to move up the value chain to ensure their survival. With the increase in price competitiveness in the region, and the impending end to European quota advantages under the Multi-Fiber Agreement, product quality is becoming increasingly important.2 While Vietnamese manufacturers are aware of this, many of them, both private and state-owned, face significant problems in trying to move up the value chain. The most important of these problems are:

1 Precise data on the number of foreign-invested garment enterprises is not available. However, the Vietnam Textile and Apparel Association (VITAS) estimate that over 25 percent of textile and garment enterprises have foreign investment, the majority of these in the textile sector. 2 The Multi-Fiber agreement is set to end in 2005.

vii · a local textile industry that is not competitive (leading to a reliance on imported raw materials) · an over-dependence on foreign agents (resulting in reduced profit margins and limited knowledge about final markets and consumers) · a shortage of skilled workers (leading to low product quality) · a dearth of practical training facilities (most training is very theoretical) · limited access to information (about local laws, suppliers, foreign markets etc.) · limited ability to access foreign markets (leading to passivity, i.e., waiting for agents/ buyers to come to them)

Private garment manufacturers face an additional set of problems by virtue of their private ownership. The most important of these are:

· an inability to access loans from banks (leading to difficulties in expanding or upgrading equipment) · restricted access to EU quota allocations (since quota is predominantly allocated to state- owned enterprises) · lack of experience with direct exporting (due to previous restrictions which have now been lifted) · limited access to buyer missions visiting Vietnam (since Government Ministries mainly channel visitors to state-owned enterprises) · few opportunities to participate in international trade fairs (since participation is controlled by state bodies)

These factors trap many private garment firms in a vicious circle and limit opportunities to expand and upgrade. In this environment, employee loyalty is low and staff turnover is high (employees leave for as little as a $3 increase in their monthly salary). Thus, managers are reluctant to invest in staff training, and the trap continues. In the words of one manager, “we are on the tiger’s back and cannot get off.”

The challenge remains as to how private garment firms can move up the value chain. The main strategy must be to capitalize on their core advantages: an industrious workforce, cheap operating costs and greater flexibility vis-à-vis their state-owned counterparts, while also focusing on improving product quality, finding new markets and expanding product range, particularly into non-quota categories.

There is great potential for private garment producers to increase their profits. FOB business increases profit margins, but there is also an opportunity to obtain higher margins through producing higher value and more diversified products for the CMT business. Managers of private firms are eager to upgrade the skills of their workforce and are largely aware of their own shortcomings in management skills, including accounting, operations, marketing and human resource management. They are hungry for information about foreign markets and are keen to find new customers.

In making the following information available to the public, MPDF hopes that policy makers, donors, service providers, buyers and the general public will gain insight into the issues facing the garment industry as a whole and private manufacturers in particular. With some assistance, the Vietnamese garment industry has greater potential to contribute to Vietnam’s economic growth.

viii I. AN OVERVIEW: PAST SUCCESS AND FUTURE CHALLENGES: Hassan Oteifa, Mission Leader And Former Manager of IFC’s Textile Department

A. Introduction

1.01 In spite of its late development compared to its Asian neighbors, the Vietnamese garment industry has grown impressively in recent years in terms of capacity and export earnings. It has been able to establish itself as an important vehicle for the country’s industrial development. Garment exports grew from US$90 million in 1990 to US$1.35 billion in 1997 and generated about 20 percent of the country’s total merchandise export, ranked second to oil. The industry has also played an important role in employment generation; it currently employs around 300,000 workers, most of whom are women. The above achievements were accomplished in spite of its entry into an already crowded and highly competitive market.

1.02 The success of the industry has been mainly due to:

· the availability of female workers with good qualities in terms of intelligence, diligence and high rates of literacy · low labor costs at less than US cents 25 per hour (among the lowest in the region) · low investment costs due to the availability of low-rent buildings from government agencies and access to a wide range of basic, inexpensive new equipment, as well as used equipment at opportune prices · the important role which the regional operators play in terms of providing essential marketing links and of providing most, if not all, the required raw materials · the encouragement to export in terms of market access, given by the country’s trading partners in the region and by the European Union (EU) · a workable, although not ideal, system of importation of raw materials for export processing and of re-export of finished goods · the availability of relatively efficient internal transport and shipping facilities

1.03 A prior MPDF mission (April 1998) identified a number of major challenges that the industry is facing that require serious attention to ensure the long term viability of the sector. At present, local value addition is small (estimated at about 20 percent of export value) since the bulk of the fabrics, accessories and trim is imported. Increasing local content requires upgrading the relatively poor state of the domestic textile industry and addressing the lack of basic raw materials (natural and man-made fibers). However, this means making substantial investments in machinery and equipment, acquiring modern technology, and properly training managers, engineers, and technicians to run these facilities efficiently. This will not be an easy target to achieve because the textile industry in the region is facing a difficult time due to overcapacity and depressed demand and prices. However, there are a few encouraging indications that foreign and joint venture investments are finding attractive niches and establishing themselves as credible suppliers of fabrics and accessories. It is a modest step in the right direction as long as these suppliers can effectively compete with imports.

1.04 The garment plants visited, with few exceptions, are not efficiently run due to inadequate work space, inappropriate equipment, and lack of efficient production planning and control. These problems are caused by a shortage of skilled technicians, supervisors, quality controllers and the absence of organized operators’ training. Labor productivity is low, estimated at 50 percent of similar Chinese operations, and this erodes the country’s

1 advantage of low labor wages. Lack of product specialization, particularly among the small producers, is seen as an important factor that makes it difficult to address the above deficiencies.

1.05 There is an over-dependence on foreign agents for getting orders and for the procurement of raw materials. Direct contacts with customers are very weak and, accordingly, there is little knowledge of the markets where products are consumed and of the marketing channels themselves.

1.06 The importance of addressing the above challenges now lies in the fact that the industry will have to compete in a global environment when the quota system administered under the Multi-Fiber Agreement ends in 2005. At that time, quota availability will no longer play a factor in where orders are placed. Competition will intensify and will be based on other factors such as market access, production cost, product quality, quick response, reliability of delivery and a hospitable domestic economic environment. If the competitiveness and marketing issues are properly addressed, they would yield quicker results, which ought to encourage investments in the textile sector.

1.07 A recently published review carried out for UNIDO on Vietnam’s industrial competitiveness discussed the textile and garment industry among other industrial sectors.3 It emphasized the need to address the issues raised above, among other important policy issues. While state-owned enterprises (SOEs) in the garment sector benefit from the services given by a variety of government-supported organizations, particularly in the marketing and training areas, the private sector, which only developed in recent years, does not enjoy similar support. The existing garment industry association, which looks after the interests of the private sector, in its present organizational and financial capacity, seems incapable of providing the necessary support for the private sector.

1.08 The economic crisis in Asia has shown that the private garment sector is more vulnerable to market downturn. Orders and quotas are channeled to the SOEs through the existing government-supported institutions. The small and less organized private garment units that in the past depended on doing commission work for overburdened SOEs were hit hardest. As export orders declined, they were left behind, unable to secure new orders and incapable, without institutional support, of directing their sales to other markets. MPDF's proposed initiative to support private garment manufacturers comes at an important time for the industry.

3 "Vietnam's textile and garment industry: Notable achievements, future challenges:" Hal Hill, Australian National University, July 1998 - prepared for UNIDO & Ministry of Planning and Investment, Hanoi.

2 B. Mission Objectives and Field Work

1.09 The main objective of this mission was to investigate in detail the non-investment difficulties (operational and marketing) faced by the private garment sector, determine the scope and priorities of support needed, and recommend to MPDF the most appropriate ways of providing such support. It also included the development of a rough estimate of the implementation costs associated with this support.4 The mission included specialists in marketing: Mr. Dietmar Stiel of SECO, Germany, in garment technology: Mr. Peter Davies of Fielden-Cegos, UK, in training: Mr. Roger Fielding of Geoffrey Willis, UK, and Mr. Hassan Oteifa, Former Textile Unit Manager of IFC who was the mission leader and who was involved in MPDF’s prior mission. Over 40 garment plants were visited, and emphasis was placed on medium and “not too small” garment enterprises with installed capacities of roughly 100 to 500 sewing machines. Visits and interviews were also carried out with concerned government agencies, educational and training institutions, trade associations, buyers and retailers, machinery and service suppliers, and consulting firms. A “town hall” meeting was organized in Ho Chi Minh City (HCMC) where garment operators discussed marketing issues and identified factors that the industry perceives to be critical to improving its performance.

1.10 The mission benefited greatly from the preparation work commissioned by MPDF and carried out by the faculty of Textile-Garment Fashion Department at the Hanoi University of Technology (HUT), who accompanied the mission during its field work, and also from the contribution of the Vietnam Chamber of Commerce and Industry. 5 The active participation of MPDF staff was outstanding and was highly regarded by all members of the mission. Prior to its departure, the mission made a presentation of its findings and recommendations to the senior managers and involved staff of MPDF and received useful feedback during subsequent discussions. The meeting was also attended by the participating staff of HUT who added a useful local view to the discussions.

C. Mission’s Findings

1.11 As is noted above, over 40 garment plants were visited by different members of the mission who shared their observations with each other on a daily basis. The plants visited have different installed capacities and produce different types of garments for both the export and the domestic markets. Most of them were located in HCMC, Hanoi, and Haiphong, the key garment manufacturing centers in the Vietnam.

1.12 In assessing the operations of each plant, the following points were examined and discussed with each plant’s management: · production buildings and service facilities · process flow and machinery and equipment layout · types, sources, and conditions of installed machinery and equipment · methods of manufacture, pace and level of productivity · personnel attitude and commitment · level of middle management skills · general overview of other supporting departments

4 Some recommendations and all implementation costs are not included in this report. For further details, please contact MPDF directly. 5 Both reports are included herewith

3 · general working conditions including health and safety

1.13 It was generally observed that in almost all the plants visited, floor layout was very congested and the working conditions were poor. Installed machinery and equipment were invariably very basic with little attention paid to attachments or simple additions to improve the method of work. There is little use of semi-automatic machines for critical operations to ensure good and consistent quality. There is also an obvious lack of garment technology techniques and trained management: both are essential for achieving high levels of productivity, product quality and cost reduction.

1.14 To protect and enhance the industry’s position in the highly competitive and global garment market the above deficiencies need to be addressed. Two options were considered. The first is to invest in high-technology machinery and equipment, which would provide high outputs at the consistent and increasingly stringent quality requirements with less labor input. However, this option will require extensive capital investment which is neither affordable nor easily available, particularly for the small and medium private garment manufacturers. Use of high technology will require a much higher level of skilled managers, engineers and technicians who will have to be properly trained in equipment installation. This is obviously not an easy task to achieve considering the previously mentioned observations on the performance of the sector. Furthermore, loss of many jobs as a result of this approach would not be socially acceptable and the substitute of cheap labor by expensive capital may not be economically justifiable under local conditions, particularly for the targeted segment of the sector.

1.15 The other option is to gradually upgrade machinery and equipment and improve the skills of the operating personnel (including management) through training. This would allow the industry to reorganize itself over a longer period of time with reasonable and affordable capital investment without major disruptions to the work force. For instance, changes from basic sewing machines to upgraded models with top and bottom thread trimmers and needle positioners could initially be made for critical operations to improve stitch presentation and eliminate hand trimming of sewing threads which can damage the garment. This relatively modest investment would result in improvements that can be quickly achieved and can be easily quantified. The gradual approach would allow time for training and retraining of operators and other personnel in new skills which would allow for better choice of physical investment and more efficient utilization of resources. In other words, training should come ahead of investment to maximize its benefits.

D. Review of the Vietnamese Garment Market

1. Local Markets

1.16 It is estimated that 70-75 percent of domestic consumption is met by local production. The remaining part represents “grey” imports from China, imported garments from Hong Kong, Korea and Taiwan, garments made from imported fabrics for the “cut-make-trim” business, and used clothing. The bulk of local production is very basic and is produced by made-to-measure small producers, so-called “home industry sites.” As the retail industry is not well developed, many of these small manufacturers set up their own outlets. The nature of the business and the associated difficulties in collection discourages professional garment making companies from becoming major suppliers. It appears that for MPDF’s targeted

4 segment of the private sector, the medium and “not-too-small” companies, the local market is not a critical one.

1.17 Imported garments in the local market are mostly Chinese-made, low price products specifically made for the regional markets. These imports enter the country as “grey” imports, i.e., without paying duty. These products are handled by a very large number of small traders, which makes it difficult to assess.

1.18 The marketing consultant’s review indicates that price and design are the most important factors for the local consumer. Quality, availability, and brand name are of less importance due to the low purchasing power of the majority of the population.

2. Export Markets

1.19 The export business however, is dominated by commission garmenting or so-called “CMT” (cut-make-trim) mainly for the EU and Japan. This business is chiefly controlled by Hong Kong, South Korea, and Taiwan-based companies which use Vietnam as a subcontracting base. They provide all fabrics, accessories, and patterns, and the final buyers are mostly the EU or other Western countries. The larger Japanese companies usually have their own buying agencies in the country.

1.20 The CMT business is characterized by strong dependence on the buyer and the fact that it is a low value-added activity. During interviews with Vietnamese government agencies and garment producers, they often emphasized the objectives of reducing such dependence and increasing local content by using locally made fabrics. However, this is not feasible at present due the inability of the local textile industry to meet the various demands of foreign buyers for specific fiber content, fabric construction, design, finish, quality and competitive prices. Alternatively, the garment makers can import fabrics, but this will limit the desired increase in local content. FOB (free on board) business requires direct links with the final buyers, knowledge and experience in regional procurement of fabrics, accessories and trim, and financial resources to support this kind of business. Most of the companies visited lack these critical factors needed for success. There are also potential risks associated with this kind of business. Quality disputes resulting in rejection of shipments and delayed delivery leading to cancellation of orders or the imposition of penalties can be very costly. This may explain the reluctance of even some the larger companies to seek FOB exports. However, there are a few cases where joint venture or know-how agreements allowed companies to successfully increase the share of the FOB business in their exports. During the field visits, a large number of private garment makers expressed their willingness to take the risks associated with FOB exports and are seeking support to improve and expand their marketing efforts.

1.21 Vietnamese garments are mostly exported to two markets: the EU and Japan, at roughly 40 percent each. Other markets represent less than 15 percent of total exports, so it is clearly important for the country to diversify its export markets. The US market is not attractive at this time since Vietnamese exports do not yet enjoy the “Normal Trade Relations” status (formerly “most favored nation” status). Other markets in southern Africa, the Gulf States and in Latin America could be explored, but professional guidance would be required to penetrate these markets and such services are costly for individual companies. As a group undertaking, however, such an intervention might be economically feasible, particularly with outside assistance. It should also be noted that the industry needs to be able

5 to offer a wider range of products. At present, its focus is on a limited number of standard items (jackets, trousers, blouses, and skirts), and in order to expand, the industry must strengthen its garment design and pattern making capabilities.

1.22 The Asian crisis demonstrated the risk of dependence on a few markets. As the Japanese market, which accounted for over 40 percent of Vietnamese garment exports, became depressed and as quota restrictions were increased on exports to the EU, garment makers, particularly the less organized small units, were left without orders. Out of a reported number of about 150 professional private companies, only a small number are directly exporting. The rest are operating as subcontractors for the larger state-owned or private companies. This reflects the serious dependence of the private garment makers on others for orders. Some of the companies also expressed dissatisfaction with the quota allocation. The UNIDO study suggested that a professional quota management system will be of high importance for the country’s garment exports. Recently a step towards quota reform was taken allowing the public sale of part of the quotas for the EU market; however, since only 3 percent of the total quota is affected, the impact of the reform will be limited.

3. Private Sector Weaknesses

1.23 The above review of the situation in the garment industry points out the following market-related weaknesses:

· Lack of marketing and sales know-how about international markets, submarkets, and specific requirements of potential clients. There is no professional distribution system or representation of the private sector in the key export markets or potential markets. Contacts are often made with state-owned companies or regional agencies for the large buyers and production consists of basic or standard products focusing only on the lowest possible price.

· The industry’s competitive disadvantages vis-à-vis other regional competitors due to local garment makers’ inability to locally source fabrics of the required specifications at competitive prices. These disadvantages also include lengthy delivery time, lack of materials procurement know-how from Asian countries, and a shortage of qualified management and staff,

· The unfavorable image of Vietnamese garment manufactures who are associated with cheap products and low quality standards, as well as the country’s small share of the global market.

· The lack of a strong professional association which can support the private sector in accessing orders, quotas, and in addressing local issues which influence their operations.

6 II. MARKETING: Dietmar Stiel, SECO, Germany

A. Introduction

1. Background

2.01 According to Vietnamese ministries, companies, associations, organisations, MPDF, and sector experts, the garment industry has grown stable over the past decades.

2.02 Since the competitiveness of the garment industry is still strong due to low production costs and high efficiency, MPDF intends to support privately-owned companies to increase or maintain their export performance at current levels, help them move up the value chain, and further increase their exports to the EU and international markets.

2.03 UNIDO’s study showed that companies have little knowledge of product upgrading or international markets and often do not have sufficient marketing and management skills to overcome their current position as subcontrators or increase their competitiveness as FOB suppliers. Furthermore, structural problems like lack of access to the US market and EU quotas are hampering export growth.

2.04 MPDF invited a team of experts to Vietnam to assess its target group, private garment manufacturers. One of them was Mr. Stiel, an international marketing and management consultant specializing in the textile and garment industry who has experience in the Vietnamese garment sector. He was asked to carry out a market study on the Vietnamese private garment industry and its markets, the results of which are summarized below.

2. Objectives

2.05 The goals of the study were the following:

· Analyze the Vietnamese garment industry, its market situation and the potential for garment companies in local and export markets

· Assess the strengths and weaknesses of private export companies and offer practical recommendations aimed at improving competitiveness, increasing value- added, and stimulating the export performance of Vietnamese private garment companies6

2.06 Based on the terms of reference and various meetings with MPDF the market study employed the following approach:

· Field research/ primary data – Qualitative interviews with selected experts from the Vietnamese garment industry, traders, and managers of private garment companies (approximately 17 companies) – Meetings with foreign buyers and purchasing offices (5 meetings)

6 Recommendations are not included here. For further information, please contact MPDF directly.

7 – Qualitative interviews with experts from textile and garment associations, governmental organizations, institutions, training centers and officials (approximately 15 meetings) – Survey of retail structure and final consumer behavior according to market segments in Vietnam (approximately 8 meetings and 12 interviews) – Workshop with private companies, institutions and branch experts (12 participants) – A combination of desk and field research by the consultant drawing upon market information gained through 3 years of work in Vietnam · Desk research – Statistical data supplied by MPDF, from EU and international sources, and Vietnamese statistics departments – Data and information from international and national sources – Analysis of the existing market supplied by MPDF – Existing data and information from the SECO office

B. Analysis of the Vietnamese Garment Sector

1. Local Markets

2.07 According to market interviews, local manufacturing sites supply about 70-75 percent of the local market, approximately 10-15 percent of all imports are “grey imports,” mainly from China, compared to approximately 5 percent for legally imported garments from Hongkong, Korea, EU/ US or Singapore. Further, approximately 5-10 percent of the market is supplied by second-hand clothing which comes to Vietnam via aid projects or as smuggled goods from China. The remaining 10-15 percent are products made for the export CMT business but sold in the local market.

Figure 2.1 Share of local market coverage 1998

Grey imports 10 %

Legal imports 5 % Local manufacturers 70 % Second-hand clothing 7.5 %

Export manufacturers for CMT 7.5 %

Source: SECO Market Survey 1998

8 2.08 The local market is influenced by small local manufacturers who produce their products on so-called “home industry sites,” These companies often work on a ’made to measure’ basis or produce small series of products according to past buyers’ requests. The quality is very basic and only meets local consumer demands in terms of quality, fashion, and price-value ratio.

2.09 Home industry firms usually do not have any professional accounting systems or calculation bases. This means that depreciation of machines, financing costs or other additional factors are usually not calculated into the costs of their products. Companies very often do not pay for electricity nor do they pay minimum wages. Additionally, this type of company is frequently not subject to any kind of duty, tax or social benefits.

2.10 Local manufacturers use sales agents as links between their factory and retailers who are also responsible for collecting sales revenues. This is a major problem since the retail structure is weak and the legal system does not support private companies and businesses. For this reason, many companies concentrate on setting up their own outlets or selling via their factory shops. Domestic business, however, is neither very popular nor promising for professional garment companies since, in the current business environment, they cannot compete on price against “home industry sites” or “grey imports.”

2.11 Available data and statistics, especially for the local market, are weak and do not reflect all the business realities of Vietnamese imports and exports.

2.12 The local market for Vietnamese garment manufacturing companies is strongly influenced by large imports of low-price products from China. These products are specifically manufactured for export which is chiefly oriented towards the regional markets (Vietnam, Lao PDR, Cambodia etc.). They come through the border between China and Vietnam, mainly as “grey imports” for which no import duties are paid. This kind of products, the quality of which is mostly quite poor, are sold by importers to small retailers and street markets.

2.13 The business is very hard to survey and identify since import/ export business is in the hands of hundreds of small traders operating mainly in the unofficial/ informal sector. Import duties are based on ’good relations’ with custom officers, and the will to pay bribes and ’handling fees.’

2.14 Retail is dominated by small family companies and street market stalls. The market share of large distribution organizations such as department stores and chain stores is at approximately 5-10 percent, still small. From an organizational point of view, these distribution systems are still weak. No statistics, data or numbers are available relating to the retail structure of the local market.

2.15 Small shops very often request assignment contracts from local manufacturers, i.e. manufacturing companies receive payment after the shop owner has sold the products on behalf of the manufacturer. This kind of contract gives 15-20 percent of the retail price to the retailer and 80-85 percent of the sales price to the manufacturer. Mark ups on products vary from 10-40 percent on the purchasing price.

9 2.16 According to information gathered, price and design aspects are the most important critical success factors for final consumers in Vietnam. Aspects like quality, availability, and brand image are of lesser importance in the Vietnamese market since local and international brand names are currently not well known.

2.17 The market is affected by the very low purchasing power of the average population, especially in rural areas. The new middle and upper classes are still very small in number, as are tourists who tend to buy garments made for export.

2. Export Markets

2.18 The following chart gives data on the property structure of Vietnamese export companies.

Figure 2.2: Property Structure of Vietnamese Export Companies

Cooperatives 4% Private sole proprietor State-owned 9% 28%

Private Ltd/Joint Stock 31%

Foreign Invested 28%

Source: MPDF Garment Sector Study 1998 (total number:268)

2.19 CMT Production. The export business in Vietnam is dominated by assembling, so- called CMT business which is mainly exported to the EU and Japanese markets. This business is chiefly controlled by companies from Hongkong, South Korea, and Taiwan who use Vietnam as a subcontracting base. These companies provide all fabrics, accessories, patterns, and fashion information to the Vietnamese assembling companies which then manufacture on behalf of their Asian intermediaries. The final buyers are mostly EU or other Western companies. Larger Japanese companies have their own purchasing and handling offices in Vietnam.

2.20 These co-operations are realized since Vietnam offers low wages and reasonable manufacturing quality on a subcontracting basis. Furthermore, the availability of EU quota is of high importance. This business is characterized by a strong dependency on the buyer as well as by low prices and low added value for the Vietnamese manufacturers.

2.21 There is strong competition among Asian and Eastern European manufacturers, especially with respect to OPT (CMT) business. Since manufacturing prices are nowadays

10 largely similar, European companies tend to be moving their production bases from Asia to Eastern Europe.

2.22 Very often the price per production minute is the most important competitive factor. The following table shows production prices for different garment manufacturing locations.

Table 2.1: Production Prices by Location Country Production Costs/ Min in Trend US $ (w/out transportation costs) Eastern Europe Slovenia 0.15 rising Slovak Rep. 0.14 strongly rising Poland 0.15 strongly rising Hungary 0.14 strongly rising Bulgaria 0.10 stable Romania 0.12 rising Moldavia 0.08 stable Ukraine 0.07 stable Albania 0.06 stable Baltic countries 0.13 rising Average 0.10 Asia China (central/ north China) 0.09 stable Hong Kong 0.19 stable Thailand 0.16 rising Taiwan 0.20 strongly rising Sri Lanka 0.15 rising India 0.12 stable Indonesia 0.10 stable Bangladesh 0.08 stable Vietnam 0.08 stable Average 0.13 Source: SECO Production Costs Analysis 1998

2.23 FOB Production. Many Vietnamese manufacturers talk about setting up their own product range and moving from current CMT business to FOB business. However, most companies have not succeeded in moving towards this type of business. The main reason is that they lack direct marketing links to the final buyer, and sufficient know-how with respect to where and how to purchase fabrics and accessories. A further important point is that companies are not able to pre-finance fabrics on behalf of buyers. Firstly, since financing costs are very high and secondly, since local banks are not used to giving credit for export processing contracts.

2.24 Based on firm-level interviews, there was a feeling that a number of state-owned companies feel quiet comfortable with existing CM/ CMT business since the risk factor is much lower than with FOB contracts.

2.25 As long as companies are unable to overcome these major problems, they will probably stick to the current assembly-oriented business.

2.26 Export Performance of the Vietnamese Garment Industry. The following table shows the exports of the Vietnamese garment industry and its major competitors.

11 Table 2.2: Major Garment Export markets for Selected East Asian Countries (percent of total) USA EU Japan East Asia Other Total Vietnam 1996 2.2 43.3 42.2 8.8 3.5 100 China 1990 11.3 10.9 48.6 49.2 14.6 100 1996 12.7 10.7 32.9 30.5 13.3 100 Indonesia 1990 38.1 35.6 6.5 6.4 13.5 100 1996 34.1 32.0 8.4 5.2 20.4 100 Thailand 1990 19.3 34.1 7.9 5.9 32.7 100 1996 44.1 29.9 16.9 4.5 4.7 100 Source: Australian University 1998

2.27 This data also highlights the importance of Vietnam securing normal trade relations (MFN) status in the US market as quickly as possible. Larger companies should prepare themselves for this time and try to export, even with low margins, in order to capture market share well in advance.

2.28 Exports to the EU are hampered by EU import quotas. This situation has slowed export development since the EU is the largest market followed by Japan. Because of Japan’s current weakness and Vietnam’s inability to compete in the US market due to lack of normal trade relations, the EU will become more and more important. Moreover the EU has increased its quota allocation. In addition, some of the categories of quota allocations were not entirely used up in 1998.

2.29 Trade Relations with the EU market. The following chart shows the major EU export countries for Vietnamese garment manufacturers. Germany is by far the most important market for the Vietnamese garment industry.

Figure 2.3: Export of Garment and Textile Products to EU in 1997

France Holland 14.5% 12.5%

UK 9.2%

Italy 6.5%

Spain 6.0% Germany 42.0% Others 9.3%

Source: General Customs Office, Hanoi 1998

2.30 In reviewing Vietnam’s export performance to the EU, and its utilization of available quota, it must be noted that, quota allocations in major categories such as Cat 4 (T-shirts) or Cat 7 (blouses) have grown by over 50 percent since 1996.

12 2.31 In 1998, Vietnam only used its full quota allocation in Cat 6 (men’s trousers), and only 97.8 percent of Category 21 production was used. Other important categories like Cat 7 (blouses) and Cat 27 (ladies’ shirts) were not fully used. This was for several reasons:

· Quota distribution in Vietnam is not well organized · The EU market for garments was weaker in 1998 compared to other markets · Countries like Bangladesh, which some years ago did not offer this product have begun to also manufacture Cat 21 jackets today · Eastern European countries have developed a strong competitive edge in this and other product categories

2.32 However, since Vietnam still sells its products via sales intermediaries, it is still competitive. The table on the following page shows the quota utilization of selected Asian garment exporters over the past few years.

2.33 EU Quota Management. A professional quota management system is essential to improving Vietnam’s export performance to the EU. As a first step towards improved quota distribution, the Ministry of Trade’s Auction Committee decided to organize a public sale of part of the 1999 export quotas to the EU market. Though this step was intended to overcome criticism from private, foreign, and joint venture companies regarding to existing quota distribution, less than 3 percent of quotas were made available.

2.34 Businesses wanting to take part in the auction had to pay a VND 50,000 auction fee plus an advance of VND 2 million for each category of garment that they wanted to bid for. The auction took place at the Ministry of Trade’s office in Hanoi on December 15, 1999. Quotas for the items to be sold publicly to the highest bidders included: 240,000 T-shirts (Cat 4); 280,000 pairs of trousers (Cat 6); 210,000 women’s blouses (Cat 7); 25,000 women’s jackets (Cat 15); 1,4 million jackets (Cat 21); 80,000 dresses (Cat 26); 50,000 sportswear (Cat 73).

13 Table 2.3: EU QUOTA SITUATION OF SELECTED ASIAN COUNTRIES (As of 13 January 1999) Category Bangladesh China India Indonesia Sri Lanka Vietnam in mil. pieces 96 97 98 96 97 98 96 97 98 96 97 98 96 97 98 96 97 98 99* License 262 231 255 55 74 76 74 71 67.5 24.4 25.5 23.4 ------4.5 4.4 6.6 0 4 Quota Sur Sur Sur 75 82 83 60 62 67 36.3 38 40.2 ------4.3 4.3 6.6 6.8 Percent used ------73.08 90 91 126 112 95 67.2 67.1 58.3 ------104.8 102 100 0 6 License 23 33 37 25 26 26.5 7.8 8.1 9.4 79 8.8 10.7 6.4 7.2 7.4 2.9 2.8 4.3 0.02 Quota Sur Sur Sur 26 26 26.7 7.3 7.7 8.3 10.3 11 12 7.3 8.1 9.1 2.7 2.7 4.1 4.3 Percent used ------110 100 90.2 106.8 105.3 113.4 76.5 80 89.3 87.5 88.7 80.8 106.8 103 103.8 0.5 7 License ------11.5 11.8 11.7 59.4 58.7 48.4 5.8 7 7.7 12 14.1 13.6 1.6 1.5 1.9 0 Quota ------11.9 12 12.2 57.2 58.9 61 7.6 8.1 8.8 11.4 12.5 14.2 1.4 1.4 2.2 2.2 Percent used ------96.6 97.9 96.1 103.7 99.7 79.3 76.4 85.8 87 105 112.3 96.2 116.2 108 88.9 0 8 License 134 125 131 17.5 16.9 15.7 60 43.7 39.6 9.7 13.2 16 7.1 5.5 3.7 6.7 8.1 9.1 0 Quota Sur Sur Sur 16.7 16.9 17.2 41 42.3 44 11.9 12.8 13.9 9.3 10.3 11.6 8.3 8.4 9.6 9.9 Percent used ------104.7 99.8 91.5 124.2 103.4 90 81.2 103.6 114.9 76.3 53.7 32.3 80.8 96.3 94.9 0 16 License ------3 3.8 4.7 ------0.009 0.000 0.004 0 Quota ------15 15.2 15.5 ------0.2 0.2 Sur Sur Percent ------20.5 25.1 30.6 ------3.1 1 -- -- used 17 License ------3.7 8.7 8.8 ------0.02 0.02 0.06 0 Quota ------9.9 10 10.2 ------0.2 0.2 Sur Sur Percent ------37.5 86.8 86.3 ------8.2 11.8 -- -- used 21 License ------14.6 16.5 14.2 ------20.9 23.8 19.9 2.5 2.5 2.4 11.4 11.7 13.9 0 Quota ------15.4 17 17.4 ------28.8 29.9 31.2 8.3 9.2 10.6 9.9 10.2 14.3 15 Percent ------95.1 95 29.4 ------72.6 79.6 63.8 30.2 27.3 22.5 115.2 114.5 97.8 0 used 26 License ------4.3 4.4 5.2 21.8 20.8 19.6 ------0.6 0.4 0.5 0 Quota ------4.9 5 5.1 14.9 15.6 16.5 ------0.4 0.4 0.7 0.7 Percent ------86.2 88 102.9 146.5 133.3 119 ------128.5 90.1 79.9 0 used 27 License ------11 10.2 11.2 ------0.2 0.2 0.8 0 Quota ------12.8 13.4 14.2 ------0.2 0.2 Sur Sur Percent ------86 76.3 78.9 ------103 105 -- -- used Source: German Federal Office of Economics, Eschborn 1999 Cat 4 = T-Shirts (knitted/crocheted) Cat 17 = men’s jackets/blazers Cat 16 = men’s suits Cat 6 = men’s/women’s trousers (woven) Cat 21 = parkas/anoraks Sur = surveillance/no quota Cat 7 = women’s blouses Cat 26 = women’s dresses Cat 8 = men’s shirts Cat 27 = Women’s skirts

14 2.35 Asian Crisis. The Asian countries most affected by the crisis (South Korea, Indonesia, Japan, Malaysia, Philippines, and Thailand) represent nearly 52 percent of Vietnam’s garment export markets. But Vietnam’s most important market is Japan with approximately 42 percent share. Other markets like Taiwan or South Korea are predominantly trading partners rather than final consumers. Trends in trade relations with Indonesia, Malaysia, Philippines and Thailand can be characterized by a low export performance and a limited product range.

2.36 The Asian crisis has had significant impacts on Vietnam’s exports, especially to Japan. The EU and Japan have always been the largest markets for the country’s exports. Since Vietnam receives relatively poor quota treatment from the EU, its firms are competing in the tough East Asian market against more established exporters like China, Indonesia, India, etc., and without the benefit of initial quota advantages for the EU market.

2.37 A number of Japanese buyers have complained about low orders from their headquarter offices. They face serious problems in utilizing their production capacity for the time being and are seeking links with the EU market. As long as Japan’s economy is slow, demand for garments will also remain weak. However, Japan, as the world’s second largest economy, and with its track record, is and will remain, one of the most important buyers for Vietnam’s garment products.

2.38 New Customers and Markets. Russia, the Baltic countries (former USSR), Yugoslavia, Poland, and the Czech Republic are the top ranking customers for Vietnam’s FOB/collection business, but garment exports decreased dramatically in 1998. Significant export reductions to Russia, Hungary, Poland and the Baltic states were based on the economic problems of those regions.

2.39 In Russia, this situation is due to the devaluation of the ruble against all major currencies, the strong slowdown in consumer spending, and the dependence of a number of Eastern European countries on trade with Russia. It is generally felt that these markets will be of low importance for Vietnam until 2001.

2.40 Analysis of past and current export markets shows that a large number of markets like South America, Middle East and South Africa have not yet been penetrated by Vietnamese exporters despite the fact that other strong Asian exporters, e.g. China and India, are already selling quite well to these markets. Vietnamese export companies should explore these markets.

C. A Firm-level View

1. Overview

2.41 The number of privately-owned professional garment companies is still relatively small compared to state-owned companies. According to interviews with private companies and the Garment Association, there are approximately 150 ’professional’ private companies active in Vietnam, but only a small number of them are ’directly’ exporting. A large number of the smaller companies are operating as subcontractors for state-owned or larger private companies.

15 2.42 Since these companies operate as subcontractors for private and state-owned companies, which are already operating as subcontractors for Taiwanese or Hong Kong garment agents, the prices they can receive for their manufacturing services are extremely low. On the other hand, price competitiveness is very high. These companies usually do not have any kind of export experience, nor are they registered as export companies. Since they operate on a CM basis, they are unable to purchase fabrics and accessories and they do not have the financing to pay for raw materials.

2.43 At the time of these interviews, companies were complaining about reduced orders from their current buyers due to the Asian economic crisis, as well as slow purchasing procedures in the EU. This situation is quite understandable since the larger companies use their available production capacities before giving out orders to subcontractors. These SME companies and other large scale private firms are very interested in working directly with EU buyers so they can utilize their production capacities as well as compete by offering relatively low prices in the international market.

2.44 Quota Availability. All companies heavily complained about the current EU quota distribution system. State-owned firms and joint ventures are granted preferable quota distribution which means that private small and new companies do not have any access to quota. At the moment their only option is to purchase quota in auctions or to purchase directly from state-owned companies at inflated prices.

2.45 Market Access. Private garment exporters generally do not have direct links to foreign companies, especially those that do not have their own purchasing or quality control offices in Vietnam. In general, European buyers tend to operate via Asian agents from Hong Kong or Korea. The main reason for the weak export performance of private garment companies is that they receive low prices for their subcontracting services and can only operate in the weak local market. A further weakness of these companies is that they are still concentrating on traditional products like basic trousers, skirts, blouses, and jackets.

16 2.46 Type of Cooperation between Garment Companies and Their Customers. The following table shows the types of cooperation between companies and buyers.

Table 2.4: Market Position of Garment Companies Type of business Products/Services offered by Target Groups in Export Markets this type of business CM · Production · Industry (manufacturers / (cutting-making) (cutting, sewing etc.) converters) · Large retailers (USA) CMT · Production · Industry (converters) (cutting-making-trimming) · Procurement of trimmings · Importers · Large retailers (USA) RTU · Production · Industry (converters) (ready-to-use) · Procurement of fabrics and · Importers trimmings · Large retailers RTS · Product development · Importers (ready-to-sell) (basic product) · Large retailers · Production · Procurement Collection · Product development · Large retailers (product line) · Chain stores / clothing multiples · Procurement · Specialist retailers · Product marketing

2.47 The following graph shows the current situation of Vietnamese private garment companies with respect to their efficiency and effectiveness.

Table 2.5: Positioning of Vietnamese Private Garment Companies

Efficiency

Participation 100 % 16 private garment companies 1 textile company Chairmanand Vice Chairman of Garment, Textile and Embroidery Association MPDFstaff 75 % * Evaluation based on discussion and group judgement

50 %

25 %

Effectiveness CM CMT RTU RTS Collection Label Service

FOB Business

Fashion Business

17 2.48 Efficiency: As a technical process, efficiency is usually measured by a percentage, i.e. how well a process/job is being realized in a company/department. Effectiveness: As a more market-oriented activity, effectiveness describes what kind of process/job is being done.

2.49 This graph very clearly defines that most companies (approximately 80 percent) are operating on a CM (cut-make) basis. In this type of business, their efficiency is between 45 percent and 55 percent, which means that there is still a large possibility of improving this subcontracting process.

2.50 The remainder is subdivided into approximately 10 percent in CMT business, i.e. the manufacturers purchase some fabrics and trimmings for the buyers, and 5 percent in the ready-to-use and ready-to-sell business. Based on interviews, only very few companies are currently doing FOB business.

2. Management 2.51 The following graph shows the current management performance of private Vietnamese garment companies broken down into different management functions.

2.52 The marketing performance is subdivided into local or export markets since companies operate in both markets and their performance in these two markets is quite different.

Table 2.6: Management Performance

Efficiency

Evaluation*/ 100 % Positioning based on group discussion and judgement!

75 %

50 %

Local 25 % market

Export market Effectiveness Production Logistics Admin ./ Purchasing Human Marketing Controlling Ressources

2.53 Production. Private garment companies are quite well organized in terms of their production performance. Companies have relatively good machines and equipment. They mostly operate these machines in a professional manner. Efficiency levels in production are

18 between 40 and 60 percent which means that these companies operate their plants quite successfully. Most garment companies only operate one shift, but these shifts are usually between 9 and 10 working hours per day. Companies mentioned that operating a second shift takes a lot of organizational activity and permission. Furthermore, they presently do not have sufficient orders to necessitate a second shift.

2.54 Logistics. Here they are defined as moving raw materials from buyers to factories, as well as controlling raw materials and work flow in the factories. The logistical situation of the companies is relatively poor. Their performance is between 20 and 30 percent. Most interviewed companies confirmed that they do not have much know-how and experience to improve the logistical situation in their companies.

2.55 Administration/Accounting. In regard to the administration and accounting departments, companies stated that their experience and performance is quite weak. Most companies still work according to the planned economy way of cost calculation and do not have more advanced breakeven or cost-covering margin calculation systems. This lack of know-how, especially in times of low occupancy in the factory, is an important weakness of private companies.

2.56 Internal planning, costing, and price calculation is very weak as a result of the aforementioned points. Furthermore, it does not give enough planning security to the top management to calculate their company’s overall cost, individual product price, and performance.

2.57 Purchasing. All interviewed companies stated that their know-how in purchasing fabrics, accessories, and other types of materials for their own use and on behalf of their buyers is very weak. Local textile mills are not capable of producing competitive fabrics in terms of price and quality. Companies do not have access to foreign raw material markets, and lack substantial links and knowledge about where and how to purchase fabrics and accessories at international prices.

2.58 Human Resources. Most companies defined their human resource management as quite reasonable in terms of the local situation. They confirmed that workers are available for garment manufacturing and that sufficient institutions and training schools exist where they can send their staff for sewing training.

2.59 A very weak point is personnel for middle and top management in production as well as in management functions (marketing, accountinging, etc.). All companies complained about the shortage of skilled personnel, especially for sales and marketing. Most candidates have neither international experience nor command of foreign languages.

2.60 Marketing. Companies differentiated between local marketing and export marketing activities. All companies confirmed that their overall marketing skills and experience are very low. For the important EU export market, their business experience is very weak.

2.61 Firms have no direct links to foreign buyers and are very passive in their marketing activities. The average privately-owned company has not participated in any foreign trade fairs, selling missions, promotion activities, etc. This leads to a situation where private companies wait for Hong Kong or Korean agents to bring subcontracting orders to their factories.

19 2.62 Sales skills for the local market are at a more advanced stage with an average efficiency of 25 to 30 percent.

2.63 However, the local market is still weak and faces a lot of difficulties, especially with regard to distribution, pricing, and local retailers’ payment procedures.

3. Marketing

2.64 Since most private garment companies identified marketing and sales as a major difficulty for their companies, ’marketing performance’ has been highlighted as one of the key issues and analyzed accordingly. The efficiency and effectiveness model was also used to analyze the current situation.

Table 2.7: Marketing Performance

Efficiency

Evaluation / 100 % Positioning based on group discussion and judgement!

75 %

50 %

25 %

Effectiveness Pricing Info/ Product Promotion Links to On time Customer Market develop- buyers/ delivery service Research ment Selling Export Final ranking of C C B AA importance

2.65 Pricing. Based on the experience of the interviewed companies and of the consultant, the price-value ratio of Vietnamese garments is good compared to international competitors. This situation was confirmed by buyers interviewed in Vietnam as well as in the EU.

2.66 Info/Market Research. Private garment companies have no access to market information, trend research, and customer data. This is mainly due to the fact that there are no export promotion institutions, private sector institutions or other organizations which can supply companies with this important data. All companies stated that access to information like lists of potential buyers and agents, data about the export potential of other countries, and all other necessary information is of high importance.

2.67 On the other side, buyers from Europe, Japan, and other countries complained about the unavailability of, for instance, exporter directories or company lists relating to the

20 Vietnamese garment industry. Most new buyers access manufacturers through traditional channels like the Ministry of Industry, the Chamber of Commerce, or Vietnamese embassies in their respective countries. This particularly hinders private garment companies since they are basically excluded from these channels. State-controlled institutions and organizations usually channel buyers to traditional state-owned manufacturers, thus eliminating private garment companies completely.

2.68 Product Development. All interviewed companies stated that product development is an extremely weak point. Companies do not have access to market information, fashion news, new fashion trends, etc. Furthermore, companies lack know-how in terms of sizing tables, grading lists, and technical data for product development.

2.69 Also, personnel in charge of product development and design are very weak and inexperienced in using Western methods for product development like CAD/CAM or other more advanced technologies. This is important since international companies communicate product development data via the Internet to the subcontracting manufacturer. These new technologies will be of future importance in helping Vietnamese firms become FOB exporters or ready-to-sell/collection businesses. Locally produced fashion designs and products are usually not saleable in international export markets like Japan and the EU. Since the fashion requirements in Eastern Europe and Russia are very different from the Vietnamese market, international design is also important. Designers who participate in local fashion shows and exhibitions can not really compete in export markets, only in the domestic market.

2.70 Promotion. Private companies confirmed that their promotion activities are weak and need to be improved in order to compete in international markets. Most companies do not have company profiles, nor information about their products or services in a readily available form for international buyers. Companies seldom participate in international and local trade fairs, and have no idea about the requirements of foreign markets. They also lack knowledge in promoting their products business to business.

2.71 Links to Buyers/Sellers. This point was identified by all companies during interviews as well as during the workshop as the most important problem for private garment companies in Vietnam.

2.72 The current dependency on subcontracting business from local companies as well as the dependency on subcontracting for Taiwanese/Hong Kong/Korean agents is, according to private firms, their weakest point.

4. Strengths and Weaknesses

2.73 The following final analysis shows a summary of the main strengths and weaknesses of private Vietnamese garment exporters regarding marketing/sales in export countries/markets. v Strengths

· Ability to supply subcontracting service at attractive prices and with good price performance

21 - Good competitiveness versus countries who cannot work on an OPT basis only (e.g. South Korea, Taiwan, Malaysia). - Competitive price performance compared to Asian competitors (India, China, Bangladesh, Indonesia).

· Decreasing market barriers in most of the important markets (also ’critical’ categories) - Main categories of Vietnamese OPT quotas to EU are not utilized. - Currently no increase in quota restrictions for Vietnam. - Increase of quota allocation in ’critical’ categories in 1999 until 2005 and abolition of quota and market protection due to WTO/MFA. - Relatively low quota utilization of ’uncritical items’ compared to other Asian countries (e.g. China, Indonesia, India).

· Good experience in garment production and production know-how - Good quality of workmanship and in some specialized production processes. - Partly well equipped productions plants and factories. - Experience in cooperating with Asian customers and their market require- ments.

· Links to new export markets via Vietnamese emigrants - Direct FOB export sales, including local product development. v Weaknesses

· Currently low importance/significance of Vietnamese garment exports to EU countries - Small percentage of EU garment imports are from Vietnam - Long distance and delivery periods (low flexibility) for EU market, especially in regard to Eastern European competitors for OPT business.

· Competitive disadvantages compared to regional Asian competitors in industrialized countries - High product costs of Vietnamese textile manufacturers. - Lengthy delivery times and to some degree problems regarding reliability of textile deliveries, import of materials, and customs handling. - Lack of staff qualification, especially middle management. - No procurement know-how regarding fabrics, trims, yarns, etc., in regional markets. - Slow responding process due to cooperation with Asian agents and language problems.

· Necessity of improving overall image of Vietnamese garment manufacturers - Main image of Vietnam and its garment industry is as a ’low wage country’ with very cheap products and low quality standards.

22 - Low confidence in business reliability and delivery times. - Unavailability of material/fabrics etc. meeting international quality standards. - Difficult to deal with due to Socialist system and difficult to travel to.

· Lack of marketing and sales know-how for international markets, sub-markets, and of specific customer requirements. - No professional distribution system or representation of private Vietnamese garment exporters in the EU, US, Asia, and new markets. - Often contacts only exist between state-owned Vietnamese exporters and/or regional agencies (e.g. in Hong Kong) for large buyers. - Production of basic or standard products mainly focusing on the lowest possible price. - Lack of know-how of different marketing strategies and instruments to find new sales and potential customers/distribution channels.

· Lack of professional association or organization to represent interests. - No association exists with professional management and organizational structure. - Foreign trade contacts and inquiries are almost always channeled to state- owned companies. - Quota distribution only supports existing businesses and neglects newcomers.

23 III. TRAINING: Roger Fielding, Geoffrey Willis and Associates, United Kingdom

A. Introduction

3.01 This report investigates the training needs of the Vietnamese garment industry. This is part of a Garment Sector study into the support services required by the industry, in order to assist the Vietnamese manufacturers to develop their businesses and expand into new markets for their products.

3.02 In assessing the training needs in the garment sector, we have have considered a number of criteria which must be met for any subsequent support to be commercially successful. These were:

· Training support should be sustainable, economical, and deliver measurable improvements translating into increased competitiveness of the participating companies.

· Initial training should be capable of scaling up and increasing its scope.

· The focus should be on the small to medium private companies.

· Training support should be oriented toward long term activity and commitment by the industry.

· Training results and the impact upon company results should be measurable and have clear benefits for the industry.

· Initial work should be capable of demonstrating success quickly.

· Companies participating in the first phase should be selected for their attitude, potential, and commitment to training.

· Training courses provided should be able to deliver results and therefore be of a practical nature, and capable of being delivered at the manufacturing level.

B. Methodology

3.03 Background. MPDF commissioned the faculty of Textile–Garment Fashion Department at Hanoi University of Technology (HUT) to provide background data for the study. Analysis of the data rapidly led to the conclusion that the concentration of target manufacturing companies was in Ho Chi Minh City (HCMC).

3.04 Field Work. The MPDF support staff worked with Dr. Tran Nhat Chuong and Dr. Tran Thuy Binh of HUT to arrange visits to:

· 15 manufacturing facilities of which 11 were private enterprises

· 18 organizations which provide services to the industry, of which 5, were private

24 · 1 joint venture

· 2 relevant government departments

C. Findings

1. Firm-level Findings

3.05 The essence of the field work was face-to-face discussions with factory owner/managers, government officials and the principals of organisations which provide services of potential value. During each visit it was generally possible to discuss the overall commercial situation in which the organisation operated. Responses from the factory management and observations during a walk through the manufacturing facility provide the basis for the comments which were reported on individual sheets, but which are not included here for reasons of confidentiality.

3.06 Pattern Cutting and Lay Making. Since the majority of work is undertaken on a Cut Make and Trim (CMT) basis, the customer normally supplies patterns (and sometimes markers either on paper or more recently on disc). Where no markers are provided the patterns are traced by hand to make markers with inherent inaccuracies and limitations in duplication.

3.07 There are computers available in both Hanoi and HCMC capable of handling this mechanical operation of marker making. If it were possible to encourage the establishment of a sub-contracting operation for this computer service, there would be a huge improvement in consistency of make-up and sewing quality on offer.

3.08 There is very little evidence of the need for design input, and the teaching effort assigned to original design in the further education colleges far outweighs the industry need.

3.09 Spreading and Cutting. Spreading is most often carried out by pulling fabric off a suspended roll and onto the cutting table by hand. Even the most basic hand operated spreading carts are the exception rather than the rule.

3.10 This sort of approach leads to low productivity and so substantial overstaffing, and coincidentally poor material utilisation. The development of good practices in material utilisation will be very important as companies drive towards more FOB business, but the skill of lay making can and should be introduced into the current manufacturing environment through training.

3.11 Sewing. Generally untidy and poorly laid out. The progressive bundle system is predominantly in evidence. Whilst being easy to manage at low levels of performance, it does rely on a keen appreciation of work assessment to ensure that the individual operations are evenly balanced, otherwise bottlenecks are created within production lines which lead to low productivity.

3.12 Finishing and Packing. A weak area, where generally insufficient room has been allocated to the function to allow logical and efficient work flow. Double handling leads to a deterioration of garment presentation, and since this is the first thing that the customer sees, it

25 is vital to get it right first time.

3.13 Training in the Factories. In-house and separate areas designated for training were the exception rather than the rule. Liaisons with outside training establishments were surprisingly strong, although curricula were consistently and disappointingly more theoretical than practical.

3.14 Limitations in the operational set up of cutting rooms, sewing room floors and finishing sections mean that it is difficult for the current managers to benefit from the productivity increases which derive from systematically based training programmes.

3.15 From the establishments visited where training is offered, it is vested first in the sewing machine operators and second in the cutting room. There is virtually no activity in finishing or supervisor training. The management functions of production planning and control and costing are in the hands of the owner/managers and over the years have been developed to suit individual situations. The reality of working in a mainly CMT environment, particularly in times of scarcity of orders, is that prices are often offered on a ’take it or leave it’ basis, leaving the realm of the efficient costing system and entering the commercial judgement arena.

3.16 The best served activity appears to be that of training mechanics. This is generally off site, and worthy of particular mention as a well respected institution is Fashion II and Sewing Technical High School in Thu Duc, Ho Chi Minh City.

3.17 The major views and observations to come from the private sector and co-operative factories were:

· 6 respondents confirmed that they attempt to hire skilled operators rather than train them. · 5 respondents confirmed that technical training is bought in from colleges and overseas. · 3 respondents said that their factory provides training courses and charges the trainees for participation. · 3 respondents admitted that they do not have any training procedures · 2 respondents said that they recruit staff from vocational and district training schools

3.18 Other significant comments were:

· Supervisors are recruited from the pool of experienced sewing machinists · The major training activity is carried out ’on the job’ by fellow workers · Some factories are already paying for training either directly or indirectly and most would pay for the installation of training techniques provided that: - the trainees signed employment contracts - there was some financial/ incentive help available

3.19 The three SOEs visited understandably had characteristics which were different from private sector companies. They have benefited from significant capital expenditure programmes and apparently have access to sufficient quota to fill customer’s orders. There has been a noticeable input to technical areas, particularly from Eastern Europe. Lower level technical exposure is available locally from further education establishments. There is a

26 common thread of virtually no in-plant training, Garment Company 10 Training School being the exception.

2. Visits to Ministries

3.20 The major points passed on were:

· Government has approved a general strategy to involve 200,000 workers in the garment industry. · An attempt is being made to decentralise from the big cities · Government is allocating capital for garment development depending on performance · Joint ventures account for 40 percent of all exports · Firms need to understand how to move from CMT to FOB trading · Firms need to improve training and efficiency

3. Visits to Service Providers

Each visit was used to investigate the contribution which the provider might make to enhance the development of training practices in Vietnam. During the field work it was tentatively agreed that the private sector would probably offer the most suitable base for this development. (For further profiles of the service providers see HUT’s study in section (V)).

3.21 State-owned Service Providers. It is very clear that the equipment being used for training courses was old compared to similar equipment used in even the most humble of factories. The content of the courses is heavily weighted towards theory. The industry relies on an understanding of practical issues at all levels and this must be reflected in the training of young managers. Worthy of particular mention is the Fadin facility in Hanoi. The design, pattern making and pattern grading skill base there is capable of development to the benefit of local manufacturers. The Fashion II and Sewing Technical High School, Thu Duc, Ho Chi Minh City has a good reputation for the training of sewing machine mechanics. HCMC University of Technology School of Industrial Management offers a very real alternative as a management training base but needs to be further investigated.

3.22 In summary, the needs of the industry appear to be well served by the wide choice of subjects which are available. They include the training of machinists, middle management skills, and fashion design. However, these courses are invariably biased toward theory and the needs of the state owned enterprises. Generally they are not entirely suitable for small and medium-sized privately-owned businesses.

D. Summing Up

3.23 Manufacturers have had very little formalised training (apart from ’learning on the job’) in the areas of:

· Design, pattern making and grading · Fabric inspection · Quality control · Supervision · Production planning and control

27 · Costing · Management and management techniques

3.24 Where there are formalised approaches, they involve separate training areas for prospective machinists and finishing operations. The basic principles are founded on teaching an understanding of overall garment construction with the final test being to make a single garment in its entirety. This approach has little relevance to the effective introduction of a machinist to a production line which relies on the efficient and repeated production of sequential operations.

3.25 As might be expected, the teaching of design, textile technology, quality control, management techniques and sewing machine mechanics are far better served in training institutions than in the manufacturing facilities. Where we saw teaching of basic production techniques, the equipment was old and often cannibalized. Most of the facilities have the appearance of a lack of funds, and without enhancement, this will hinder the development of the fledgling industry.

3.26 Even taking into account the fact that the industry is in its formative stages of development, the training techniques which are in place will not be effective, in supporting the push of the industry to compete in the marketplaces of the world. Whilst this is not unusual for a maturing industry, it is of considerable concern that the technical benefits which have flowed from joint venture liaisons in other developing countries are not yet apparent in Vietnam. This suggests that a training initiative is overdue and will not be created within the industry and so will need a kick start from outside.

3.27 Various claims have been made in respect of the number of trainees being released into the industry. Within the scope of this study it has not been possible to validate these claims either individually or in total. This reflects the larger problem of quantifying the industry itself. Each source we have looked at seems to indicate a different number of employees and varying levels of revenue.

3.28 There is a history of trainees paying for their courses. There is also evidence that individual companies will buy training which fits their objectives of increasing productivity and reducing costs whilst preserving flexibility.

3.29 The training framework will have to deliver results from a low productivity base. It is the sequence of implementation which then becomes important. The first objective must be to develop the skills necessary to improve the set up and running of individual production lines so that they match best practices. The benefits of this will be quickly realised through training production line supervisors to run the units at levels of efficiency which are being routinely achieved elsewhere in Asia. As a parallel exercise, it will be necessary to implement training to improve the quality of cut work at the pre-sewing stage. Once there is an understanding of the benefits and operation of a well thought out strategy it will become a natural step to implement improvements in Operator Training.

3.30 There are a number of cultural issues which represent themselves in the design of current training practices:

· They are planned and presented in great detail, but they are theoretical, and the industry is practical, depending upon manual skills to a very high degree.

28 · The course content is broad and not targeted. · They suffer from lack of exposure to the best practices that are being applied successfully elsewhere in the world.

3.31 It is therefore evident that this local approach must be given great consideration before embarking upon far ranging changes to the training infrastructure in the industry. However, the potential gains are great and can be accessed relatively quickly--a competitive edge which must be turned to advantage in order to secure Vietnam’s position in the global market.

3.32 General Comment. We estimate that there are significant productivity gains to be made through basic reorganisation of production lines and appropriate training. In individual factories this can be developed within a few months, if not weeks, by employing appropriate and directional techniques. However, this then poses the problem of how to sell the additional production generated, or manage with the surplus labour!

3.33 In order for the private garment manufacturing sector to compete with other low cost countries, the efficiency of the factories has to be raised. This will improve capacities, lower unit costs, improve quality and make Vietnam an attractive sourcing base.

3.34 The only way for the industry to reach the required competitive levels of operation is by training their people in the practical skills necessary.

3.35 To justify returns on training by individual factories would require a specific study of each plant. The visits carried out clearly show a need for training exemplified by the low productivity levels observed. Productivity is identified as the time taken to manufacture typical garments. From our own experience of carrying out feasibility studies in Vietnam, productivity is typically felt to be 50–60 percent of what could be achieved with better training and engineering.

E. Recommendations:

1. Introduction

3.36 Training for the Vietnamese Garment Industry, must be based upon effective, proven practice. It should be a balance of knowledge and operating skills.The following recommendations are based upon the observations made during the field visits, and the needs of the Vietnamese Garment Industry to move from their present position to a more competitive one.

3.37 At present, training is carried out principally, by State Owned Enterprises, which address the theory and practice of garment making. There is little experience of, and concentration on, the commercial needs for efficient and productive manufacturing. With other competing economies able to match and beat the low cost labor rates, it is imperative that the Vietnamese garment industry compete by increasing efficiencies and lowering unit costs thereby.

29 3.38 It is only by training the industry’s personnel to analyse their operations and have the skills to improve them, that Vietnam can hope to compete with its rivals in the developing economies.

2. Productivity

3.39 Throughout the following recommendations for training, “productivity” is a widely used justification for providing better training for the industry. Although it is expressed as the making time per garment, this measure of productivity combines a number of operating elements which are essential to the commercial success of the garment manufacturing company, and are included in the following recommendations:

· The improvement in cutting , sewing, and finishing methods, seeks to reduce the non-productive work. In a typical sewing operation up to 80% of the operation cycle is handling of the material to and from the needle.(Production engineering training) · The way in which the garments are passed from operation to operation and the layout of the plant, can reduce this wasted non-productive time. (Production engineering and supervisor training) · The less work in process and organisation of sequencing, the quicker throughput time, and improved response time. Thus enabling Vietnamese companies to compete with other developing economies who may be closer to key markets. (Production Control, supervisor, and production management training) · Training in improved operating techniques improves the quality of work. A more highly skilled workforce able to be more flexible and productive, are more equipped to meet customer quality requirements and expectations. In a fashion based industry this is a pre-requisite if a garment company wants to take advantage of the markets demands, which are ever changing. · The effect of better quality of work means fewer repairs during the manufacturing process. From experience a typical repair will take three to four times as long to complete, than getting it right first time. A significant impact upon productivity. (All components of training but particularly quality assurance, cutting, production engineering, operator and supervisor training)

It is with these factors in mind that the following recommendations are made specifically for the Vietnamese garment industry.

3. Profile of the Training

3.40 The training must be at the level to take – what is a fledgling industry - up to a level of productivity and competitiveness, that can sustain the development of new markets, and establish Vietnam as an attractive sourcing base.

3.41 It must concentrate on the basics of good methods and highly trained management as the foundation for expansion later. To this end we recommend focusing upon operating methods and production unit supervision as the first priorities.

30 4. Training Components:

3.42 Our recommendation is that the following areas of training be attended to initially:

a) Operating methods : Production Engineering/Organisation b) Supervisor Training c) Pattern and Lay Making, and Cutting

Then:

d) Operator Training e) Quality Assurance, and Clothing Technology f) Production management g) Fashion and creative design

3.43 The training of mechanics should be carried out by the manufacturers of equipment, most of whom have either facilities or training programs for this. a) Training Content – Operating Methods: Production Engineering/ Organisation

3.44 As has been observed in the visits and from our own experience of studies done in Vietnam, the methods and equipment used by the industry are at the lowest end of the technological scale. In productive terms the companies are not competitive with rival economies. The dependence upon low labor rates can only sustain competitiveness for a limited time before economic aspirations of the workers, and progress of the economy, put upward pressure on earnings levels. This has previously happened elsewhere, in Thailand and Malaysia for example, countries which now are having to invest in more productive methods, rather later than they should have done. The industry can raise productivity levels irrespective of business growth or status, and preparation for the future, is the best way to become a first class world garment producer.

3.45 It is for these reasons that we recommend that training in efficient production methods, and the skills of using better equipment be the first priority of any training support.

3.46 Production Engineering:

The content of production engineering techniques should include:

· Introduction to Garment Construction

An overview of the major constructions and materials used in Garment making

· Garment Analysis

The breakdown of Garments into production operation sequences and modules suited to manufacturing. How to use this analysis as the base for designing

31 operating systems, involving the logical pre-assembly of small parts, the assembly of the parts, and the finishing.

· Work Measurement and setting Production Standards

How to assess the production time required for each operation and the allowances for rest and fatigue which must be built in. The setting of standards and monitoring of performance. How to use production standards as a means of motivating the operator.

· The materials

Training in the make up and uses of the main fabrics used, including knowledge of the spinning, weaving, knitting, dyeing and finishing techniques.

· Equipment

The major machinery, its application and flexibility. This includes pattern making on CAD systems, lay making, spreading, cutting and sewing as well as the finishing. Stitch types and other methods of assembly are covered. Where possible the trainee is given the opportunity to cut and sew a garment so that the basic skills of sewing and other work are learnt and understood.

· Workplace Methodology

An intensive part of the course where trainees are taught the techniques and practices of method study and other industrial engineering skills such as ergonomics. Practical work on site is an essential part of this subject. As well as learning the current equipment, productivity enhancing attachments, and techniques available, students will be introduced to state of the art methods being developed so that they may monitor and assess such developments in the future.

· Materials Handling

As a typical garment requires as much as 80% of the work time for moving, re- positioning and handling the components, trainees are taught the various means of transporting products through the production process. They are introduced to ready-made systems available as well as how to design their own systems economically from local materials.

· Implementing the Changes

All the techniques in the world are useless unless the engineer can communicate with, demonstrate, and convince workers, of the benefits of improved methods.

32 Techniques and means of selling the changes and overcoming barriers to change are also learnt.

3.47 Production Organisation:

· Manufacturing Functions

The factors affecting production department structures capable of carrying out specific tasks in accordance with market demands, such as quick response, low cost, high quality, style variability.

· Manufacturing Layout

From the product analysis the production engineer is taught to utilise the space available to the optimum in order to maximise good working methods, logical workflow and work in process management.

· Material Utilisation

Training in the pattern making operation, fabric inspection, and lay making techniques, to optimise the utilisation of fabric. How to install controls on usage and deal with suppliers on unacceptable variances. Training on the current technologies of CAD systems is included.

· Quality Assurance

Means of preventing work going wrong, and the ways to spot the incorrect work as soon as possible to reduce repair time, and maintain high quality. Statistical means of spot-checking. Quality audits.

· Production Planning and Control

An introduction to using the knowledge of the production system, the standards and feedback to plan effectively and realistically. How to monitor the progress of orders against customer expectations.

· Costing and Return on Investment

The ways of evaluating the returns from production method improvements The cost behaviours of garments Basic Financial management and records

33 3.48 Benefits of the Training

We believe from experience that such a comprehensive and practical course will provide the future manufacturing managers for the industry, as the techniques and skills learnt are all applicable to managing a clothing production company. Each component should be designed, taking into account the present level of knowledge and skills found during the study, and from the consultant’s experience of the Vietnamese industry. b) Training Content - Supervisor Training

3.49 The development of improved production methods, means that the first line of manufacturing management will have to understand the methods, be able to apply them, and teach and manage the operators on the new systems of manufacturing,

3.50 The training should also include skills of running organised production lines and utilising the human resources available.The training course should be initially taught off site at the training provider location and should be continued in the factories.

Training content should include the following:

Training in General Supervision Skills:

· Clothing Technology

The knowledge of the different stitch types and seams. How to recognise poor stitching and its effect on various fabrics. The main fabric types, and their behaviour in the machine.

· Motivation of workers

The ways of keeping operators interested in producing at a productive rate and good quality. Encouragement, recognition, and leadership

· Leadership and handling authority

How to assert oneself and provide the leadership that operators want. The personal qualities of a supervisor, required to manage a production unit.

· Communication

The skills required to give instructions clearly, and how to demonstrate and illustrate methods of working.

34 Training in Specific Garment Production Skills:

· Production Line Organisation

The logical sequencing of operations, the layout of workplaces and the ways in which the supervisor controls the flow of work.

· Sewing Methods

Basic introduction to operation method analysis, and how to organise work for the most productive result. Handling techniques and how to train or re-train operators onto the best methods at the workplace.

· Machinery use and maintenance

How to get the best out of the machinery. Routine cleaning and maintenance. Thread tension adjustments and other running repairs such as needle changing and stitch adjustments.

· Line Balancing

The techniques of maintaining a constant flow of work to each operator so that utilisation of the workforce and equipment is optimised. Visual and calculation methods.

· Progressing

The disciplines of maintaining sequencing through production. The methods used to retain bundle integrity, and matched parts. Ways of working with economic work in process levels and getting garments through quickly.

· Quality Assurance and control

Recognising sewing and other faults and identifying the cause. Ways of setting up controls, and identifying faults at the earliest stage possible. How to make repairs effective and minimise alteration time.

· Factory Rules

Health and safety regulations, best practice, and environmental considerations. Disciplinary procedures, and how to handle difficult operators.

35 c) Training Content - Pattern and Lay-making, and Cutting

3.51 As the industry is able to obtain more FOB work, the companies will have to develop sourcing, buying and material utilisation skills in order to make acceptable margins from this type of business. Initially whatever FOB business is obtained, the factory must be capable of meeting not only the client’s requirements for styling and fit through good pattern skills but to utilise the material to the optimum. It is normal for the material cost to represent as much as 65-80% of the product manufacturing costs in low labour rate economies, and good utilisation of materials purchased, is vital to commercial success.

Training content should include the following:

· Pattern Making

How patterns are designed and sized. The identification of the parts and the features of a pattern.

· Lay Making

The manual methods of laying out patterns to achieve optimum utilisation of materials. How to measure and improve lays.

· Spreading

The techniques of hand spreading, machine spreading and inspection of the fabric.

· Cutting

Basic skills of cutting with straight knives, band knives and other hand operated knives.

· Preparation for Sewing

Bundling, numbering and controlling cut work supply to sewing.

· Computerised Lay Making An introduction and appreciation of the benefits of CAD assisted lay making. d) Training Content Operator Training

3.52 The above three aspects of training are the priorities for “kick starting” the industry into improved training. Once these skills are in place then investment in operator training is the next logical step. Improved training in the workplace, can result in significant reductions in training times, which in turn means more output sooner from the new entrants, and higher skill levels to reinforce the improved methods.

36 3.53 Ideally each factory would have its own training area with trained instructors teaching the sewing and other operational skills to new industry entrants. Re-training experienced operators onto the company’s ways of manufacturing would also be covered.

Training content should include the following:

Operator Skills:

· Selection of workers for operational work.

Relating the tasks to be performed to the inherent skills of the applicant for work. Simple selection exercises.

· Teaching the knowledge required

Getting the trainee familiar with the surroundings and the language of the garment factory (induction)

· Constructing a training course

The way in which knowledge and skill development exercises are organised so that the trainee develops the skills effectively.

· Basic Skills for Sewing and other Operations

How to develop the basic skills of movement and perception.

· Identifying job skills

Analysing and identifying the specific job skills that are to be taught.

· Developing exercises to reach high skill levels

How to design job training exercises and the use of targets to motivate and measure progress.

· Quality Training

Knowing what is required and recognising faults. How to correct and prevent mistakes. Carrying out a simple fault analysis. Simple sampling techniques.

· Health and Safety

The development of habits for safe and healthy working

37 · Training for stamina and consistency

Exercises to maintain high output and quality throughout a working day.

· Training records and results

Simple controls and motivating methods for the trainee. Measuring and costing out training effectiveness. e) Training Content - Quality Assurance

3.54 Developing garment industries usually begin on the simpler garments. This enables the manufacturers and their operators to learn the quality requirements of the market.

3.55 The quality demands for the Asian markets and other developing markets where many Vietnamese companies have begun trading, are not as demanding as the established and more sophisticated European and American markets.

3.56 The need is for a practical training support in plant, as the variation in garments and quality requirements is very broad, so that any training should be relevant to, and focused upon, a company’s specific customer needs.

Training content should include the following:

· The Components of Quality in Garments

Seam construction and appearance. Stitch types. Fit and shape. Sizing. Finishing. Customer perception.

· Specifications

How to draw up a working specification to meet customer requirements. Tolerances and Interpretation.

· Inspection methods

Understanding of the effectiveness and limitations of the various systems of inspections such as in line, end of line and random methods.

· Sampling Techniques

Introduction to simple sampling methods on the production line. Carrying out quality audits.

38 · Quality Certification

The outlines of requirements for ISO 9000 certification and its relevance to exporters

f) Training Content - Production Management

3.57 The industry must be able to run and develop more flexible, highly productive and profitable garment factories in Vietnam. It is therefore vital that the industry begins to develop a group of professional production managers capable of utilising new technology and modern management techniques, and running factories at the levels of performance which are demanded by markets forces.

3.58 This training should be directed at the factory or departmental managers who will need improved organisational and planning skills to cope with the development of more efficient manufacturing methods as well as the commercial skills of meeting customer, and company needs.

Training content should include the following:

· Planning for Garment Operations

Multi-task management. Operation breakdown for productivity and control. Flexible systems of production and layouts. Organising and planning pre- production activities such as sampling and approvals.

· Managing the Supply Chain

Sourcing, purchasing and specification of materials. Working relationships with suppliers and customers. Packaging and distribution. Export procedures and requirements.

· Balancing the Production Units

Using production standards to evaluate production times and loading. Designing simple balancing and performance controls, and managing these.

· Work in process Controls

How to keep a consistent flow of work to each operation. Methods and handling systems to achieve high productivity and fast response. Meeting deadlines and assigning and managing priorities. Balancing sales requirements with production needs for performance.

· Communicating with Supervisors and Staff.

Briefing, reporting, handling feedback, and presentation skills.

39 Motivating the staff. Maintaining contact with the production floor (Management by walking about).

· Improvement Projects

Project management techniques applied to development of the manufacturing facilities.

· Delegating and Developing Staff

The need to delegate and overcome the normal concerns of the manager and barriers to delegation. Assessing training needs and enhancing the skills of the supervisory staff.

· Basic Financial Management

Costing the product, Production measures, Profit and Loss, and the management of Assets and liabilities. g) Training content - Fashion and Creative Design

3.59 The development of a design element within the garment industry will depend upon the progress of the industry in its ability to produce good clothing to customer’s specifications. Therefore we make no recommendations for detailed training at this stage. We would state that there exists within the European countries excellent facilities in the fashion departments of several universities for studying design and bringing those skills to Vietnam. We would recommend that once the training project is shown to be successful and is well supported by the industry then approaches should be made to these universities for information on syllabus and requirements.

40 IV. OPERATIONS: Peter Davies, Fielden-Cegos, United Kingdom

A. Introduction

4.01 The textile and garment industry is central to Vietnam’s transition from a centrally planned to a market economy, from an economic system built predominately around state enterprises to one which treats all enterprises equally regardless of ownership, and to the success of the doi moi process. The industry is also a critical element in the country’s export drive, and more generally its efforts to integrate itself into the international economy. Textiles and garments are invariably one of the major industries in a country’s early-stage manufactured exports. Export success in this industry is usually the forerunner to the emergence of a broad-based export-oriented development strategy. Failure to achieve export success in this industry is invariably symptomatic of deep-seated domestic obstacles and an inability to build on strong potential comparative advantage. Thus, the industry is important not just as a major source of exports and employment, but also for what its growth indicates more generally about economic performance.

4.02 Having completed the first phase of the international market penetration, the challenge for Vietnam’s textile and garment industry is to develop a broad-based export drive, including a shift to higher quality products and greater product range, against the backdrop of the Asian economic crisis.

4.03 From the observations and comments made above, the conclusions in this report confirm the only way forward in the short term will be the transfer into semi-automatic processes, and to gradually build-up to higher technology.

B. Purpose of survey

4.04 To visit numerous garment manufacturing plants to assess the following:

· To obtain data for the preparation of individual profiles. · To discuss and evaluate their attitude and commitment. · To view the floor area and assess the floor layout, method of manufacture, speed, pace and level of productivity. · To analyse the various types of machinery and equipment. · To view and discuss the levels of middle management skill. · To generally overview the other departments. · To assess the general working conditions.

C. Observations

4.05 In almost all the visits made, the floor layouts were very congested and the general working conditions poor. With regard to the machinery and equipment, this was invariably very basic, with little or no attention being paid to attachments or simple additions to improve the method of work. There was an obvious lack of garment technology techniques and trained middle management. The following lists the main areas highlighted during the observation study:

· Congested floor area

41 · No defined and organised layout of the machinery · Poor overhead lighting · Little or no knowledge of the basic sewing techniques, such as - correct positioning of feet, only one foot control - correct threading of the sewing machine - tensioning of top and bottom threads - handling at needle point - length of sewing bursts - needle position at stops and curves - length and purpose of back-tacking - winding of bobbin spool - poor control of machine speed · Basic machinery, little or no use of semi-automatic machines for critical operations · Operators showed a reasonable understanding of speed and pace · Time consuming garment construction techniques · Many operations could have been combined · Quality control needs to be extended to include in-line inspection · Flow of work not sequential, bundles of parts become mixed and damaged · Cutting skills limited, pieces not out to the line · No lay markers; pieces are marked individually using chalk · No indication of time taken to produce garment

D. Conclusions

4.06 In general, the Vietnam garment industry has a performance efficiency rating in the region of 45/50 percent, this will obviously have to be greatly improved upon to ensure continuous growth within the industry. With the projected economic figures for 1998 indicating a reduction of 15 percent, the industry has no alternative but to improve its level of productivity. There are signs that the industry is on the brink of a period of rationalisation and shrinkage, and this rethink could force the level of productivity upwards which will result in a stronger and more efficient industry to meet the world marketplace demands.

4.07 Similar to other garment producing countries, the issue to be decided over the next 4 to 5 years (when the quota system will disappear) will be whether or not to move to an extensive capital investment program or to an extensive up-grading of equipment together with a training program to run in parallel with each other.

4.08 The transfer to high-technology requires massive capital investment, although it will provide the consistent quality requirements; and lower product costs will unfortunately cause the necessity to dramatically reduce manning levels, creating a social problem for people with no work or alternative employment to pursue. This high-technology phase will need to be addressed during the next 4 to5 years but it has to be introduced on a gradual basis ensuring that the training for the new technology is implemented alongside the transfer–not only for the operatives but also for engineers and management.

4.09 The other alternative, of a gradual up-grading of machinery and equipment, is the most logical step to take. It will allow time to reorganise the industry over a longer period of time. This would allow time to train and retrain operators, engineers and management in the new skills. Initially the changes to the machinery and equipment are minor–from the basic

42 sewing machine like Juki DDL 5550 to the up-graded models with top and bottom thread trimmers and needle positioners. These machines would be utilised on critical operations to improve stitch presentation and eliminate hand trimming of sewing threads (inaccurate trimming of sewing thread can result in damage to the garment). Other up-grades would involve pattern design and development by using the new computer techniques, such as, PDS (Pattern Design System) for the accurate draughting of the standard block, grading and pattern cutting. Sewing quality problems normally result from inaccurate pattern formation and fabric cutting: sewing can only become accurate if the patterns and the cutting operations are carried out with the maximum degree of accuracy.

4.10 It can be concluded from the above that the logical sequence should be:

· Development and accuracy of the patterns · Improved cutting techniques to provide accurate cut pieces · Training and development in garment technology · Training and development of middle management

4.11 A typical program for in-plant sessions would involve the following:

· Basic Work Measurement, taking a time for each operation · Garment Construction, finding the best way to make the garment · Sequential Sewing, finding the logical path of manufacture · Attachments, awareness of types and uses · Machine awareness, knowing how and what machine can be used · Floor layout, positioning the machines in sequence · Cutting Room. Developing good practices, procedures and controls · Training and Re-training, on-line techniques · Production Planning, using operational times to balance production · Labor Cost Control, using operational times to produce garment cost · Quality Control, practices and procedures · Management organisation, developing the structure and responsibilities

43 V. PROFILES OF SERVICE PROVIDERS FOR GARMENT FIRMS: Hanoi University of Technology (HUT) , Vietnam

A. Training and Education Services

1. Demand and Supply of Training & Education services

v Demand

5.01 With 500,000 employees in over 600 garment factories in Vietnam, there is a strong need for training. Training of industrial sewing workers, technicians, designers, and management are the key priorities.

5.02 The demand for training is highest among state-owned enterprises which represent approx. 70 percent of the demand.

5.03 It is estimated that the demand for training among managers, technicians, workers and designers may increase by 50 percent in the next few years.

v Supply

5.04 In recent years, training institutions have been able to meet the needs of the garment industry; however, in recent times, institutions have been unable to keep up with the rapid growth of the industry.

5.05 Training for industrial sewing workers and maintenance workers is generally provided by job training centers and vocational schools and colleges, while training for management, technicians, and engineers is provided by universities and institutes.

5.06 Training fees are generally paid by participants, but in some cases, are met by the Government, garment companies and social organizations. Training courses vary from three to six months, or one to five years depending on the job’s requirements and the type of training. Training materials and methods are generally not appropriate and need to be updated and improved. The teachers themselves also need to be retrained.

5.07 To sum up, it may be said that the supply of training services for garment industry is satisfactory in terms of quantity and variety of training. However the quality of these services are not satisfying the demands of garment companies. Therefore, efforts should be made to improve the quality of training currently offered by these institutions.

44 2. Profiles of Service Providers

FACULTY OF TEXTILE, GARMENT & FASHION DESIGN (HANOI UNIVERSITY OF TECHNOLOGY)

GENERAL INFORMATION Address Dai Co Viet Road, Block C5-217, Hai Ba Trung Dist., Hanoi Telephone/Fax Tel : 844 8692401 Fax: 844 8696702 Contact Person and Title Dr. Tran Minh Nam, Dean of Faculty Main Services Areas Education &Training, Research, Technology Transfer and Consulting 1956 Year Established State-owned university Legal Form Under Ministry of Education & Training Ownership 43 Total Number of Staff 41 Number of professional staff 2 Number of support staff MAIN SERVICES · Undergraduate programs (5 years) specialized in Textile, Garment and Fashion design. · Technical college programs (3 years) specialized in Garment · Postgraduate programs (Master and Ph.D) in Garment and Textile Technology · Conducting research on garment technology, fashion design, finishing technology, new materials, spinning, weaving, knitting

MAIN CUSTOMERS Companies State-owned and private companies, JVs, 100 percent foreign-owned companies, research institutes, technical colleges. Sectors Garment, textile, fashion design, spinning, knitting, weaving City/Region Nation-wide Results to date The Faculty has trained more than 2000 professionals, engineers and technical bachelors of which 70 are specialized in garment & fashion design, 240 are garment bachelors, 9 M.Sc and 2 Ph.D. The Faculty has also conducted successful research on vegetable fibres (VIE/86/010) for UNDP during 1987-1991, 3 training courses in design techniques for UNIDO (1998) and a project in natural dyestuff for OXFAM Hong Kong - Quebec...etc. COMMENTS The Faculty of Textile, Garment and Fashion Design is the first and biggest training organisation specialized in textile, garment, fashion design in Vietnam. Moreover, the Faculty has also been organizing training programs at a technical college level and short-term training courses for local garment enterprises. The Faculty’s teaching staff has 43 professionals including 1 professor, 2 associate professors, 15 Ph.D. and 5 Masters. The garment and fashion design section under the Faculty consists of 13 staff of which 2 are Ph.D. trained abroad, 3 Masters, 7 engineers and 1 technician at secondary level. The Faculty’s core competencies lie in its very strong relationships with Government organisations such as the Ministry of Industry, Vietnam National Textile & Garment Corporation, People’s Committees of different cities and provinces, research institutes, etc..... and with garment-textile enterprises on a nationwide scale. International relationships with foreign universities have also increasingly developed.

45 FACULTY OF FASHION DESIGN (HANOI OPEN UNIVERSITY)

GENERAL INFORMATION Address B1, Bach Khoa Ward, Hai Ba Trung Dist., Hanoi Telephone/Fax Tel: 844 8693786 Fax: 844 8691587 Contact Person and Title Mr. Nguyen Ngoc Dung Address of Subsidiaries N/A Main Services Areas Training Year Established 1993 Legal Form State-owned university Ownership Ministry of Education & Training Total Number of Staff 10 Number of professional staff 10 Number of support staff 0

MAIN SERVICES Training undergraduates in architecture, industrial art and fashion design

MAIN CUSTOMERS Companies State-owned, private, joint-venture, foreign companies Sectors Various economic sectors City/Region Hanoi

Results to date The Faculty has trained 15 undergraduates since 1993 who are currently working for textile-garment industry in Vietnam.

COMMENTS The Faculty is famous for its distance-training programs. In co- operation with other universities and local training centres, the Faculty has organized many local training programs such as evening training programs in Hai Phong.

46 INDUSTRIAL SECONDARY COLLEGE II

GENERAL INFORMATION Address Km. 6, Rd. 10, Nam Dinh - Ninh Binh, Nam Dinh city Telephone/Fax Tel: 84 350 849 581 Fax: 84 350 843 051 Contact Person and Title Mr. Phan Ba Yen, Vice Director Address of Subsidiaries N/A Main Service Area Training Year Established 1998 Legal Form State-owned College Ownership Ministry of Industry Total number of staff 110 Number of professional staff 60 Number of support staff 50

MAIN SERVICES Providing the following training programs for garment companies: · Technical secondary level - 2.5 years · Certificate training courses for garment workers - 3 to 18 months

MAIN CUSTOMERS Companies State-owned enterprises, private companies, joint ventures, vocational centres Sectors Garment and textile City/Region Nam Dinh, Thai Binh, Hung Yen

Results to date Annually, the school trains 120-150 cadres at secondary level, technical personnel and garment workers and around 30 technical workers specialized in the maintenance and repair of garment equipment

COMMENTS The school opened its Garment Faculty in 1990 which focuses on training garment workers and technical personnel at secondary level.

47 INDUSTRIAL TECHNICAL ECONOMIC COLLEGE I

GENERAL INFORMATION Address 456 Minh Khai St., Hai Ba Trung Dist., Hanoi Telephone/Fax Tel: 844 8621504/ 8621860 Fax: 844 8623938 Contact Person and Title Prof. Duong Hong Quy, Rector, Mr. Tran Manh Hiep, Vice Rector Address of Subsidiaries 353 Tran Hung Dao St., Nam Dinh City Tel. 84 350 848706/849616 Fax: 84 350 845745 Main Service Area Training Research Year Established 1956 Legal Form State-owned College Ownership Ministry of Industry Total number of staff 165 Number of professional staff 105 Garment Faculty: 40 Number of support staff 60

MAIN SERVICES Providing the following training programs for garment companies: · Technical college level - 3 years - in garment, accounting, business management · Technical secondary level - 2 years - in garment, accounting, business management · Certificate training courses - 3 to 18 months - for garment workers.

MAIN CUSTOMERS Companies State-owned enterprises, private companies, JVs, vocational centres, state management organisations. Sectors Garment and textile. City/Region The North and Centre of Viet Nam, mainly Nam Dinh, Thai Binh, Nam Ha, and Ninh Binh Provinces.

Results to date The school has trained about 600 bachelors, 2000 cadres at technical secondary level and more than 5000 workers for garment industry.

COMMENTS The school has become one of the leaders in training garment workers at technical secondary and technical college levels in Vietnam. The school has gained significant experience in training activities and has built a professional team of teachers and garment experts. The Garment Faculty was established in 1985 with more than 40 staff comprising 2 engineers who graduated from former Soviet Union, 20 bachelors at technical college level and a team of highly-skilled technical secondary level workers. The workshop for garment training is equipped with 200 brand new and 200 second hand sewing machines. The school has also established strong relationships with Garment enterprises in Northern and Central provinces of Vietnam, especially garment companies in Nam Dinh and neighbouring provinces.

48 NAM DINH TEXTILE TECHNICAL AND ECONOMIC SCHOOL

GENERAL INFORMATION Address 6 Hoang Dieu St., Nam Dinh City Telephone/Fax Tel: 84 350 849464 Fax: 84 350 842319 Contact Person and Title Mr. Le Tung, Principal Address of Subsidiaries N/A Main Service Area Training Year Established 1968 Legal Form State-owned College Ownership Under Vietnam National Textile Garment Corporation (VINATEX) 65 Total number of staff 37 Garment faculty: 10 Number of professional staff 28 Number of support staff MAIN SERVICES Providing the following training programs for garment companies: · Technical college level - 3 years · Technical secondary level - 2 years · Certificate training courses - 3 to 18 months

MAIN CUSTOMERS Companies State-owned enterprises, private companies, co-operatives Sectors Garment and textile City/Region Nam Dinh and Thai Binh Provinces.

Results to date The school trains annually from 250 to 300 garment workers.

COMMENTS The school specialises in training garment workers for local enterprises. The 10-staffed Garment Faculty comprises 1 technical college level teacher, 2 technical secondary level teachers and highly-skilled garment workers. The garment workshop is equipped with 125 sewing machines and 100 other garment machines.

49 TRAINING SCHOOL OF GARMENT COMPANY 10

GENERAL INFORMATION Address Sai Dong, Gia Lam, Hanoi Telephone/Fax Tel: 844 8276 923 / 8276 396 Fax: 844 8276925 Contact Person and Title Mr. Nguyen Nhu Hung, Director Address of Subsidiaries N/A Main Service Area Training Year Established 1946 Legal Form State-owned College Ownership Under Garment Company 10 Total number of staff 20 Number of professional staff 15 Number of support staff 5

MAIN SERVICES Providing the following training programs for garment companies: · Technical college level - 3 years · Technical secondary level - 2 years · Management training

MAIN CUSTOMERS Companies State-owned enterprises, private companies, limited liability companies Garment and textile Sectors Thai Binh, Gia Lam, Nam Dinh and Hai Phong City/Region The school has been conducting training courses for the management, Results to date technical staff and workers for about 10 garment companies, including Garment Company 10 and other companies in Northern provinces.

COMMENTS The school has established strong relationships with its client companies, a wide consulting network and a flexible board of management. The school is planning to extend its activities to fashion design training and support services for garment companies.

50 HANOI GARMENT TECHNICAL SCHOOL

GENERAL INFORMATION Address 56 Kham Thien, Dong Da, Hanoi Telephone/Fax Tel: 844 8511 190/ 8511 767 Contact Person and Title Mr. Hoang Huu Trung, Chief of Training Division Address of Subsidiaries N/A Main Service Area Training Year Established 1975 Legal Form State-owned College Ownership Hanoi Education Department Total number of staff 31 Number of professional staff 21 Number of support staff 10

MAIN SERVICES Providing the following training programs for garment companies: · Worker training - short-term, long-term, and customised courses · Technical training

MAIN CUSTOMERS Companies State-owned and private companies. Sectors Garment and textile City/Region Hanoi and provinces nearby

Results to date The school has been training thousands of garment workers at 3/4 level for State-owned and private garment enterprises in Hanoi.

COMMENTS The school has a qualified team of teachers and receives government’s financial aid annually. It has built up its own relationship with several domestic garment companies. The school’s future plan is to open training programs in fashion design and improve the overall training quality.

51 HAI BA TRUNG DISTRICT TRAINING CENTRE

GENERAL INFORMATION Address Mai Huong Quarter, Bach Mai, Hanoi Telephone/Fax Tel: 844 8631 429 Fax: 844 8634 160 Contact Person and Title Mr. Pham Van Khanh, Director Address of Subsidiaries N/A Main Service Area Training Year Established 1984 Legal Form State-owned Ownership State-owned Total number of staff 25 Number of professional staff 15 Number of support staff 10

MAIN SERVICES Providing the following training programs for garment companies: · Worker training · Technical training · Management training: short-term and customised courses

MAIN CUSTOMERS Companies The unemployed of 25 wards in Hai Ba Trung District and 4 wards of other districts in Hanoi, former criminals in reintegration programs with the community, and some garment companies

Sectors Garment City/Region Hanoi and provinces nearby

Results to date The school has been training hundreds of garment workers for garment enterprises in Hanoi.

COMMENTS As a big training organisation in Hai Ba Trung district, the centre is equipped with up-to-date facilities with 20 classroom and 50 sewing machines donated by the Swiss Government. In the coming years, the centre plans to extend its training scope.

52 GARMENT AND FASHION TECHNICAL SECONDARY SCHOOL

GENERAL INFORMATION Address Le Chi Village, Gia Lam Dist., Hanoi Telephone/Fax Tel : 844 8276514 Fax: 844 8766585 Contact Person and Title Mrs. Bui Thi Thi, Head Master. Address of Subsidiaries N/A Main Services Areas Training Year Established 1966 Legal Form State-owned institution Ownership Under Vietnam National Textile & Garment Corporation Total Number of Staff 90 Number of professional staff 70 Number of support staff 20

· Training courses (long-term & short-term) for mechanical workers in MAIN SERVICES maintenance techniques · Intensive courses to improve garment workers’ and technicians’ skills.

MAIN CUSTOMERS Companies State-owned and private companies. Sectors Garment City/Region Mainly in Northern cities and provinces, namely Hanoi, Bac Ninh, Hung Yen, Nam Dinh, Quang Yen,

Results to date Since 1977, the school has organized 8 training courses for garment technicians and trained 20.000 workers in operating and maintaining sewing machines.

COMMENTS The school is highly respected in training qualified workers for the garment industry. The training workshop is equipped with 575 sewing machines and 75 other specialized machines. The school has an experienced team of qualified teachers. This has made the school one of the best-known secondary schools in the field of Garment and Fashion Technical training in Vietnam.

53

VIETNAM PRODUCTIVITY CENTRE (VPC)

GENERAL INFORMATION Address Hoang Quoc Viet St., Cau Giay Dist., Hanoi Telephone/Fax Tel : 844 7561548/7561500 Fax: 844 756502 Contact Person and Title Ms. Nguyen Thi Anh Thu, Head of Customer Relation Unit Address of Subsidiaries N/A Main Services Areas Training and consulting Year Established 1997 Legal Form State-owned centre Ownership National Productivity Organisation (NPO) 33 Total Number of Staff 33 Number of professional staff 0 Number of support staff

MAIN SERVICES · Training and consulting in the application of total quality management systems (TQM), including ISO 9000

MAIN CUSTOMERS Companies State-owned, private and JV companies. Sectors Various industrial sectors including garment. City/Region Mainly in the North and in the Middle of Vietnam

Results to date The company has carried out more than 40 short-term training courses (1-4 days), trained more than 1000 trainees and provided consulting services for 14 companies.

During its two years of establishment, VPC has successfully provided COMMENTS training and consulting services in ISO 9000 for many business sectors in Vietnam. The professional team consists of 33 staff of which 3 are Masters and 28 are engineers and Bachelors. The company has strong customer relationships and its main customers are: Vinatex, Nam Dinh Textile Company, Garment Company 10, Duc Giang Garment Company, Viet Thang Garment Company, 29/3 Garment Company.

54 TRAINING CENTRE FOR STANDARDS AND QUALITY (STAMEQ)

GENERAL INFORMATION Address Hoang Quoc Viet St., Nghia Do, Cau Giay Dist., Hanoi Telephone/Fax Tel : 844 8361407 Fax: 844 8361408 Contact Person and Title Ph.D. Phan Minh Hang Address of Subsidiaries N/A Main Services Areas Training Year Established 1980 Legal Form State-owned centre Ownership State-owned Total Number of Staff 9 Number of professional staff 9 Number of support staff 0

MAIN SERVICES Providing training services in application of ISO 9000

MAIN CUSTOMERS Companies State-owned, private and joint-venture companies. Sectors All industrial sectors including garments. City/Region Mainly in the North and the Middle of Vietnam.

Results to date The company has been organizing about 30-40 short-term training courses (1-5 days) annually for 800-1000 trainees.

COMMENTS The centre has 9 staff of which 6 are engineers and bachelors. Moreover, the centre is strongly supported by professionals from STAMEQ, Economic Institutes and universities.

55 BINH THANH TRAINING CENTRE

GENERAL INFORMATION Address 235 Phan Van Tri, Ward 11, Binh Thanh Dist., HCMC Telephone/Fax Tel: 848 8940 250 Fax: 848 8413576 Contact Person and Title Ms. Cao Thi Mai Hoa, Chief of Garment Department Address of Subsidiaries N/A Main Services Areas Training Year Established 1984 Legal Form State-owned enterprise Ownership State-owned Total Number of Staff 80 Number of professional staff 70 Number of support staff 10

MAIN SERVICES · Training garment workers for companies and households · Training workers for electronic and electric sectors · Computer training

MAIN CUSTOMERS Companies State-owned & private companies Sectors Mainly Garment sector City/Region Ho Chi Minh City

Results to date Since its establishment, the centre has trained thousands of workers from garment companies in HCMC.

COMMENTS The centre trains about 200 workers annually at 3/7 level. With the support from UNIDO from 1999, the centre is in better condition to improve its training quality and to increase the number of training courses.

56 FACULTY OF FASHION DESIGN OF HANOI INDUSTRIAL ART COLLEGE

GENERAL INFORMATION Address O Cho Dua, La Thanh St., Hanoi Telephone/Fax Tel: 844 8257364 Fax: 844 8517390 Contact Person and Title Mr. Tran Huy, Dean of Faculty Address of Subsidiaries N/A Main Services Areas Training Year Established 1976 Legal Form State-owned college Ownership Ministry of Education & Training Total Number of Staff 5 Number of professional staff 5 Number of support staff 0

MAIN SERVICES Training Fashion Designers

MAIN CUSTOMERS Companies State-owned, private, JV, 100 percent foreign owned companies Sectors Various economic sectors City/Region Nation-wide

Results to date The college has trained about 30 fashion designers.

COMMENTS It is the first undergraduate training organisation on fashion design in Vietnam. The Faculty specialises in Commercial Graphics and Mode Creation Art. The Faculty has also organised short-term technical training courses for management and technicians of textile-garment companies. The Faculty is planning to open training courses in industrial sewing techniques.

57 BAC NAM GARMENT TECHNICAL SCHOOL

GENERAL INFORMATION Address 31 Ly Thuong Kiet St., Hai Phong Telephone/Fax Tel: 8431 846753 Fax: 8431 843142 Contact Person and Title Mr. Cao Huu Nghi, Director Address of Subsidiaries N/A Main Services Areas Training Year Established 1956 Legal Form Social Organization Ownership Hai Phong People’s Committee Total Number of Staff 18 Number of professional staff 18 Number of support staff 0

MAIN SERVICES · Organizing long-term training courses (18 months) for garment workers at 3/7 level · Organizing short-term training courses (1-3 months) for unskilled workers

MAIN CUSTOMERS Companies State-owned and private companies Sectors Garment City/Region Hai Phong city

Results to date The school has provided thousands of garment workers for state- owned and private enterprises. The company’s main customers are: Hai Phong Garment Company 3, Commercial Import/Export Company.

COMMENTS This is the only training institution for the garment industry in Hai Phong. The school is equipped with modern sewing machines of which 24 are industrialised sewing machines. It has conducted monthly training course for garment workers. Graduates are issued a certificate by Hai Phong Department of Education and Training. It has obtained strong support from Hai Phong Scientific and Technical Association.

58 FASHION AND GARMENT TECHNICAL HIGH SCHOOL II

GENERAL INFORMATION Address 6/10 Kha Van Can, Linh Dong, Thu Duc, HCMC Telephone/Fax Tel: 848 8966002 Fax: 848 8960561 Contact Person and Title Mr. Huynh Cong Tri, Rector Address of Subsidiaries N/A Main Services Areas Training Year Established 1978 Legal Form State-owned school Ownership State owned Total Number of Staff 100 Number of professional staff 70 Number of support staff 30

MAIN SERVICES · Technical college training in fashion design, sewing technology, equipment maintenance and operation · Technical workers training · Technical secondary level workers training · Short-term training to improve management skills for garment companies’ management · Providing technical consulting services

MAIN CUSTOMERS Companies State-owned, private companies Sectors Garment City/Region Southern region

Results to date Since its establishment, the School has trained 10.917 garment professionals and workers of which 3387 are technical workers, 63 technical secondary level workers, 207 technical college level workers, 50 bachelors and 7210 management cadres.

59 B. Marketing Services

1. Demand and Supply of Marketing Services

v Demand

5.08 Interviews with the senior management of garment companies in Northern, Southern and Central provinces in Vietnam affirmed that almost all garment companies have a demand for marketing services. However, only about 20-30 percent of garment companies currently use marketing services. The main reasons for this is as follows:

· Most Vietnamese garment companies are subcontracting for foreign companies; only a limited number of companies undertake direct FOB export; · Most of them lack information about marketing services and service providers; · Most management of garment companies lack marketing skills and knowledge; · Many of them do not see the importance of marketing’s role in business.

5.09 The main marketing services used by garment companies are advertising, exhibitions, trade fairs, and total quality management and most of the users of these services are big State-owned or joint venture companies.

5.10 Based on the growth of the garment industry and the results of survey, the use of marketing services (both in quantity and in quality) is estimated to increase threefold in the future.

v Supply

5.11 Findings from the survey show that there are only a limited number of organizations providing marketing services for garment companies. They are usually young, small, inexperienced, and located in big cities such as Hanoi and Ho Chi Minh City.

5.12 The main kinds of service providers are state owned, private and joint venture companies; among them, the state owned companies have the biggest market share.

5.13 Marketing service organizations usually provide services to a wide range of customers from different sectors; only a few of them focus on the garment sector and those that do focus mainly on the domestic sector. The reasons for this are as follows:

· Garment companies are not significant users of marketing services compared with other sectors · Service providers lack capacity, skills and capital

5.14 In conclusion, it can be said that although the demand for marketing services among garment companies is quite high, their use of these services is still limited. In order to meet the needs of garment companies, service providers need to increase both the quantity and relevance of their services.

60 2. Profiles of Service Providers

VIETNAM TRADE FAIR AND ADVERTISING NATIONAL COMPANY (VINEXAD)

GENERAL INFORMATION Address 9 Dinh Le St., Hoan Kiem Dist., Hanoi Telephone/Fax Tel : 844 8255512 Fax: 844 8255556 Contact Person and Title Mr. Nguyen Thanh Than, Vice President. Address of Subsidiaries 273 Hai Ba Trung St., Dist. 3, HCMC 51 Dong Khoi St., Dist. 1, HCMC Main Services Areas Advertising Trade Fair Organizing Year Established 1975 Legal Form State-owned enterprise Ownership Under Ministry of Trade Total Number of Staff 250 Number of professional staff 180 Number of support staff 70

· Organizing Trade Fairs MAIN SERVICES · Providing advertising services · Publishing "Information-Advertisement" Magazine · Organizing Fashion Shows

MAIN CUSTOMERS Companies State-owned and private companies Sectors Various sectors, including garment industry City/Region Hanoi & HCMC

Results to date Since its establishment in 1975, VINEXAD has organised more than 12 Fashion Shows for garment products, has established strong co- operation relationships with garment companies and assisted them to promote their products in international markets.

COMMENTS VINEXAD currently has a big and successful business and is planning to expand its business activities. The company has also been organizing trade fairs and exhibitions for an increasing number of foreign companies.

61 TRADE SERVICE COMPANY NO. 1

GENERAL INFORMATION Address 2 Mai Dong St., Hai Ba Trung Dist., Hanoi Telephone/Fax Tel : 844 8621228 Fax: 844 824620 Contact Person and Title Mr. Nguyen Dinh Hy, Director. Address of Subsidiaries N/A Main Services Areas Procurement services Import/Export Year Established 1995 Legal Form State-owned Ownership Under Vietnam National Textile Garment Corporation Total Number of Staff 80 Number of professional staff 30 Number of support staff 50

· Providing raw materials, fabrics, accessories & chemicals to textile MAIN SERVICES and garment companies. · Domestic trading in textile and garment products · Promoting import-export activities of garment companies

MAIN CUSTOMERS Companies Local private and state-owned, co-operatives, households, trade villages. Sectors Textile, garment. City/Region Hanoi, HCMC, Hue, Da Nang, Ha Tay, Nam Dinh, and some other provinces.

Results to date Total turnover in 1997 reached VND 83 billion and is expected to reach VND 100 billion in 1998. The company’s biggest customers are member companies of Vietnam National Textile Garment Corporation.

COMMENTS The company has become a very important supplier of raw materials for garment companies such as cotton, man-made fibres, chemicals, and accessories. It enjoys a high reputation among its business partners for its products’ quality.

62 HCMC EXHIBITION AND INFORMATION CENTRE

GENERAL INFORMATION Address 97 Pho Duc Chinh St., Dist. 1, HCMC Telephone/Fax Tel: 848 8210 012 Fax: 848 8296 502 Contact Person and Title Mr. Nguyen Van Minh, Administration Officer Address of Subsidiaries N/A Main Services Areas Providing information, marketing, and exhibition services. Year Established 1990 Legal Form State-owned enterprise Ownership State-owned Total Number of Staff 96 Number of professional staff 81 Number of support staff 15

MAIN SERVICES · Organizing exhibitions, trade fairs, customer’s conferences · Advising and conducting advertising services · Providing information and organizing international trade fairs

MAIN CUSTOMERS Companies State-owned, private, and foreign companies Sectors Garment City/Region Ho Chi Minh City and Southern region

Results to date The centre has served hundreds of clients, both domestic and foreign companies. It organizes exhibitions and customers’ conferences annually. The centre has a good relationship with international advertising companies and international exhibition centres. Its main customers are Viet Tien Co., Binh Minh Co., Truong Giang Co., and etc.

COMMENTS The centre has established itself as one of the best known organizations in HCMC and Southern region. Aided by the HCMC Culture and Information Office, the centre is well equipped and has good operating conditions. It also has a good relationship with domestic and foreign clients. However, the centre needs further investment in its infrastructure and equipment and in improving the skills of its management staff. It also needs to widen co-operation with international partners.

63 VIETNAM SUPERINTENDENT AND INSPECTION COMPANY (VINACONTROL)

GENERAL INFORMATION Address 54 Tran Nhan Tong/ 96 Yet Kieu, Hanoi Telephone/Fax Tel: 844 8255 077/ 8256 184 Fax: 844 8253 844 Contact Person and Title Mr. Le Viet Su, General Director Address of Subsidiaries 80 Ba Huyen Thanh Quan, HCMC Main Services Areas Providing product quality control services Year Established 1957 Legal Form State-owned enterprise Ownership Ministry of Trade Total Number of Staff 800 Number of professional staff 700 Number of support staff 100

MAIN SERVICES Product quality control services for almost all goods and services

MAIN CUSTOMERS Companies Domestic and foreign companies Sectors Trading, Manufacturing, Exporting, Importing City/Region Nation-wide

Results to date The company has been providing a great number of services in total quality management and other related services.

COMMENTS As the biggest product quality control company in the northern region, VINACONTROL specialises in providing goods and total quality control services. The company has 4 branches in Hai Phong, Quang Ninh, Da Nang, HCMC. VINACONTROL has a modern laboratory system in all of its branches. Its certificates are widely recognized.

64 TECHNICAL CENTRE FOR QUALITY ASSURANCE-TESTING-MEASUREMENT

GENERAL INFORMATION Address Hoang Quoc Viet Rd., Cau Giay Dist., Hanoi Telephone/Fax Tel: 848 8361 395 Fax: 848 8361 199 Contact Person and Title Ms. Pham Thu Thuy, Director Address of Subsidiaries Main Services Areas Providing TQM services Year Established 1977 Legal Form State-owned enterprise Ownership Ministry of Science, Technology and Environment Total Number of Staff 6 Number of professional staff 6 Number of support staff 0

MAIN SERVICES Providing total quality management services in the light industry sector.

MAIN CUSTOMERS Companies State-owned, private, joint-venture companies Sectors Light industry, including garment City/Region Nation-wide

Results to date The centre has been providing quality control services for several garment and textile companies. Main customers: Garment Company 28, Garment Company 20, Garment company X19, Coats Total Phong Phu, and so on.

COMMENTS The centre’s laboratory is equipped with modern machines and equipment. Its major activities include quality control services for garment companies, setting Vietnamese standards, providing consulting services, and training technicians for enterprises in light industry.

65 THANG LONG SUPERVISION CO. LTD.

GENERAL INFORMATION Address 262 Vong Str., Thanh Tri Dist., Hanoi Telephone/Fax Tel : 844 8698120 Fax: 844 8698124 Contact Person and Title Mr. Nguyen Ngoc Duyet, Vice Director. Address of Subsidiaries N/A Main Services Areas Total Quality Management Year Established 1998 Legal Form Limited Liability Company Ownership Private Total Number of Staff 8 Number of professional staff 7 Number of support staff 1

· Providing Total Quality Management Services for import-export and MAIN SERVICES consumer goods. · TQM consulting: e.g. ISO 9000 · Pricing products at market value

MAIN CUSTOMERS Companies State, private, joint venture and foreign companies Sectors Industrial, Agricultural, Mechanical, Textile-Garment, Cement, Mineral Water City/Region Hanoi, Ninh Binh, Nam Dinh, Ha Nam.

Results to date The company has conducted quality examinations and evaluations of Phu Thai’s (ltd. liability) imported products, a mineral water production line in Ninh Binh, the production equipment of Hiep Hung Shoe Company, & the electronic system of Hoan Kiem district’s police. COMMENTS The company has a team of qualified experts and associates.

66 PHI THINH TRADING AND SERVICE COMPANY LTD.

GENERAL INFORMATION Address 152 Dien Bien Phu, Dist. 3, HCMC Telephone/Fax Tel: 848 8203857 Fax: 848 8202784 Contact Person and Title Ms. Hoang Thi Ngoc Mai, Office Co-ordinator Address of Subsidiaries 43 Ly Nam De Str., Hoan Kiem Dist., Hanoi Main Services Areas Total Quality Management Services Year Established 1994 Legal Form Limited Liability Company Ownership Private Total Number of Staff 24 Number of professional staff 22 Number of support staff 2

MAIN SERVICES Providing Total Quality Management (TQM) services to garment companies.

MAIN CUSTOMERS Companies State-owned and foreign companies Sectors Garment City/Region HCMC, Hanoi, My Tho

Results to date The company has provided TQM services in packaged form for nearly 80 garment companies. Its main customers are: Just Jamie & Paulrich Ltd, Fifth Avenue, Carfax (British), Target (Australian), Garment Company X28, Tien Tien Garment Company.

The company has a powerful team of TQM experts who have COMMENTS graduated from abroad and are supported by foreign experts. The company has achieved a high reputation in its service quality and high customer satisfaction. It has also established a very strong relationship with domestic as well as foreign customers such as England, South Korea and maintained a large number of loyal customers (both domestic and foreign). The company’s future plan is to expand its cooperative relationships on a nation-wide scale.

67 PLANNING AND MARKETING DEPARTMENT (VIETNAM NATIONAL TEXTILE AND GARMENT CORPORATION) GENERAL INFORMATION Address 25 Ba Trieu Str., Hanoi Telephone/Fax Tel: 844 8265897 Fax: 844 8262268 Contact Person and Title Mr. Nguyen Thanh Tung, Expert Address of Subsidiaries N/A Main Services Areas Marketing and Information Services Year Established 1955 (Vinatex was merged between the Textile Department and Garment Department in 4/1995) Legal Form State-owned enterprise Ownership Vietnam National Textile-Garment Corporation Total Number of Staff 10 Number of professional staff 10 Number of support staff 0

MAIN SERVICES · Providing market research services · Providing business and production related information for textile- garment companies · Organizing customer’s conferences · Collecting and processing market information for the garment and fashion design industry. MAIN CUSTOMERS Companies State-owned, private and foreign companies Sectors Textile and garment City/Region Nation-wide

Results to date The Department has achieved significant results since its establishment: organizing annual textile-garment exhibitions, organizing conferences on garment technology and fashion design, & developing international relationships with foreign partners.

COMMENTS The Department has been very successful in promoting marketing and information services among companies in the Garment & Textile industry. The professional team is divided into specialized groups responsible for each sector of the market (both foreign and domestic).

68 C. Production-Related Services

1. Demand and Supply of Production-Related Services

v Demand

5.15 Production related services are a big concern for garment producers in Vietnam. Although most of the garment companies interviewed were unfamiliar with these services, there is a demand for consulting services related to improving production capacity and product quality to assistance with factory layout and production lines.

5.16 Garment companies have a great demand for skilled engineers, technicians and mechanical workers for maintenance services. About 1 worker is needed per 3 lines and one engineer per 10-15 lines for an average garment company. They also require a stable supply of equipment, spare parts, and accessories at a reasonable price.

5.17 Services in quality inspection, quality insurance and management system are in great demand among big garment companies with capacity of 5-10 million products per annum.

v Supply

5.18 There are a number of organizations providing training services in this area to garment companies in Vietnam, eg: courses on garment line design provided by the Faculty of Textile-Garment of Hanoi University of Technology (HUT); and specialized lectures and short courses in production management provided to garment companies by HUT’s faculty of Economics and Management.

5.19 However, higher education institutions do not have training courses for engineers which focus on garment equipment maintenance. Therefore, in garment companies, maintenance services are usually conducted by engineers who are trained in precise mechanical engineering. Garment training schools offer many courses for training mechanical workers but trained workers do not generally meet the requirements of garment companies.

5.20 The supply of equipment, spare parts and accessories is conducted mostly by foreign manufacturers though some local factories provide, in limited numbers, unsophisticated parts and accessories for garment companies.

5.21 Quality management services are usually carried out internally by garment companies both on the production line and after each production stage. The technical and product quality control department of garment companies assume the responsibility for the quality of final products as well for packaging and storage.

5.22 In short, in the coming years, the support organizations in this area must strengthen and improve their services to better satisfy the increasing demands of garment companies.

69 2. Profiles of Service Providers

HOCHIMINH CITY JUKI SERVICE CENTRE

GENERAL INFORMATION Address 14-16 Tran Hung Dao Street, District 1, HCMC Telephone/Fax Tel: 848 836 8881 Fax: 848 836 9987 Contact Person and Title Mr. Pham Van Phuc, Director Address of Subsidiaries G 23C Thanh Cong, Hanoi Main Service Area Providing equipment and maintenance services for garment Year Established companies Legal Form 1995 Ownership State-owned enterprise Total number of staff State-owned Number of professional staff 20 Number of support staff 16 4

MAIN SERVICES · Providing garment machines, equipment and spare parts · Providing maintenance services · Technical consulting

MAIN CUSTOMERS Companies State, private, joint venture and foreign companies Sectors Garment City/Region HCMC, Hanoi and Southern provinces

Results to date The Company has served hundreds of garment companies in Vietnam since its establishment, for example YASUDA Ltd. Co., Wonderful Saigon Garment Ltd. Co., Viet Thang Garment Company, etc. Currently JUKI is one of the most highly respected companies in terms of its products and services’ quality owing to: · Good management skills · Highly-skilled staff.

COMMENTS JUKI is a company specialized in selling machines and equipment, providing maintenance services, and consulting in technical and production management for the garment industry. The company’s success results from the excellent quality of its services and equipment. Furthermore, it has received strong support from technical experts in Japan, South Korea, and Singapore. It has also established a wide network of business relationships with many garment companies in the region.

70 VIET TIEN TUNG SHING SEWING MACHINE CENTRE

GENERAL INFORMATION Address 27-33 Tran Hung Dao St., Dist. 1, HCMC Telephone/Fax Tel : 848 8214166 Fax: 848 8293358 Contact Person and Title Mr. Nguyen Thanh Tan, Deputy Manager. Address of Subsidiaries 9 floor, Hanoi Tungshing Square, 2 Ngo Quyen St., Hoan Kiem Dist., Hanoi City. Tel. 844 8266296/8266297 Fax: 844 8266266 Main Services Areas Providing equipment and accessories Year Established 1985 (Hanoi Branch: 1991) Legal Form Join-venture Ownership Joint venture between Viet Tien and Tung Shing Total Number of Staff 1000 Number of professional staff 900 Number of support staff 100

MAIN SERVICES Providing: · Sewing machines, cutters, pressers, irons. · Accessories · Maintenance services

MAIN CUSTOMERS Companies State-owned, private, joint-venture, 100 percent foreign owned companies. Sectors Garment. City/Region Vietnam, Laos, Cambodia

Results to date The company provides sewing machines, accessories and maintenance services to many garment companies in Vietnam and neighboring countries.

COMMENTS Viet Tien - Tung Shing is one of the leading suppliers in sewing machines and other machines for the garment industry in Vietnam. The centre is currently running as a monopolised distributor for 7 domestic companies and 10 foreign suppliers. Additionally, the centre is providing door-to-door maintenance services and other types of services to satisfy customers’ orders. In addition to the head office in HCMC, the centre has also opened agencies and maintenance workshops in Hanoi, Nha Trang, Hai Phong, and Da Nang.

71 COMMERCIAL AGENT OF LECTRA SYSTEM CO. LTD.

GENERAL INFORMATION Address 2 Le Thanh Tong St., Hoan Kiem Dist., Hanoi Telephone/Fax Tel : 844 8257938/8257940 Fax: 844 8257943 Contact Person and Title Ph.D. Phan Minh Hang Address of Subsidiaries N/A Main Services Areas Providing applicable software programs and training programs Year Established 1996 Legal Form Limited Liability company Ownership FADIN Total Number of Staff 3 Number of professional staff 3 Number of support staff 0

MAIN SERVICES Providing the following services: · Computer aided design and computer aided manufacturing (CAD/CAM) · Training · Maintenance and guarantee services

MAIN CUSTOMERS Companies State-owned and private companies, technical colleges Sectors Textile and garment. City/Region From the North to the Middle of Vietnam (including Da Nang)

Results to date Established in 1996 as a commercial agent of LECTRA SYSTEMS through FADIN, the company provides mainly CAD/CAM products to garment companies, schools, universities and institutes supporting the garment and fashion design industry in Vietnam. The company has provided more than 15 CAD/CAM systems and several training courses for technical staff. Besides, the company has also provided training, consulting and maintenance services for Lectra Systems’ equipment. The company’s potential customers are: Garment Company 10, Garment Company 40, Hung Thinh Garment Company, Hung Yen Garment Company and Nam Dinh Technical Secondary School II.

COMMENTS The company has established a high reputation in after-sale services, including maintenance and guarantees.

72 VIETNAM PRODUCTIVITY CENTRE (VPC)

GENERAL INFORMATION Address Hoang Quoc Viet St., Cau Giay Dist., Hanoi Telephone/Fax Tel : 844 7561548/7561500 Fax: 844 756502 Contact Person and Title Ms. Nguyen Thi Anh Thu, Head of Customer Relation Unit Address of Subsidiaries N/A Main Services Areas Training and consulting Year Established 1997 Legal Form State-owned centre Ownership National Productivity Organisation (NPO) 33 Total Number of Staff 33 Number of professional staff 0 Number of support staff

MAIN SERVICES · Training and consulting in the application of total quality management systems (TQM), including ISO 9000

MAIN CUSTOMERS Companies State-owned, private and JV companies. Sectors Various industrial sectors including garments. City/Region Mainly in the North and in the Middle of Vietnam

Results to date The company has carried out more than 40 short-term training courses (1-4 days), trained more than 1000 trainees and provided consulting services for 14 companies.

Since its two years of establishment, VPC has successfully COMMENTS provided training and consulting services in ISO 9000 for many business sectors in Vietnam. The professional team consists of 33 staff of which 3 are Masters and 28 are engineers and Bachelors. The company has strong customer relationships and its main customers are: Vinatex, Nam Dinh Textile Company, Garment Company 10, Duc Giang Garment Company, Viet Thang Garment Company, 29/3 Garment Company.

73 D. Design Services

1. Demand and Supply of Design Services

v Demand

5.23 Survey results show that garment and pattern design is new to Vietnam and that more than 80 percent of garment companies have not used design services. This is mainly due to the following reasons:

· Most garment companies are processing export goods for foreign partners based on specified designs; · Big companies usually have a design section under their Technical Department comprising experts responsible for making counter samples and studying details of ordered designs. However, most of these experts have not been trained in design and are unable to cope with the increasing demand for design, especially fashion design; · Many companies cannot find suitable partners to supply this service. In fact, this service has just started in Vietnam and service providers are quite new, inexperienced and have not been able to attract customers; · Small and medium garment companies do not have sufficient budgets to pay for this service.

v Supply

5.24 Vietnam Fashion Design Institute (FADIN) is the one of the first organizations specializing in this service. It provides a wide range of services, including studying customer tastes, advising consumers on local and international fashion trends, and designing fashion for garment companies. However, most of the designs created by Vietnamese designers are only of an artistic nature and could hardly be used in garment manufacturing for domestic and foreign markets.

5.25 There are three training organizations specializing in design in Vietnam: (1) Industrial Art University, with about 20 graduates in design and fashion each year, (2) Open University, Faculty of Fashion with about 20 graduates in design each year, (3) Hanoi Technology University, Textile, Garment and Fashion Department with about 30 graduates each year. However, the curricula and training methods of these organizations are not updated and practical enough to satisfy the increasing demands of garment companies.

5.26 In addition, a number of training centers and schools in garment companies have been equipped with modern computer-aided design systems but these systems have not been used efficiently and effectively; they are mostly used for production inside the companies or for teaching purposes.

5.27 In the future, when subcontracting work is gradually replaced with direct export, the demand for home-made designs will increase and to match this demand, suppliers need to increase the quantity of their courses and improve their quality.

74 2. Profiles of Service Providers

VIETNAM FASHION DESIGN INSTITUTE (FADIN)

GENERAL INFORMATION Address 2 Le Thanh Tong St. Hoan Kiem Dist., Hanoi Telephone/Fax Tel : 844 8257314 Fax : 844 8257554 Contact Person and Title Mrs. Pham Thi Xuan - Research Dept. Manager Address of Subsidiaries 41 Chuong Duong St. , Dist. 1, HCM City. Main Service Area Fashion Design, Marketing, Training , Research, Technology Transfer Year Established 1995 Legal From State Owned Company Ownership State Owned Total number of staff 64 (Hanoi : 42; HCMC : 22) Number of professional staff 32 Number of support staff 32

MAIN SERVICES · Carrying out research on fashion design · Marketing textile materials and garment accessories for new fashions · Providing information on fashion design · Co-operating with the Technical Schools and Colleges in fashion design and fashion technology training · Participating in the preparation of a development strategy for the garment industry for the period 2000 - 2010

MAIN CUSTOMERS Companies Local private and state owned companies, primary and secondary schools. Sectors Garment companies and schools City/ Region Hanoi, HCMC, Danang, Hue and other provinces.

Results to date Since its establishment in 1995, the Institute has served about 30 companies and organizations. It has carried out 6 research projects, including fashion materials, fashion design for primary and secondary schools, design of labor protection clothes, using local fabrics for designing ethnic minority fashion, etc. In cooperation with other institutes and colleges, it has also provided training courses in fashion design and garment technology.

COMMENTS Before 1995, the predecessor of FADIN was the Research Centre of garment technology. Since 1995, it has expanded its activities to various fields, including fashion design, marketing, training and technology transfer. It has established itself as one of the biggest companies specializing in fashion design in Vietnam.

75 FADIN FASHION DESIGN INSTITUTE (HCMC BRANCH)

GENERAL INFORMATION Address 41 Ben Chuong Duong, Dist. 1, HCMC Telephone/Fax Tel: 848 8297226 Fax: 848 8213245 Contact Person and Title Ms. Dang Thi Minh Hanh, Managing Director Address of Subsidiaries 2 Le Thanh Tong Str., Hoan Kiem Dist., Hanoi Main Services Areas Fashion Design Year Established 1996 Legal Form State-owned enterprise Ownership State-owned Total Number of Staff 24 Number of professional staff 22 Number of support staff 2

MAIN SERVICES · Fashion Design for garment products · Fashion Training MAIN CUSTOMERS Companies Stated-owned and private companies Sectors Garment City/Region Ho Chi Minh City and Hanoi

Results to date Since its establishment in 1996, the company has served many Garment Companies such as: Sai Gon Garment Company 3, Viet Tien Garment Company, Nha Be Garment Company, Nam Tien Garment Export Company.

COMMENTS As a fashion design institute, FADIN has been very successful in providing fashion design services for garment companies. The styles the company has designed have become very popular in Vietnam. FADIN has also established a very strong relationship with customers and has organized many customer conferences. The company has a very professional team of young, creative and enthusiastic fashion designers. In the near future, FADIN plans to conduct training courses on fashion design.

76 COMMERCIAL AGENT OF LECTRA SYSTEM CO. LTD.

GENERAL INFORMATION Address 2 Le Thanh Tong St., Hoan Kiem Dist., Hanoi Telephone/Fax Tel : 844 8257938/8257940 Fax: 844 8257943 Contact Person and Title Ph.D. Phan Minh Hang Address of Subsidiaries N/A Main Services Areas Providing applicable software programs and training programs Year Established 1996 Legal Form Limited Liability company Ownership FADIN Total Number of Staff 3 Number of professional staff 3 Number of support staff 0

MAIN SERVICES Providing the following services: · Computer aided design and computer aided manufacturing (CAD/CAM) · Training · Maintenance and guarantee services

MAIN CUSTOMERS Companies State-owned and private companies, technical colleges Sectors Textile and garment. City/Region From the North to the Middle of Vietnam (including Da Nang)

Results to date Established in 1996 as a commercial agent of LECTRA SYSTEMS through FADIN, the company has provided mainly CAD/CAM products to garment companies, schools, universities and institutes supporting the garment and fashion design industry in Vietnam. The company has provided more than 15 CAD/CAM systems and several training courses for technical staff. Besides, the company has also provided training, consulting and maintenance services for Lectra Systems’ equipment. The company’s potential customers are: Garment Company 10, Garment Company 40, Hung Thinh Garment Company, Hung Yen Garment Company and Nam Dinh Technical Secondary School II.

COMMENTS The company has established a high reputation in after-sale services, including maintenance and guarantees.

77 FACULTY OF FASHION DESIGN (HANOI OPEN UNIVERSITY)

GENERAL INFORMATION Address B1, Bach Khoa ward, Hai Ba Trung Dist., Hanoi Telephone/Fax Tel: 84-4-8693786 Fax: 84-4-691587 Contact Person and Title Mr. Nguyen Ngoc Dung Address of Subsidiaries N/A Main Services Areas Training Year Established 1993 Legal Form State-owned university Ownership Ministry of Education & Training Total Number of Staff 10 Number of professional staff 10 Number of support staff 0

MAIN SERVICES Training undergraduates in architecture, industrial art and fashion design

MAIN CUSTOMERS Companies State-owned, private, joint-venture, foreign companies Sectors Mainly garment and fashion City/Region Hanoi

Results to date The Faculty has produced 15 undergraduates since 1993 who are currently working for the textile-garment industry in Vietnam.

COMMENTS The Faculty is famous for its distance-training programs. In co- operation with other universities and local training centres, the Faculty has been offering local training programs such as programs at Hai Phong Evening University.

78

FACULTY OF TEXTILE, GARMENT & FASHION DESIGN (HANOI UNIVERSITY OF TECHNOLOGY)

GENERAL INFORMATION Address Dai Co Viet Road, Block C5-217, Hai Ba Trung Dist., Hanoi Telephone/Fax Tel : 844 8692401 Fax: 844 8696702 Contact Person and Title Dr. Tran Minh Nam, Dean of Faculty Main Services Areas Education &Training, Research, Technology Transfer and Consulting 1956 Year Established State-owned university Legal Form Under Ministry of Education & Training Ownership 43 Total Number of Staff 41 Number of professional staff 2 Number of support staff MAIN SERVICES · Undergraduate programs (5 years) specialized in Textile, Garment and Fashion design. · Technical college programs (3 years) specialized in Garment · Postgraduate programs (Master and Ph.D) in Garment and Textile Technology · Conducting research on garment technology, fashion design, finishing technology, new materials, spinning, weaving, knitting

MAIN CUSTOMERS Companies State-owned and private companies, JVs, 100 percent foreign-owned companies, research institutes, technical colleges. Sectors Garment, textile, fashion design, spinning, knitting, weaving City/Region Nation-wide Results to date The Faculty has trained more than 2000 professionals, engineers and technical bachelors of which 70 are specialized in garment & fashion design, 240 are garment bachelors, 9 M.Scs and 2 Ph.Ds. The Faculty has also conducted successful research on vegetable fibres (VIE/86/010) for UNDP during 1987-1991, 3 training courses in design techniques for UNIDO (1998) and a project in natural dyestuffs for OXFAM Hong Kong - Quebec, etc. COMMENTS The Faculty of Textile, Garment and Fashion Design is the first and biggest training organization specialized in textile, garment, & fashion design in Vietnam. Moreover, the Faculty has also organized training programs at technical college level and short-term training courses for local garment enterprises. The Faculty’s teaching staff consists of 43 professionals including 1 professor, 2 associate professors, 15 Ph.Ds. and 5 Masters. The garment and fashion design section under the Faculty consists of 13 staff of which 2 are Ph.D. trained abroad, 3 Masters, 7 engineers and 1 technician at secondary level. The Faculty’s core competencies lie in its very strong relationships with Government organizations such as the Ministry of Industry, Vietnam National Textile & Garment Corporation, People’s Committees of different cities and provinces, research institutes, etc. and with garment-textile enterprises on a nationwide scale. International relationships with foreign universities have also increasingly developed.

79 E. Information Services

1. Demand and Supply of Information Services

v Demand

5.28 Findings from the survey show that the demand of garment companies for information is high but their use of this service is still limited. Normally, when they need information on topics such as markets, price, design, finance policy, tax policy, etc. they collect this type of information from consulting experts in concerned authorities, for example the Ministry of Finance, Department of Customs, Ministry of Trade, and Vinatex or through customer conferences, exhibitions or trade fairs. The major users of this service are usually big state- owned and joint venture companies located in big cities like Hanoi and Ho Chi Minh City. The main reasons for this situation are:

· Most garment companies are subcontractors for foreign companies; · Garment companies, especially small and medium companies cannot afford support services, including information; · Most of them lack information about information services and service providers.

v Supply

5.29 There are only a few organizations providing this kind of service for garment companies in Vietnam. Apart from a few private companies, the Information Department of the Textile-Garment Economic Technological Institute and the Marketing and Information Department of VINATEX are the two biggest information service providers in the garment sector. In addition, the information centres of the Ministry of Trade and the Ministry of Industry provide information to garment companies. However, the information provided by these organizations is still limited, covering only some fields such as science and technology. Their international relations are also restricted, making it difficult for them to collect and update information about foreign markets and partners. Other sources of information are usually of a secondary nature like libraries, textile-garment bulletins, trade journals, books, periodicals, newspapers, etc. The reasons for the small quantity of providers of this service are as follows:

· Garment companies’ use of information services is not high; · These service organizations lack capital, skills and facilities.

5.30 In conclusion, it can be said that although the demand for information services among garment companies is high and is expected to increase, the supply of these services is not sufficient, neither in quantity nor quality.

80 2. Profiles of Service Providers

ANDI COMPANY LTD

GENERAL INFORMATION Address 9 Pham Ngu Lao St., Dist. 1, HCMC Telephone/Fax Tel: 848 8211 138 Fax: 848 8211223 Contact Person and Title Mr. Pham Minh Tu, Director Address of Subsidiaries N/A Main Services Areas Information services Year Established 1993 Legal Form Limited Liability company Ownership Private Total Number of Staff 12 Number of professional staff 8 Number of support staff 4

MAIN SERVICES · Providing market, economic and trade information · Publishing trade magazines and papers

MAIN CUSTOMERS Companies State-owned, private, and foreign invested companies Sectors All sectors, including garment City/Region Ho Chi Minh City

Results to date The company has served hundreds of clients, both domestic and foreign companies. The company is well-known for its high quality services. The company’s clients are increasing and its main customers are Motorola, American Rice, Novartist and so on.

COMMENTS ANDI is one of the first companies to provide secondary information for clients in the southern region. The company’s core competencies are a strong team of professional staff (2 MBAs, 1 Master’s of Computer Science, and 3 computer-science engineers). It is also supported by a strong team of associates and state-of-the-art equipment. To cope with the risk of decreasing numbers of clients due to widening internet application, the company not only provides secondary information but also analyses collected information and advises clients on processing information.

81 HCMC EXHIBITION AND INFORMATION CENTRE

GENERAL INFORMATION Address 97 Pho Duc Chinh St., Dist. 1, HCMC Telephone/Fax Tel: 848 8210 012 Fax: 848 8296 502 Contact Person and Title Mr. Nguyen Van Minh, Administration Officer Address of Subsidiaries N/A Main Services Areas Providing information, marketing, and exhibition services. Year Established 1990 Legal Form State-owned enterprise Ownership State-owned Total Number of Staff 96 Number of professional staff 81 Number of support staff 15

MAIN SERVICES · Organizing exhibitions, trade fairs, customer’s conferences · Advising and conducting advertising services · Providing information and organizing international trade fairs

MAIN CUSTOMERS Companies State-owned, private, and foreign companies Sectors Garment City/Region Ho Chi Minh City and Southern region

Results to date The centre has served hundreds of clients, both domestic and foreign companies. It has been organizing exhibitions and customers’ conferences annually. The centre has a good relationship with international advertising companies and international exhibition centres. Its main customers are Viet Tien Co., Binh Minh Co., Truong Giang Co., etc.

COMMENTS The centre has established itself as one of the best known organizations in HCMC and Southern region. Aided by the HCMC Culture and Information Office, the centre is well equipped and has good operating conditions. Good relationships with domestic and foreign clients is also another advantage. However, the centre needs further investment in its infrastructure and equipment, improved skills of its management staff, and widening international co- operative relations.

82 PLANNING AND MARKETING DEPARTMENT (VIETNAM NATIONAL TEXTILE AND GARMENT CORPORATION)

GENERAL INFORMATION Address 25 Ba Trieu Str., Hanoi Telephone/Fax Tel: 844 8265897 Fax: 844 8262268 Contact Person and Title Mr. Nguyen Thanh Tung, Expert Address of Subsidiaries N/A Main Services Areas Marketing and Information Services Year Established 1955 (Vinatex was merged by the Textile Department and Garment Department in 4/1995) Legal Form State-owned enterprise Ownership Vietnam National Textile-Garment Corporation Total Number of Staff 10 Number of professional staff 10 Number of support staff 0

MAIN SERVICES · Providing market research services · Providing business and production related information for textile- garment companies · Organizing customer’s conferences · Collecting and processing market information for the garment and fashion design industry. MAIN CUSTOMERS Companies State-owned, private and foreign companies Sectors Textile and garment City/Region Nation-wide

Results to date The Department has had significant results since its establishment: organizing annual textile-garment exhibitions, organizing conferences on garment technology and fashion design, and developing international relationships with foreign partners.

COMMENTS The Department has been very successful in promoting marketing and information services among companies in the Garment & Textile industry. The professional team is divided into specialized groups responsible for each sector of the market (both foreign and domestic).

83 THE TEXTILE- GARMENT ECONOMIC AND TECHNICAL RESEARCH INSTITUTE

GENERAL INFORMATION Address 458 Minh Khai St. Hai Ba Trung Dist., Hanoi Telephone/Fax Tel : 844 8624025 Fax : 844 8622867 Contact Person and Title Nguyen Van Thong - Vice Director Address of Subsidiaries 345/128A Tran Hung Dao Str., Dist. 1 - HCM City. Main Service Area Scientific and Technological Research Technology Transfer Training Year Established 1969 Legal From State-Owned organisation Ownership Under Vietnam Textile-Garment Corporation. Total number of staff 125 Number of professional staff 98 Number of support staff 27

MAIN SERVICES · Transfer of textile and garment technology · Conducts scientific research activities, re: textile-garment materials, new technology, and new products · Undertakes experimental production of new textile-garment products from silk, cotton and synthetic yarns. · Establishes standards and methods of testing of textile-garment materials · Quality control and testing · Publishes information and documents related to textiles and garments · Provides short-term training courses for textiles-garment technical staff.

MAIN CUSTOMERS Companies Private and state owned, small and medium enterprises Sectors Textile, garment. City/ Region Hanoi, HCM City and other provinces in the North, the Centre and the South of Vietnam.

Results to date The Institute has served more than 100 clients so far. It has completed 15 national research projects, 2 projects supported by UNDP, and a number of contracted research projects for textile-garment companies.

In addition, it has published monthly “Vietnam Textile-Garment Bulletin“”

COMMENTS The Institute is one of the biggest research organisations in the field of textiles and garments in Vietnam.

84

F. Advocacy Services

1. Demand and Supply of Advocacy Services

v Demand

5.31 Advocacy services are not very popular among garment manufacturers. However, the demand for this service exists as can be seen from the establishment of garment associations. A great number of garment companies in HCMC have participated in the HCMC Textile- Garment & Embroidery Association and their numbers are growing. For instance, the number of members of the HCMC Textile-Garment & Embroidery Association has increased from 82 to 187.

5.32 In addition to associations located in Hanoi and HCMC, a number of associations have been recently established in other cities and provinces such as the Garment Arts Club in Hai Phong. The demand to join these organizations has increased, especially for fashion associations and clubs.

v Supply

5.33 Although advocacy services are still not very popular among garment companies, a number of support units have been set up in recent years. A typical example is the textile- garment associations in Hanoi, HCMC and Hai Phong. A number of garment clubs have also been established, for instance, the club of young women directors in Hanoi, which supports small and medium sized garment companies in marketing, production management, business transactions and so on.

5.34 In addition, law consulting companies and lawyer’s associations are providing legal services on production and business activities for many sectors, including the garment sector.

5.35 Also, findings from the survey show that advocacy services in the garment industry are emerging faster in the South, in line with the increasing number of garment companies, especially private ones in HCMC and the surrounding provinces. Associations, clubs and law consulting companies, all provide advocacy support to garment companies in HCMC.

5.36 In short, it is necessary to continue to strengthen advocacy services for garment companies through existing and new associations, clubs and forums.

85

2. Profiles of Service Providers

LEGAL INFORMATION CONSULTING CENTRE

GENERAL INFORMATION Address 208 Dien Bien Phu, Dist. 3, HCMC Telephone/Fax Tel: 848 8203247 Fax: 848 8202402 Contact Person and Title Mr. Tran Minh Tien, Office Manager Address of Subsidiaries Da Nang City Main Services Areas Legal Consulting Year Established 1996 Legal Form State-owned enterprise Ownership State-owned Total Number of Staff 30 Number of professional staff 24 Number of support staff 6

· Providing consulting services on Investment Law, MAIN SERVICES Corporate Law, Labor Law, International Business, Tax, Production Management. · Providing information services related to Government policies.

MAIN CUSTOMERS Companies Stated-owned and private companies, multi-nationals, JVs, 100 percent foreign-owned companies Sectors Manufacturing, including Garments City/Region HCMC and Southern provinces

Results to date Since its establishment, to date the centre has served about 200 companies such as: Doc Lap Garment Company, Phuong Dong Garment Company, Nha Be Garment Company, Viet Thang Textile Company, Hiep Hung Shoes Company.

COMMENTS Though it has been recently established, the centre has shown significant results in the field of legal consulting. It has provided valuable information to a great number of customers. It has a team of foreign trained qualified and experienced lawyers. The centre also publishes a weekly journal: Legal Data Bank Information, which provides useful information regarding Government laws and policies. In the near future, the centre plans to expand its business range to other consulting activities for garment companies.

86 HO CHI MINH CITY TEXTILE-GARMENT-EMBROIDERY ASSOCIATION

GENERAL INFORMATION Address 51 Ben Chuong Duong Str., Dist. 1, HCMC Telephone/Fax Tel : 848 8293389/8293390 Contact Person and Title Mr. Nguyen Duc Hoan-President Address of Subsidiaries N/A Main Services Areas Legal services, Information, Short Term Training, International Relations, Loan Services Year Established 1987 Legal Form Non-Government Organization Ownership Vietnam Chamber of Commerce and Industry Total Number of Staff 184 member units Number of professional staff Number of support staff

· Protecting and representing interests and legal rights for all MAIN SERVICES members of the association. · Providing legal information and government policies · Legal consulting regarding international business, tax, labor law, customs · Providing financial assistance to members of textile-garment companies · Organizing short term courses to improve qualifications for member companies · Organizing monthly meetings for member enterprises.

MAIN CUSTOMERS Companies State-owned and private companies. Sectors Textile, garment, embroidery City/Region HCMC and Southern provinces

Results to date The members of the Association has increased from 82 initially to 184 in 1997, which are mostly textile-garment companies, namely: Tan Phu Cuong Garment Company, Sinh Viet Garment Company, Gia Dinh Textile-Garment Company, Sai Gon I, II, III companies, etc. The Association has helped a great number of textile/garment companies to improve their staff’s qualifications and management skills. It has also assisted many companies in introducing their products into foreign markets like Sweden, Thailand, South Korea, USA, Taiwan and Japan.

COMMENTS Focusing on the textile-garment industry, the association has gained a good understanding of the laws, policies and issues related to the industry. The core competence of the association lies in a team of experienced and qualified experts and lawyers. Many textile-garment companies are planning to join the Association. In the near future, the association is going to expand its operations and improve its overall consulting quality.

87 HAIPHONG GARMENT ART CLUB

GENERAL INFORMATION Address 18 Dinh Tien Hoang St., Hai Phong Telephone/Fax Tel: 8431 823809 Contact Person and Title Mr. Quang Nam, Club Manager Address of Subsidiaries N/A Main Services Areas Providing information and advocacy services Year Established 1998 Legal Form Social Association Ownership Hai Phong People’s Committee Total Number of Staff 50 Number of professional staff 40 Number of support staff 10

MAIN SERVICES Organizing customer conferences, fashion shows & meetings of garment enterprises and fashion designers.

MAIN CUSTOMERS Companies State-owned, private, joint-venture companies Sectors Garment City/Region Haiphong

Results to date Since its establishment, the club has organized 1 customer conference and 3 fashion shows to support domestic fashion designers and garment companies.

COMMENTS The Club is a social association of garment companies as well as individuals who are interested in the garment industry. It is one of 21 clubs of the Hai Phong People’s Committee. The Club has supported many garment enterprises promoting their products through organizing successful fashion shows. The Club is going to open short-term training courses and to increase the number of customer conferences in the coming years.

88 HAIPHONG GARMENT ASSOCIATION

GENERAL INFORMATION Address 17 Tran Hung Dao Str., Hai Phong Telephone/Fax Tel: 84 31 847005 Fax: 8431 845149 Contact Person and Title Mr. To Hoac, President Address of Subsidiaries N/A Main Services Areas Advocacy services Year Established 1988 Legal Form Social Association Ownership Hai Phong Scientific and Technical Union Total Number of Staff 25 Number of professional staff 15 Number of support staff 10

MAIN SERVICES Legally supporting garment enterprises and individuals

MAIN CUSTOMERS Companies State-owned, private, joint-venture companies Sectors Garment sector City/Region Hai Phong

Results to date Supporting and promoting garment organisations and enterprises in their production and business activities.

89 G. Financial Services

1. Demand and Supply of Financial Services

v Demand

5.37 Currently, the major financial services used by garment companies, including state- owned and private, are loan and auditing services. Loans are mainly provided by commercial banks while auditing is conducted internally. In order to expand business activities, garment manufacturers are in need of the following financial services:

· Loans: Garment companies usually have a lack of capital, however, they can only get short term loans from banks. This makes it difficult for them to operate, expand their production facilities and pay interest. They have great demand for long term loans from banks and financial companies; · Auditing: At present, auditing in garment companies is implemented internally. However, external auditing is expected to be in demand in the future; · Leasing service: Most facilities and equipment in garment companies has been purchased from domestic or foreign suppliers. However, the purchase cost is quite high, especially for private SMEs. Thus, some garment companies have opted for leasing instead. Therefore, leasing is expected to be in high demand by garment companies.

v Supply

5.38 Commercial banks: Provide loan services to garment companies. Major providers are: Vietcombank, Incombank, etc.

· Financial Textile-Garment Company: established in 1996 with the main function of providing loan services. Its major clients are state-owned garment companies under Vinatex and some private garment companies. The company has provided its clients with about $300.000 or about 15 percent of the company’s total equity. Currently, the company plans to expand its activities as a financial intermediary to support garment manufacturers.

· Auditing companies: as mentioned above, in garment companies, the auditing process is implemented internally. Nevertheless, with the appearance of auditing companies (domestic and foreign), providing high quality services, the use of external auditors will increase among garment companies.

5.39 Although the use of financial services in the garment industry is not greatly used, the demand for this service is quite high. In this context, financial service providers should be improved to satisfy the requirements of garment companies. The recent promulgation of a number of new policies and regulations by the Government will create opportunities for financial service providers to engage more actively in Vietnam’s garment sector.

90 2. Profiles of Service Providers

TEXTILE-GARMENT FINANCIAL COMPANY

GENERAL INFORMATION Address 41 Ben Chuong Duong Street, District 1, HCMC Telephone/Fax Tel: 84 8 823 1768 Fax: 848 821 6357 Contact Person and Title Mr. Thieu Si Trong, Vice Director Address of Subsidiaries 32 Trang Tien, Hanoi (Tel: 844 8257413) Main Service Area Financial Services Year Established 1997 Legal Form State-owned Enterprise Ownership State-owned Total number of staff 25 Number of professional staff 20 Number of support staff 5

MAIN SERVICES Making loans to textile and garment companies

MAIN CUSTOMERS Companies Domestic companies, including companies under Vietnam National Textile Garment Corporation Sectors Garment, textile City/Region HCMC, Hanoi and Southern provinces

Results to date The Company has extended loans to twenty domestic enterprises since its establishment, lending up to VND 25 billion.

COMMENTS As a newly established company, Textile Garment Financial Company has been focusing on extending loans to textile and garment companies. This specialization strategy facilitates the company in evaluating its customers, speeding up its loan services, and improving management quality.

91 H. Research Services

1. Demand and Supply of Research Services

v Demand

5.40 From the results of the survey, it can be said that the demand for research service (in design, material, technology, etc.) in the garment industry is not very high. Some of the reasons are as follows:

· Most garment companies are under subcontracts, using designs provided by foreign partners; · Garment materials, spare parts and auxiliaries are mostly imported; · The garment companies still do not see the important role of research and development.

5.41 However, it is anticipated that the demand for research services in the garment industry will rapidly increase in the coming years when the market becomes more competitive and subcontracting is gradually replaced with direct export. Specifically, garment companies will need to research new designs, be innovative in using technology and manage their operations more effectively to improve productivity and lower product prices.

v Supply

5.42 The main kinds of research services provided for garment companies are in: (1) garment technology, (2) garment materials, (3) design, (4) others depending on the requirements of customers or objectives of Government projects.

5.43 However, findings from the survey show that research services are not satisfying the demands of the garment industry. The following are the main reasons for this situation:

· There are a limited number of providers in this market. Most of them are newly established, inexperienced, and lack professional research experts. Also, their capital and technological capacities are limited; · Demand for and profit from this service are not attractive enough; · Research programs funded by the Government are not effective and practical enough to apply in production.

5.44 Up to now, the Economic and Technological Institute of Textile-Garments, Fadin Fashion Design Institute and the Textile-Garment Technology Faculty of Hanoi University of Technology are the main organizations supplying this service for the garment industry.

5.45 It can be concluded that research services still do not satisfy the development demand of the garment industry and should be strengthened in the coming years.

92 2. Profiles of Service Providers

VIETNAM FASHION DESIGN INSTITUTE (FADIN)

GENERAL INFORMATION Address 2 Le Thanh Tong St. Hoan Kiem Dist., Hanoi Telephone/Fax Tel : 844 8257314 Fax : 844 8257554 Contact Person and Title Mrs. Pham Thi Xuan - Research Dept. Manager Address of Subsidiaries 41 Chuong Duong St. - Dist. 1 - HCM City. Main Service Area Fashion Design, Marketing, Training , Research, Technology Transfer Year Established 1995 Legal From State Owned Company Ownership State Owned Total number of staff 64 (Hanoi : 42; HCMC : 22) Number of professional staff 32 Number of support staff 32

MAIN SERVICES · Carrying out research on fashion design · Marketing textile materials and garment accessories for new fashions · Providing information on fashion design · Co-operating with the Technical Schools and Colleges in fashion design and fashion technology training · Participating in the preparation of the development strategy of garment industry for the period 2000 - 2010

MAIN CUSTOMERS Companies Local private and state owned companies, primary and secondary schools. Sectors Garment companies and schools City/ Region Hanoi, HCMC, Danang, Hue and other provinces.

Results to date Since its establishment in 1995, the Institute has served about 30 companies and organisations. It has carried out 6 research projects, on subjects such as: fashion materials, fashion design for primary and secondary schools, design of labor protection clothes, using local fabrics for designing ethnic minority fashion, etc. In cooperation with other institutes and colleges, it has also provided training courses in fashion design and garment technology.

COMMENTS Before 1995, the predecessor of FADIN was the Research Centre of garment technology. Since 1995, it has expanded its activities to various fields, including fashion design, marketing, training and technology transfer. It has established itself as one of the biggest companies specializing in fashion design in Vietnam.

93 FADIN FASHION DESIGN INSTITUTE (HCMC BRANCH)

GENERAL INFORMATION Address 41 Ben Chuong Duong, Dist. 1, HCMC Telephone/Fax Tel: 848 8297226 Fax: 848 8213245 Contact Person and Title Ms. Dang Thi Minh Hanh, Managing Director Address of Subsidiaries 2 Le Thanh Tong Str., Hoan Kiem Dist., Hanoi Main Services Areas Fashion Design Year Established 1996 Legal Form State-owned enterprise Ownership State-owned Total Number of Staff 24 Number of professional staff 22 Number of support staff 2 MAIN SERVICES · Fashion Design for garments · Fashion Training MAIN CUSTOMERS Companies Stated-owned and private companies Sectors Garment City/Region Ho Chi Minh City and Hanoi

Results to date Since its establishment in 1996, the company has served many Garment Companies such as: Sai Gon Garment Company 3, Viet Tien Garment Company, Nha Be Garment Company, Nam Tien Garment Export Company.

COMMENTS As a fashion design institute, FADIN has been very successful in providing fashion design services for garment companies. The styles the company have designed have become very popular in Vietnam. FADIN has also established very strong relationships with customers and has organized many customer conferences. The company has a very professional team of young, creative and enthusiastic fashion designers. In the near future, FADIN plans to conduct training services on fashion design.

94 THE TEXTILE- GARMENT ECONOMIC AND TECHNICAL RESEARCH INSTITUTE

GENERAL INFORMATION Address 458 Minh Khai St. Hai Ba Trung Dist., Hanoi Telephone/Fax Tel : 844 8624025 Fax : 844 8622867 Contact Person and Title Nguyen Van Thong - Vice Director Address of Subsidiaries 345/128A Tran Hung Dao Str., Dist. 1 - HCM City. Main Service Area Scientific and Technological Research Technology Transfer Training Year Established 1969 Legal From State-Owned organisation Ownership Under Vietnam Textile-Garment Corporation. Total number of staff 125 Number of professional staff 98 Number of support staff 27

MAIN SERVICES · Transfer of textile and garment technology · Conducts scientific research activities, re: textile-garment materials, new technology, and new products · Undertakes experimental production of new textile-garment products from silk, cotton and synthetic yarns. · Establishes standards and methods of testing of textile-garment materials · Quality control and testing · Publishes information and documents related to textiles and garments · Provides short-term training courses for textiles-garment technical staff.

MAIN CUSTOMERS Companies Private and state owned, small and medium enterprises Sectors Textile, garment. City/ Region Hanoi, HCM City and other provinces in the North, the Centre and the South of Vietnam.

Results to date The Institute has served more than 100 clients so far. It has completed 15 national research projects, 2 projects supported by UNDP, and a number of contracted research projects for textile-garment companies.

In addition, it has published the monthly "Vietnam Textile-Garment Bulletin"

COMMENTS The Institute is one of the biggest research organisations in the field of textiles and garments in Vietnam.

95 MARKET RESEARCH CENTRE (CESAIS)

GENERAL INFORMATION Address 17 Pham Ngoc Thach Str., Dist. 3, HCMC Telephone/Fax Tel : 848 8231589/8231590 Fax : 848 8231591 Contact Person and Title Ms. Pham Ngoc Huong, Manager. Address of Subsidiaries N/A Main Services Areas Market Research Year Established 1993 Legal Form State-owned Research Institute Ownership Under the Economics University in HCMC Total Number of Staff 17 Number of professional staff 15 Number of support staff 2

· Market Research MAIN SERVICES · Economic Research · Pre-feasibility and feasibility studies for investment projects · Training in market research and business management.

MAIN CUSTOMERS Companies JV, 100 percent foreign, and local companies (state-owned and private), limited liability companies. Sectors Manufacturing, including garment City/Region HCMC

Results to date The company has served hundreds of foreign and domestic clients. Its main customers are: Pepsi Cola, EXOTISSIMO, VISO Powder Company.

COMMENTS As a research institute belonging to HCMC University of Economics, CESAIS was the first licensed market research firm in Vietnam. Since its establishment, the centre has provided a wide variety of services, including research, training, etc. The centre has a strong team of foreign trained highly-qualified and experienced researchers and has gained a good reputation among its customers.

96 FACULTY OF TEXTILE, GARMENT & FASHION DESIGN (HANOI UNIVERSITY OF TECHNOLOGY)

GENERAL INFORMATION Address Dai Co Viet Road, Block C5-217, Hai Ba Trung Dist., Hanoi Telephone/Fax Tel : 844 8692401 Fax: 844 8696702 Contact Person and Title Tran Minh Nam, Dean of Faculty Main Services Areas Education &Training, Research, Technology Transfer and Consulting 1956 Year Established State-owned university Legal Form Under Ministry of Education & Training Ownership 43 Total Number of Staff 41 Number of professional staff 2 Number of support staff MAIN SERVICES · Undergraduate programs (5 years) specialized in Textile, Garment and Fashion design. · Technical college programs (3 years) specialized in Garment · Conducting research on garment technology, fashion design, finishing technology, new materials, spinning, weaving, knitting · Postgraduate programs (Master and PhD) in Garment and Textile. Technology

MAIN CUSTOMERS Companies State-owned and private companies, JVs, 100 percent foreign-owned companies, research institutes, technical colleges. Sectors Garment, textile, fashion design, spinning, knitting, weaving City/Region Nation-wide Results to date The Faculty has trained more than 2000 professionals, engineers and technical bachelors of which 70 are specialized in garment & fashion design, 240 are garment bachelors, 9 M.Scs and 2 Ph.Ds. The Faculty has also conducted successful research on vegetable fibres (VIE/86/010) for UNDP during 1987-1991, two other projects for UNDP (VIE/86/014 & VIE/86/015), 3 training courses in design techniques for UNIDO (1998) and a project in natural dyestuff for OXFAM Hong Kong - Quebec. COMMENTS The Faculty of Textile, Garment and Fashion Design is the first and biggest training organisation specialized in textile, garment & fashion design in Vietnam. Moreover, the faculty has also organized training programs at technical college level and short-term training courses for local garment enterprises. The faculty’s teaching staff has 43 professionals including 1 professor, 2 associate professors, 15 Ph.Ds. and 5 masters. The garment and fashion design section under the faculty consists of 13 staff of which 2 are Ph.D. trained abroad, 3 masters, 7 engineers and 1 technician at secondary level. The faculty’s core competencies lie in its very strong relationships with Government organisations such as the Ministry of Industry, Vietnam National Textile & Garment Corporation, People’s Committees of different cities and provinces, research institutes, etc., and with garment-textile enterprises on a nationwide scale. International relationships with foreign universities has also increasingly developed.

97 I. Procurement Services

1. Demand and Supply of Procurement Services

v Demand

5.46 Most of the garment companies interviewed agree that procurement services are very necessary and they all have a demand for a stable and reliable supply of machines, equipment, spare parts and accessories. However, most of the garment companies have to depend on foreign suppliers, since products provided by domestic suppliers do not satisfy the requirements of garment companies producing for export, especially for high quality garments. Garment companies also have demand for garment accessories, for example, zipper, button, thread, labels. They need to be high quality and delivered in a timely fashion.

v Supply

5.47 The supply of garment equipment is mainly fulfilled by foreign companies through their representative offices in Vietnam located in Hanoi and Ho Chi Minh City like Juki, Brother (Japan), Samwon, Kolon, Tuna Sima (Korea) and Tung Shing (Hong Kong) or through trading companies, which act as intermediaries. These companies also provide spare parts and accessories for their equipment.

· Fabrics are either supplied by foreign partners in subcontracts or purchased by Vietnamese garment manufacturers. Home-made fabrics only satisfy 20 percent of the demand for the export garment industry.

· Garment accessories are supplied by joint ventures and wholly foreign-owned companies. There are three PE padding manufacturers - one in the North and two in the South, two interlining manufacturers in the South, two thread manufacturers, and some other manufacturers of buttons, zippers, and labels.

· Spare parts are supplied mainly by foreign equipment manufacturers and partly by local factories. There are 3 spare part manufacturers, one in the North and two in the South. However, the product quality of local factories cannot satisfy the demand of garment companies so most of the sophisticated spare parts still have to be imported.

5.48 In the coming years, the garment industry needs to supply high quality fabrics, accessories and spare parts for production for both domestic and export markets. The percentage of home-made fabrics is estimated to increase to 40 percent to satisfy the demand of garment companies. In short, to satisfy the increasing demand for procurement services in Vietnam, domestic suppliers need to increase both in quantity and quality.

98 2. Profiles of Service Providers

HOCHIMINH CITY JUKI SERVICE CENTRE

GENERAL INFORMATION Address 14-16 Tran Hung Dao Street, District 1, HCMC Telephone/Fax Tel: 848 836 8881 Fax: 848 836 9399 Contact Person and Title Mr. Pham Van Phuc, Director Address of Subsidiaries G 23C Thanh Cong, Hanoi Main Service Area Providing garment equipment and maintenance services Year Established 1995 Legal Form State-owned enterprise Ownership State-owned Total number of staff 20 Number of professional staff 16 Number of support staff 4

MAIN SERVICES · Providing garment machines, equipment and spare parts · Providing maintenance services · Technical consulting

MAIN CUSTOMERS Companies State, private, joint venture and foreign companies Sectors Garment City/Region HCMC, Hanoi and Southern provinces

Results to date The Company has served hundreds of garment companies in Vietnam since its establishment, for example YASUDA Ltd. Co., Wonderful Saigon Garment Ltd. Co., Viet Thang Garment Company, etc. Currently JUKI is one of the most highly respected companies in terms of its products and service quality in the market thanks to its: · Good management skills & · Highly-skilled staff.

COMMENTS JUKI is a company specialized in selling machines and equipment, providing maintenance services, and providing consulting in technical and production management for the garment industry. The company’s success results from the excellent quality of its services and equipment. Furthermore, it has received strong support from technical experts in Japan, South Korea, and Singapore. It has also established a wide network of business relationships with many garment companies in the region.

99 HANOI EVC POLYESTER PADDING MANUFACTURING AND TRADING J.V. COMPANY LTD.

GENERAL INFORMATION Address Bo Str., Sai Dong - Gia Lam - Hanoi Telephone/Fax Tel : 844 8276929/8276930 Fax: 8276933 Contact Person and Title Mr. Nguyen Van Hung - Director Main Service Area Manufacturing polyester padding Year Established 1993 Legal Form Joint Venture Company Ownership Joint Venture Total number of staff 34 Number of professional staff 14 Number of support staff 20

MAIN SERVICES Manufacturing and selling Polyester Padding to garment companies

MAIN CUSTOMERS Companies JVs, 100 percent foreign-owned, local private and state-owned. Sectors Garment City/ Region Ha Tinh and other provinces in the North

Results to date After 5 years of production, the company has manufactured about 40 millions meters with the width 44/45 inches and the weight of 40 ¸300 g/m2.

COMMENTS This is one of the 3 companies producing Polyester Padding to supply garment companies in Vietnam. It main customers are garment manufacturers in the North. The company is famous for its highly competitive products.

100 GIA LAM SEWING MACHINE COMPANY

GENERAL INFORMATION Address Bo Str., Sai Dong Town, Gia Lam Dist., Hanoi Telephone/Fax Tel : 844 827564 Fax : 844 8276565 Contact Person and Title Mrs. Nguyen Thi Thai - Deputy Director. Address of Subsidiaries : N/A Main Service Area Manufacturing Sewing Machines, Accessories, Spare-parts Year Established 1977 Legal From State Owned Ownership Under Vietnam Textile-Garment Corporation. Total number of staff 172 Number of professional staff 142 Number of support staff 30

MAIN SERVICES · Manufacturing and trading sewing machines and accessories. · Designing and installing electric networks and sewing machines in garment companies. · Providing after-sale services.

MAIN CUSTOMERS Companies JVs, foreign companies, and local companies (State and private). Sectors Garment City/ Region Hanoi, HCM City, Hai Phong, Da Nang, Tien Giang, Vinh Long.

Results to date The company has served several local, joint venture and 100 percent foreign invested companies in Vietnam

COMMENTS The Hanoi sewing machine company has a good reputation for supplying sewing machines and accessories in a timely and professional manner at competitive prices.

101 TRADE SERVICE COMPANY NO. 1

GENERAL INFORMATION Address 2 Mai Dong Str., Hai Ba Trung Dist., Hanoi Telephone/Fax Tel : 844 8621228 Fax: 844 824620 Contact Person and Title Mr. Nguyen Dinh Hy, Director. Address of Subsidiaries N/A Main Services Areas Procurement services Import/Export Year Established 1995 Legal Form State-owned Ownership Under Vietnam National Textile Garment Corporation Total Number of Staff 80 Number of professional staff 30 Number of support staff 50

· Providing raw materials, fabrics, accessories, chemicals to textile and MAIN SERVICES garment companies. · Domestic trading in textile and garment products · Promoting import-export activities of garment companies

MAIN CUSTOMERS Companies Local private and state-owned, co-operatives, households, trade villages. Sectors Textile, garment. City/Region Hanoi, HCMC, Hue, Da Nang, Ha Tay, Nam Dinh, and some other provinces.

Results to date Total turnover in 1997 reached VND 83 billion and is expected to reach VND 100 billion in 1998. The company’s biggest customers are member companies of the Vietnam National Textile Garment Corporation.

COMMENTS The company has become a very important supplier of raw materials for garment companies supplying materials such as cotton, man-made fibres, chemicals, and accessories. It enjoys a high reputation among its business partners for its products’ quality.

102 HANOI NEEDLES FACTORY

GENERAL INFORMATION Address Thanh Liet, Thanh Tri, Hanoi Telephone/Fax Tel : 844 8841337 Fax: 844 825334 Contact Person and Title Mr. Nguyen Van Manh, Vice Director. Address of Subsidiaries N/A Main Services Areas Providing needles and accessories Year Established 1983 Legal Form State-owned Ownership Hanoi Department of Industry Total Number of Staff 230 Number of professional staff 200 Number of support staff 30

MAIN SERVICES · Needles for sewing machines · Knitting needles · Needles and pins for jute industry · Accessories for sewing and weaving machines

MAIN CUSTOMERS Companies State-owned and private companies. Sectors Textile and garment. City/Region The North and Middle of Vietnam

Results to date The company has been providing annually 50,000,000 needles for sewing machines; 6,000,000 knitting needles; 40,000,000 hand needles and 20,000,000 pins for jute industry.

COMMENTS This is one of the two needle companies in Vietnam. Financed by Germany in 1983, the company has equipped its production line with state-of-the-art Japanese equipment. With good quality and reasonable prices, the company’s products are highly respected in the domestic market and are compatible with foreign products from Japan, South Korea and Taiwan. In the near future, the company plans to diversify its product range, increase investment capital to be able to improve its products’ quality and increase market share.

103 VIET TIEN TUNG SHING SEWING MACHINE CENTRE

GENERAL INFORMATION Address 27-33 Tran Hung Dao St., Dist. 1, HCMC Telephone/Fax Tel : 848 8293362 Fax: 848 8293358 Contact Person and Title Mr. Nguyen Thanh Tan, Deputy Manager. Address of Subsidiaries 9 floor, Hanoi Tungshing Square, 2 Ngo Quyen St., Hoan Kiem Dist., Hanoi City. Tel. 844 8266296/8266297 Fax: 844 8266266 Main Services Areas Providing equipment and accessories Year Established 1985 (Hanoi Branch: 1991) Legal Form Join-venture Ownership Joint venture between Viet Tien and Tung Shing Total Number of Staff 1000 Number of professional staff 900 Number of support staff 100

MAIN SERVICES Providing: · Sewing machines, cutters, pressers, irons · Accessories · Maintenance services

MAIN CUSTOMERS Companies State-owned, private, joint-venture, 100 percent foreign owned companies. Sectors Garment. City/Region Vietnam, Laos, Cambodia

Results to date The company has been providing sewing machines, accessories and maintenance services to many garment companies in Vietnam and neighboring countries.

COMMENTS Viet Tien - Tung Shing is one of the leading suppliers in sewing machines and other machines for the garment industry in Vietnam. The centre is currently running as a monopolised distributor for 7 domestic companies and 10 foreign suppliers. Moreover, the centre is also providing door-to-door maintenance services and other types of services to satisfy customers’ orders. In addition to the head office in HCMC, the centre also has agents and maintenance workshops in Hanoi, Nha Trang, Hai Phong, and Da Nang.

104 VIET PHAT JOINT VENTURE COMPANY

GENERAL INFORMATION Address 7 Mai Khoi St., Tan Binh Dist., HCMC Telephone/Fax Tel: 848 8640 800/8445 089 Fax: 848 8645 085 Contact Person and Title Mr. Nguyen Thanh Hung, Chief of Technical Division Address of Subsidiaries N/A Main Services Areas Providing Mex Year Established 1994 Legal Form Joint-venture Ownership JV between Viet Tien Co. and Development Industrial Co. (Taiwan) 200 Total Number of Staff 190 Number of professional staff 10 Number of support staff

MAIN SERVICES Providing Mex

MAIN CUSTOMERS Companies State-owned, private, and foreign investment companies Sectors Garment City/Region Ho Chi Minh City

Results to date The company has served hundreds of clients, both domestic and foreign companies. Main customers: Nha Be Garment Co., Phu Nhuan Garment Co., Tan Chau Ltd. Co., Vinh Loi Ltd. Co.

COMMENTS With a capital of US $1 million, strong human resources with experienced foreign specialists, and broad international relationships, the company enjoys a high reputation among its clients - garment companies. The company provides both packaged and client- customised services The company is considering expanding its market share and improving its services’ quality.

105 COATS TOTAL PHONG PHU JOINT VENTURE COMPANY

GENERAL INFORMATION Address Thu Duc Dist., HCMC Telephone/Fax Tel: 848 8969 465/ 8969 466 Fax: 848 8969 464 Contact Person and Title Mr. Khieu Thien Thuat, Director Address of Subsidiaries 378 Minh Khai, Hanoi Main Services Areas Providing thread Year Established 1989 Legal Form Joint-venture Ownership Phong Phu Co. and Coats Total Total Number of Staff 480 Number of professional staff 460 Number of support staff 20 MAIN SERVICES Providing threads of all types MAIN CUSTOMERS Companies State-owned, private, and foreign investment companies Sectors Garment City/Region Ho Chi Minh City

Results to date Until now, the company has served about 200 clients. It was the only company which got the Golden Prize in the Vietnam Contest of Quality in 1996. Its products are diversified and varied in colours and have been awarded ISO 9002 standard. Main customers: Phuong Dong Garment Co., Huu Nghi, Wonderful Sai Gon Garment Ltd. Co., Exported Garment Enterprises (VITEXCO)

COMMENTS With its high reputation, the company now has a strategy of widening its delivery network for both domestic and foreign companies.

106 DANG KHOA COMPANY

GENERAL INFORMATION Address 15B Nguyen Thai Binh, Ward 4, Tan Binh Dist., HCMC Telephone/Fax Tel: 848 8449 996 Fax: 848 8460 701 Contact Person and Title Mr. Nguyen Tan Ky, Manager of Administration Office Address of Subsidiaries Showroom: 565 Hoang Van Thu, Tan Binh Dist., HCMC Main Services Areas Providing accessories for sewing-machines Year Established 1996 Legal Form Limited Company Ownership Private Total Number of Staff 18 Number of professional staff 14 Number of support staff 4

MAIN SERVICES · Providing accessories for sewing-machines · Providing irons, boilers · Maintaining equipment and machines · Consulting on equipment operating techniques for garment companies.

MAIN CUSTOMERS Companies State-owned, limited liability companies Sectors Garment City/Region Ho Chi Minh City

Results to date Since its establishment, the company has served about 50 companies in a number of sectors. Main customers: Son Kim Ltd. Co., Tan Minh Ltd. Co., Quang Minh Ltd. Co.

COMMENTS Founded in 1996, Dang Khoa Co. has supplied accessories for sewing-machines for several garment companies. Services provided by the company are either offered in packaged form or through specialists. The company has a strong team of professional staff, a lot of experience, and wide relationships with customers. The company is planning to focus on the maintenance sector and penetrate new markets, both domestic and foreign.

107 SEWING MACHINES’ ACCESSORIES MANUFACTURING JOINT VENTURE COMPANY

GENERAL INFORMATION Address 7 Mai Khoi, Tan Binh District, HCMC Telephone/Fax Tel: 848 8645 082/ 8645 333 Fax: 848 8645 085 Contact Person and Title Ms. Truong Thi Mai, Manager of Administration Office Address of Subsidiaries N/A Main Services Areas Providing sewing-machine accessories Year Established 1995 Legal Form Joint-venture Ownership Joint venture between Viet Tien Co. and Tung Shing Co. Total Number of Staff 160 Number of professional staff 150 Number of support staff 10

MAIN SERVICES Providing sewing-machine accessories

MAIN CUSTOMERS Companies State-owned, foreign, and limited liability companies Sectors Garment City/Region Ho Chi Minh City

Results to date The company has provided accessories for hundreds of garment companies. Main customers: Doc Lap Garment Co., Nam A Garment Co., Hoa Binh Garment Co. COMMENTS As a joint venture with a Hong Kong partner, the company has strong financial and human resources. This contributes to its remarkable success. Its wide international relationships help generate potential markets for the company. The company provides high quality products, both packaged and customized. The company is planning to diversify its accessories for the garment industry.

108 VICO MOOLSAN COMPANY

GENERAL INFORMATION Address Bien Hoa Industrial Zone, Dong Nai Province Telephone/Fax Tel: 848 836 226/ 836 227 Fax: 848 836 228 Contact Person and Title Mr. Pham Van Tuan, Director Assistant Address of Subsidiaries Duong Xa, Gia Lam Dist., Hanoi Main Services Areas Manufacturing Year Established 1993 Legal Form 100 percent foreign investment Ownership Korea Moolsan Ltd. Co., South Korea Total Number of Staff 160 Number of professional staff 130 Number of support staff 30

MAIN SERVICES Manufacturing padding, quilted padding, comforters, bedcovers, mattresses

MAIN CUSTOMERS Companies Foreign agents and 100 percent foreign investment companies Sectors Garment companies and households City/Region The whole country

Results to date Since its establishment, the company has provided products to 100 percent foreign investment companies, foreign agents, and some local garment companies. The company also sells comforters, bedcovers, and mattresses to households.

COMMENTS Besides the main office in Dong Nai, it has an agent in Gia Lam, Hanoi.

109 HANOI EXPORT FEATHER PROCESSING PLANT

GENERAL INFORMATION Address Dinh Nam, Thanh Tri Dist., Hanoi Telephone/Fax Tel: 84-8-8625 551 Fax: 84-8-8621 776 Contact Person and Title Mr. Dang Dinh Luan, Deputy Manager Address of Subsidiaries N/A Main Services Areas Manufacturing and processing feathers for garment products Year Established 1982 Legal Form State-owned enterprise Ownership Ministry of Agriculture and Rural Development Total Number of Staff 90 Number of professional staff 38 Number of support staff 52

MAIN SERVICES · Processing feathers for export · Providing feather products to domestic garment market

MAIN CUSTOMERS Companies Foreign companies Sectors Garment City/Region Japan, Taiwan, Germany, France, and Northern region

Results to date The company annually exports about 50-100 tons of feathers.

COMMENTS Using German production lines, the company’s output could reach 400 tons per year. However, presently it can only export only 50 - 100 tons per year because of the lack of market and customers.

110 NHATRANG GARMENT MATERIAL COMPANY

GENERAL INFORMATION Address 2 Nguyen Thien Thuat St., Nha Trang City Telephone/Fax Tel: 84 58 822462/84 58 822105 Fax: 84 58 821911 Contact Person and Title Mr. Dang Trang, Director Address of Subsidiaries Main Services Areas Production and trading of garment material Year Established 1987 Legal Form State-owned Ownership Department of Industry - Nha Trang People’s Committee Total Number of Staff 600 Number of professional staff 570 Number of support staff 30

MAIN SERVICES · Providing garment companies with garment accessories such as zippers, sewing thread, elastics, buckles, interlining and buttons

MAIN CUSTOMERS Companies Private and state-owned companies Sectors Garment companies and bags, sacks, tents markers City/Region Mainly Hanoi and HCM City

Results to date From 1987-1998, the capacity of zipper production has grown from 500,000 meters to 20 million meters per year. Annual turnover is VND 26.3 billion.

COMMENTS Has a reputation for the high quality of its products. They are exported to Japan, Australia, Germany, Italy, and Pakistan.

111 J. Investment Consulting Services

1. Demand and Supply of Investment Consulting Services

v Demand

5.49 Interviews with senior managers of over 40 garment companies show that the use of investment consulting services is generally not popular. However, some of them expressed interest in this service due to the limited number of staff available in garment companies who are knowledgeable in investment projects and financial and economic calculations.

5.50 In fact, the demand for investment in technology and equipment has become pressing recently, because product quality in Vietnamese garment companies is restricted due to obsolete technology and equipment. Therefore, garment companies need consulting services on line innovation, activity expansion and on how to establish new production units. So far, there have been some investment projects which have received consulting from outside experts.

v Supply

5.51 Although they are relatively new, in recent years, investment consulting services have generally satisfied garment companies. Service organizations provide investment consulting services in a wide range of areas such as the formulation of investment projects, financial analysis and the legal aspects of investment, etc.

5.52 The main organizations providing this service to garment companies are state-owned such as the Economic and Technological Institute for Textiles and Garments and some consulting centres for investment in textile-garment corporations.

5.53 In addition, there are some organizations which have provided consulting services on investment projects for garment companies eg: Concetti and Investconsult.

5.54 In short, the demand for investment consulting services is anticipated to increase rapidly in the future and service organizations in this area need to improve themselves to satisfy this increasing demand.

112 2. Profiles of Service Providers

CONSULTANCY CENTRE FOR INVESTMENT AND TECHNOLOGY DEVELOPMENT IN TEXTILE-GARMENT INDUSTRY (CINTECH)

GENERAL INFORMATION Address 102 Lac Trung St, Hai Ba Trung Dist., Hanoi Telephone/Fax Tel : 844 8213282 Fax : 844 8213262 Contact Person and Title Mr. Chu Thanh Quy, Director Main Service Area Investment Consulting, Technology transfer Year Established 1997 Legal Form Joint stock company Ownership Private Total number of staff 14 plus 10 part-time associates in Hanoi and HCM City Number of professional staff 12 Number of support staff 2

MAIN SERVICES · Investment Consulting: market research, feasibility studies, project formulation and appraisal · Technology transfer: development of new technology, new products and new organization methods

MAIN CUSTOMERS Companies Private, state-owned and foreign companies Sectors Garment, textile, embroidery City/ Region Hanoi, HCMC, Danang, Taipei (Taiwan)

Results to date Since its establishment, the Centre has served about 10 companies (both foreign and domestic), for example Golden Frank, Taya from Taiwan, Da Nang Textile-Garment company, Thanh Son Company, My An Co. Ltd., Thang Long Garment Company, Hanoi Industrial Canvas Textile Company, Texgamex Saigon.

COMMENTS As a specialized organisation in the textile-garment investment consultancy field, its main activities so far have been: formulating garment production lines, installing projects for Texgamex Saigon, advising Da Nang garment company, advising Thang Long garment company in installing dyeing-sizing machines for Denim fabric, and providing training courses on ISO 9000 standards for garment companies. CINTECH has also participated in the preparation of the development strategy of the Vietnam Textile-Garment Industry for 2000-2010. Its professional staff and associates have acquired numerous skills and experience in the textile-garment area.

113 INDUSTRIAL PROPERTY COMPANY (INVESTIP)

GENERAL INFORMATION Address 31 Han Thuyen Street, District 1, HCMC Telephone/Fax Tel: 848 829 2400 Fax: 848 822 8603 Contact Person and Title Ms. Nguyen Thi Bich Thuy, Assistant Manager Address of Subsidiaries 1Bis Yet Kieu, Hanoi Main Service Area Investment, Business and Technical Consulting Year Established 1998 Legal Form State-owned Enterprise Ownership State-owned Total number of staff 60 Number of professional staff 56 Number of support staff 4

MAIN SERVICES Providing the following services: · Investment consulting · Technique consulting · Business consulting · Pattern and brand registration · Publishing Vietnamese Business Bulletin

MAIN CUSTOMERS Companies Domestic and foreign invested companies. Sectors Many sectors, including garment City/Region Hanoi and Ho Chi Minh City

Results to date The Company has served hundreds of clients since its establishment, many of them are garment companies, for example Binh Minh Garment Co., Garment Company 20, Saigon Garment Import - Export Co., etc..

COMMENTS Although it has been recently established, INVESTIP has been operating effectively and efficiently and seeing significant success. The company’s main competencies lie in its high quality service, a strong team of professionals including 6 graduates from Western Europe, 20 graduates from EU, a strong team of external consultants, and a flexible combination of all business sectors, which creates excellent customer services at reasonable prices.

114 K. Conclusions

5.55 Through interviews with over 70 garment manufacturers and service providers in the North, the Centre and the South in Vietnam, the team has come to the following conclusion: the Vietnamese garment industry, as a labor intensive and export driven industry, has great potential for development, but presently faces a lot of obstacles. It needs to improve its competitiveness in terms of quality, productivity, price, etc. in order to maintain and expand its market share in foreign markets, especially in non-quota markets and to gradually replace the present processing scheme by direct exporting under FOB.

5.56 In the framework of the survey, the study focused on the status of demand and supply of support services in the garment sector, identifying constraints in the sector with a view to improving the range and quality of support services to garment manufacturers, especially private ones. Some conclusions and recommendations are as follow.

5.57 Except for the training and education area, most the service providers in the garment sector are not specialized organisations for the garment industry only, rather they operate in a wide variety of sectors.

5.58 Private SME companies, especially in rural and remote areas, though large in quantity, operate in a less favorable environment and enjoy fewer support services compared with state companies. v Education and training

5.59 Results from the survey show that the current demand for education and training services is high and is expected to increase rapidly in the future when production expands, direct export replaces the current processing scheme, and access to non-quota markets increases and gradually replaces traditional quota markets.

5.60 Some of the reasons for the inefficiency of current training institutions are (1) teachers from training institutions are not equipped with sufficient knowledge and skills for the garment industry; (2) the training curricula and teaching methods are theoretical, out of date and not suitable for the practical requirements of garment companies; (3) practical machines and teaching aids are obsolete and have not been adequately invested in; and (4) training programs and certifications are still not standardized and vary among different training institutions.

5.61 The results from the survey also show that the demand for training for different levels (eg: managers, supervisors, technicians, designers, workers) differs.

5.62 The biggest training demands cited by managers are in: strategic management, production management, TQM, marketing management and financial management.

5.63 The demand for technician and supervisor training (on production line, product quality, and repair and maintenance) seems to be very important among companies interviewed. The reasons cited are: (1) technicians do not have specialized training in the garment sector as most were trained as general or mechanical engineers; (2) it is difficult for rural companies to purchase and service/repair garment machines because suppliers are only located in big cities, equipment warranties are short (6-12 months), and maintenance fees are

115 as high as $5 an hour; (3) supervisors are often line workers who have been promoted but never received management training; and (4) there has not been any standard training curricula for supervisors.

5.64 Training for workers is also very important and training institutions have not developed proper and standard training programs for workers. The training courses cover basic skills needed in each production stage but overlook related skills and comprehensive knowledge which is important to enhance workers’ productivity. The problem with this type of training is that while a worker can do his assigned job, he cannot take care of other jobs in the production line when his colleague is absent. The situation is quite different among Japanese garment manufacturers.

5.65 Design training, including garment design and pattern design, is also insufficient in Vietnam. The designs and fashions created by FADIN, for instance are mainly for fashion shows and not for use by garment manufacturers who are targeting foreign markets. Furthermore, many of the imported design systems (CAD/CAM) that are available in-country are still not in full operation due to the fact that the users of such systems were not adequately trained in how to use them. This has resulted in a considerable waste of resources. v Information provision and consulting

5.66 The demand for information and consulting services is high among companies interviewed, but to date no consulting organisations have focused on the Vietnamese garment sector. The present information centres, the Textile-Garment Economic and Technical Centre and the Market-Information Dept. of VINATEX, for example, focus on serving state- owned companies under Vinatex, and most of the information they offer is not useful to garment manufacturers. Private SMEs have to depend mostly on secondary sources such as industry publications, newspapers, periodicals, textile-garment bulletins, or personal contacts. The SMEs support centre of the VCCI also provides general services to various sectors (including the garment industry).

5.67 Information about design and fashion trends (i.e., material, colors, styles) is also inadequate for garment companies. Such information is especially important when they shift to FOB business.

5.68 Information about suppliers of machines, materials and accessories is also in high demand by garment companies interviewed. Though suppliers are often available, manufacturers do not know how to select the most appropriate equipment, fabrics, or accessories.

116 ANNEX 1: SWOT ANALYSIS OF VIETNAMESE GARMENT INDUSTRY

STRENGTHS WEAKNESSES

Country/ industry wide: In private companies visited: Country/ industry wide: In private companies visited: · Industry generates employment · Larger companies have skilled · Local value addition is small · No access to advantages enjoyed by SOEs · High quality labor force workers & relatively modern · Reduction in orders due to Asian crisis eg: bank loans, ODA, EU quota allocation, · Low labor costs for employers equipment · Over dependence on foreign agents: little participation in trade fairs etc. · Competitive pricing of exports · Managers are keen to upgrade contact with final customers · Lack of know how in design & production · Minimum investment necessary for their skills · Almost non-existent local textile industry techniques, procurement, management , owners · Limited investment is necessary · Limited number of local fabric & marketing & sales · EU quota allocation due to widespread use of used trimmings suppliers · Production dominated by CMT - therefore · Relatively efficient transport & shipping equipment · Shortage of skilled technologists, low value added facilities supervisors, quality controllers etc. · Majority doing sub-contracting work for · Workable system of export processing · Low labor productivity SOEs or large private companies · Some factories are well-equipped & have · Limited training given, especially for · No adequate garment association to well trained workers middle management represent interests · Current training facilities too theoretical · Factories are cramped & lack modern · More factories opening but fewer orders equipment coming in -" Less honey, more flies" · Managers wary of investing in staff training · Limited experience in generating own due to high staff turnover designs & limited product range · Strategic planning impossible due to ad hoc nature of orders

OPPORTUNITIES THREATS

Country/ industry wide: For private companies: Country/ industry wide: For private companies: · Trade agreement with USA will open new · Staff training = improved · China’s entry into WTO increases · Reduced orders, inability to get loans & markets efficiency = increased advantage over Vietnam quota = limited investment in equipment & · More local suppliers of fabrics and productivity = financial benefits · Ending of quota system under Multi- staff = low productivity = difficulty staying accessories are establishing locally · Improved market links = Fiber agreement in 2005 will lead to solvent · Increasing transfer of skills from buyers to increased orders = financial intensified global competition manufacturers benefits = upgrading of skills · NAFTA/AFTA will open up trade · Opportunity to improve efficiency in and equipment = move up value barriers in Asia & stimulate regional CMT and move up value chain into FOB chain competition · Local design capacity increasing · Opportunity to produce FOB for domestic market

117 ANNEX 2: AN OVERVIEW OF THE KEY PROBLEMS FACING PRIVATE GARMENT MANUFACTURERS: Fishbone Diagrams MPDF Staff

Diagram 1: Inefficient Production Organisation

Operations manager/ engineers Poor resource Problems with lack knowledge of basic management factory layout principles Inadequate Lack space Lack knowledge Re: quality assurance of machine set up working Poor production Re: manufacturing capital planning functions Re: manufacturing layout Lack knowledge Lack knowledge of Re: material utilisation of appropriate effective layout Re: production planning & control suppliers Re: workflow/ Always changing through put/ Poor inventory set up due to sequencing control changing orders INEFFICIENT PRODUCTION ORGANISATION Service providers do not market their services properly To invest in new equipment Producers don’t know where to look Producers undervalue To rent larger premises external expertise Relevant assistance not available

Producers do not Firm lacks capital know where to get technical advice

118 Diagram 2: Inadequate Business Management Skills

Managers lack knowledge of human resource Managers have little management formal training Re: labor conditions Re: payment/ incentives Historically unavailable Managers are hired due Undervalue training to connections rather Re: workers’ career than skills development Few appropriate training services available Re: worker’s training needs Lack capital INADEQUATE MANAGEMENT SKILLS

Training/ consulting is Historical lack of demand Lack training theoretical & often for services Limited/ No inappropriate exposure outside Insufficient number of Vietnam providers Producers don’t know which services are Poor quality of services on offer Limited access to available information & media Managers lack Lack of service experience providers/ appropriate services

119 Diagram 3: Difficulty Establishing Links with Buyers

Producers have difficulty Producers are going abroad to meet buyers technologically Producers lack information Lack experience in about markets backwards dealing with foreign buyers Lack cash to Re: how to Re: How to find customers go abroad price goods Lack capital Passport/ visa Re: who their customers are to upgrade No association to issues facilitate meetings Lack awareness of existing with buyers Re: which products will sell export promo. programs Lack exposure to modern Dependent on Re: international technologies agents, so do not know final buyers quality standards Difficulty establishing links with buyers

Associations Re: pricing Lack information mainly for SOEs strategy about Vietnam Embassies abroad Re: promoting themselves recommend SOEs Re: communicating with clients Re: distributing Trade directories mainly for SOEs goods

Mainly SOEs who’re Re: developing products chosen for Not many SOEs are trade fairs Producers lack basic buyers/ buying better marketing skills agents come to capitalised Buyers are captured Vietnam by SOEs

120 Diagram 4: Low Productivity of Labor Force

Poor working Workers lack conditions knowledge of basic skills Long working hours Re: sewing Low pay/ techniques Re: garment construction techniques incentives Poor production

organisation Re: pattern cutting, lay-making & Re: parameters of quality Poor physical spreading environment Re: machinery LOW use PRODUCTIVITY LEVELS OF LABOR FORCE Fear that workers Lack capital will leave

Management & workers Lack of lack knowledge of appropriate new technologies services Factory lacks capital to Do not understand its value replace/ upgrade it

Factory doesn’t DETAILS TO BE FILLED IN FROM MISS LAN’S Equipment is outdated want to invest in REPORT and/or mismatched training Supervisors lack HRM skills

121 Diagram 5: Quality Problems

Workers lack Poor Supervisors lack skills skills equipment

Re: international Not maintained quality standards Re: inspection techniques Re: garment construction Wrong equipment techniques Re: use of machines Re: sampling Re: quality Badly set up management Outdated QUALITY PROBLEMS Late delivery Poor equipment

Don’t mark lay Producers don’t understand Goods are poorly packed Don’t know markers Misrepresentation buyers’ needs re: sizes, grading between buyers & etc. producers

Done by Checkers don’t know Bad storage conditions what to look for Lack QC personnel & Buyers don’t brief hand checking stages properly Poorly cut Poor communication Goods lose quality at patterns between buyers/ Ineffective QC systems Finishing/ packing/ sellers storage/ shipping

122 ANNEX 3: Statistical Overview of the Garment Industry Vietnamese Chamber of Commerce and Industry

Table 1: Number of Garment Production Units in Vietnam Foreign No. Province Total Domestic Economic Sector invested sector Total SOE Coopera- Private Mixed Household tive Sole Proprietor Total 78782 78707 90 38 56 191 78332 75 1 Hanoi 2811 2808 13 20 31 2744 3 2 Ho Chi Minh City 5694 5641 14 5 36 118 5468 53 3 Hai Phong 1938 1938 6 6 2 1924 4 Da Nang 1233 1231 1 2 5 1223 2 5 Ha Giang 250 250 250 6 Cao Bang 287 287 287 7 Lao Cai 224 224 1 223 8 Bac Kan 243 243 243 9 Lang Son 455 455 455 10 Tuyen Quang 465 465 1 464 11 Yen Bai 378 378 378 12 Thai Nguyen 981 981 1 1 979 13 Lai Chau 281 281 281 14 Son La 296 296 296 15 Quang Ninh 1343 1343 1 1 1 1340 16 Hoa Binh 416 416 416 17 Phu Tho 933 933 3 1 1 928 18 Vinh Phuc 804 804 1 803 19 Bac Giang 1344 1344 1 1343 20 Bac Ninh 852 852 3 849 21 Ha Tay 2425 2424 2 3 2419 1 22 Hai Duong 2584 2583 2 1 2580 1 23 Hung Yen 1622 1622 1 1 1620 24 Ha Nam 621 621 5 1 615 25 Thai Binh 3529 3529 5 3 3521 26 Nam Dinh 1944 1944 6 1 1937 27 Ninh Binh 871 871 1 870 28 Thanh Hoa 2869 2869 2 2867 29 Nghe An 2734 2734 1 12 2721 30 Ha Tinh 1325 1324 1 1323 1

123 Table 1: Number of Garment Production Units in Vietnam (continued) Foreign No. Province Total Domestic Economic Sector invested sector Total SOE Coopera- Private Mixed Household tive Sole Proprietor 31 Quang Ninh 1504 1504 1504 32 Quang Tri 1016 1016 1016 33 Thua Thien Hue 1726 1726 2 1 1723 34 Quang Nam 1847 1847 4 1 1842 35 Quang Ngai 2549 2549 1 2548 36 Binh Dinh 2144 2144 1 2 2141 37 Phu Yen 857 857 857 38 Khanh Hoa 1636 1636 1 1 1 1633 39 Ninh Thuan 661 661 661 40 Binh Thuan 993 993 1 992 41 Kon Tum 327 327 327 42 Gia Lai 884 884 884 43 Dak Lak 1555 1555 1555 44 Lam Dong 1564 1563 1 1 1561 1 45 Binh Phuoc 733 733 733 46 Binh Duong 384 379 1 3 375 5 47 Tay Ninh 773 772 1 771 1 48 Dong Nai 1548 1543 3 4 3 1533 5 49 Ba Ria -Vung Tau 724 723 1 722 1 50 Long An 1216 1216 1 2 4 1209 51 Dong Thap 1446 1446 1 1445 52 An Giang 2483 2483 2483 53 Tien Giang 874 874 1 1 1 1 870 54 Ben Tre 759 759 1 1 757 55 Vinh Long 974 974 1 973 56 Can Tho 978 977 1 976 1 57 Kien Giang 2647 2647 1 2646 58 Tra Vinh 684 684 684 59 Soc Trang 692 692 692 60 Bac Lieu 0 0 61 Ca Mau 852 852 852 Source: General Statistical Office, December 1997

124 Table 2: Average Employment at Garment Production Units in Vietnam Unit: People Foreign No. Province Total Domestic Economic Sector invested sector Total SOE Coopera- Private Sole Mixed Household tive Proprietor Total 4 3 942 66 76 232 2 326 1 Hanoi 7 7 980 30 74 2 146 2 Ho Chi Minh City 18 15 2155 105 77 310 3 310 3 Hai Phong 4 4 511 109 54 2 4 Da Nang 4 4 2292 49 114 2 203 5 Ha Giang 1 1 1 6 Cao Bang 1 1 1 7 Lao Cai 2 2 20 2 8 Bac Kan 1 1 1 9 Lang Son 1 1 1 10 Tuyen Quang 1 1 80 1 11 Yen Bai 1 1 1 12 Thai Nguyen 2 2 1013 6 1 13 Lai Chau 1 1 1 14 Son La 1 1 1 15 Quang Ninh 2 2 564 20 14 1 16 Hoa Binh 1 1 1 17 Phu Tho 3 3 399 20 1 18 Vinh Phuc 1 1 180 1 19 Bac Giang 1 1 165 1 20 Bac Ninh 3 3 509 1 21 Ha Tay 2 2 611 60 2 455 22 Hai Duong 2 2 491 130 1 150 23 Hung Yen 3 3 2336 250 1 24 Ha Nam 3 3 204 20 1 25 Thai Binh 2 2 206 150 1 26 Nam Dinh 4 4 816 230 1 27 Ninh Binh 2 2 428 2 28 Thanh Hoa 2 2 415 1 29 Nghe An 1 1 374 12 1 30 Ha Tinh 2 1 175 1 143

125 Table 2: Average Employment at Garment Production Units in Vietnam (continued) Unit: People Foreign No. Province Total Domestic Economic Sector invested sector Total SOE Coopera- Private Sole Mixed Household tive Proprietor 31 Quang Ninh 1 1 1 32 Quang Tri 1 1 1 33 Thua Thien Hue 2 2 365 105 2 34 Quang Nam 2 2 299 24 1 35 Quang Ngai 1 1 184 1 36 Binh Dinh 2 2 430 86 2 37 Phu Yen 1 1 1 38 Khanh Hoa 2 2 598 15 60 2 39 Ninh Thuan 1 1 1 40 Binh Thuan 2 2 727 2 41 Kon Tum 2 2 2 42 Gia Lai 1 1 1 43 Dak Lak 2 2 2 44 Lam Dong 3 2 200 110 2 464 45 Binh Phuoc 1 1 1 46 Binh Duong 16 12 3211 220 2 317 47 Tay Ninh 2 2 220 2 362 48 Dong Nai 8 6 1550 34 102 3 522 49 Ba Ria -Vung Tau 6 5 566 2 643 50 Long An 4 4 1205 110 247 2 51 Dong Thap 3 3 1342 2 52 An Giang 2 2 2 53 Tien Giang 4 4 744 17 325 782 2 54 Ben Tre 3 3 120 525 2 55 Vinh Long 2 2 217 2 56 Can Tho 4 4 1085 2 743 57 Kien Giang 2 2 73 2 58 Tra Vinh 2 2 2 59 Soc Trang 2 2 2 60 Bac Lieu 0 61 Ca Mau 2 2 2 Source: General Statistical Office, December 1997.

126 Table 3: Median Employment At Garment Production Units in Vietnam Unit : People Foreign Total Domestic Economic Sector invested sector Total SOE Coopera- Private Mixed Household tive Sole Proprietor Total 5 4 450 31 35 110 2 204 Median Employment at 7 6 637 48 49 183 2 314 garment production units which has more then 2 employees Average Employment 4 3 942 66 76 232 2 326 (Table 2)

Source: General Statistical Office.

Table 4: Number of Garment Exporters in Vietnam (Number of Garment Production Units-Exporters) Foreign No. Province Total Domestic Economic Sector invested sector Total SOE Cooperative Private Mixed Household Sole Proprietor Total 268 193 76 12 25 80 0 75 1 Hanoi 26 23 10 3 10 3 2 Ho Chi Minh City 131 78 11 2 15 50 53 3 Hai Phong 8 8 4 3 1 4 Da Nang 5 3 1 2 2 5 Ha Giang 6 Cao Bang 7 Lao Cai 8 Bac Kan 9 Lang Son 10 Tuyen Quang 11 Yen Bai 12 Thai Nguyen 1 1 1 13 Lai Chau 14 Son La 15 Quang Ninh 16 Hoa Binh 17 Phu Tho 1 1 1 18 Vinh Phuc 19 Bac Giang 1 1 1 20 Bac Ninh 3 3 3 21 Ha Tay 4 3 2 1 1 22 Hai Duong 4 3 2 1 1 23 Hung Yen 2 2 1 1 24 Ha Nam 5 5 4 1 25 Thai Binh 6 6 4 2

127 Table 4: Number of Garment Exporters in Vietnam (Number of Garment Production Units-Exporters) (continued)

No. Province Total Domestic Economic Sector Foreign invested sector Total SOE Cooperative Private Mixed Household Sole Proprietor 26 Nam Dinh 7 7 6 1 27 Ninh Binh 1 1 1 28 Thanh Hoa 2 2 2 29 Nghe An 3 3 1 2 30 Ha Tinh 2 1 1 1 31 Quang Ninh 1 1 1 32 Quang Tri 33 Thua Thien Hue 2 2 2 34 Quang Nam 3 3 3 35 Quang Ngai 1 1 1 36 Binh Dinh 2 2 1 1 37 Phu Yen 38 Khanh Hoa 3 3 1 1 1 39 Ninh Thuan 40 Binh Thuan 1 1 1 41 Kon Tum 42 Gia Lai 43 Dak Lak 44 Lam Dong 3 2 1 1 1 45 Binh Phuoc 46 Binh Duong 9 4 1 3 5 47 Tay Ninh 2 1 1 1 48 Dong Nai 13 8 3 3 2 5 49 Ba Ria -Vung Tau 2 1 1 1 50 Long An 4 4 1 1 2 51 Dong Thap 1 1 1 52 An Giang 53 Tien Giang 4 4 1 1 1 1 54 Ben Tre 1 1 1 55 Vinh Long 1 1 1 56 Can Tho 2 1 1 1 57 Kien Giang 1 1 1 58 Tra Vinh 59 Soc Trang 60 Bac Lieu 61 Ca Mau Source: General Statistical Office, December 1997.

128 Table 5: Volume and Value of Imported Fabrics and Exported Garments in Vietnam

1992 1993 1994 1995 1996 1997 1 Export Value (Millions of USD) 2,580.70 2,985.20 4,054.30 5,448.90 7,255.90 8,900.00 2 Export value of garments 201,974 238,847 475,607 765,461 993,173 1,199,664 (Thousands of USD) 3 Volume of semi-finished fabrics 28.1 27.5 54.1 71.7 190 394 imported in Vietnam (Millions of metres) 4 Value of semi-finished fabrics 32.3 32.6 64.2 85.3 226 461.0 imported in Vietnam (Millions of USD) Source: General Statistical Office, December 1997.

129 Table 6: Garment Export Value by Country Unit: USD1000 No. Country 1992 1993 1994 1995 1996 1997 Total 201,974 238,847 475,607 765,461 993,173 1,199,664 1 Poland 2,814 4,709 3,316 1,908 3,923 9,917 2 Bulgaria 428 300 552 20 865 178 3 Germany 14,330 21,266 58,777 106,754 117,739 164,585 4 Hungary 2,427 2,527 7,458 6,506 5,366 5 Czechoslovakia 953 2,115 1,457 4,879 14,744 3,901 6 Libya 222 2,516 3,052 422 7 Canada 1,501 1,162 1,151 2,786 8,339 18,215 6 Cuba 66 1,948 9 Dominican Republic 100 10 Panama 9 129 125 457 11 Chile 4 198 47 12 Saudi Arabia 24 76 224 2,734 13 China 14 18 399 81 2,599 14 Hong Kong 28,850 24,068 23,844 23,753 30,180 26,630 15 Indonesia 32 155 112 13 16 Japan 27,180 44,336 127,676 222,353 330,649 325,048 17 Cambodia 310 590 18 Laos 2,074 1,369 3,026 2,223 1,267 3,151 19 Malaysia 5 195 354 6,597 4,242 7,570 20 South Korea 14,958 18,331 24,426 43,076 63,686 75,953 21 Singapore 199 1,919 6,288 5,749 11,661 55,796 22 Taiwan 10,977 24,486 62,792 142,307 178,445 197,596 23 Thailand 521 207 5,562 361 681 2,145 24 New Caledonia 10 25 Austria 625 627 1,052 2,830 2,448 3,670 26 Finland 1 80 877 506 2,272 27 France 2,157 7,245 17,698 32,218 29,575 55,396 28 Iceland 113 7 46 29 Italy 71 1,783 6,490 7,570 7,329 27,139 30 Luxembourg 64 48 31 Holland 1,630 3,261 8,100 18,338 28,613 42,940 32 Norway 694 88 939 422 1,481 5,697 33 Romania 1,004 173 142 28 34 Sweden 596 2,973 921 1,010 1,942 10,746 35 Switzerland 2 128 832 2,050 2,933 33,955 36 England 160 1,526 4,926 8,582 17,324 73

130 Table 6: Garment Export Value by Country (continued) Unit: USD1000 No. Country 1992 1993 1994 1995 1996 1997 37 Australia 6 364 1,415 1,211 7,337 16,719 38 Belarus 172 69 39 Russia 57,306 37,147 37,502 23,856 24,974 41,436 40 Ukraine 21 3,520 4,285 1,366 1,484 41 Belgium 122 466 1,947 2,878 18,077 42 Denmark 49 462 1,291 2,614 5,489 43 Monaco 78 44 Spain 41 168 1,421 1,913 4,050 13,470 45 Mongolia 25 46 Kuwait 23 90 13 47 North Korea 79 48 Egypt 25 42 49 USA 11,576 10,181 23,040 50 Venezuela 234 45 51 United Arab Emirates 1,142 623 52 India 50 73 53 Palestine 38 54 New Zealand 40 300 1,390 55 Argentina 441 74 56 Mexico 207 545 57 Portugal 94 35 742 58 Brazil 9 79 896 59 Philippines 235 10 967 60 Algeria 772 2 61 Eastern Europe 3,189 62 Ireland 175 63 EU 62,117 64 Israel 59 65 Jordan 16 66 SNG 3,699 67 Turkey 31 68 Middle East 765 69 Uruguay 41 70 Iran 106 71 Other countries 30,665 34,011 58,215 69,295 Source: General Statistical Office

131 Table 7: Percentage of Garment Export Value by Countries – Destinations No. Country 1992 1993 1994 1995 1996 1997 Total 100 percent 100 percent 100 percent 100 percent 100 percent 100 percent 1 Poland 1.39 1.97 0.70 0.25 0.39 0.83 2 Bulgaria 0.21 0.13 0.12 0.00 0.09 0.01 3 Germany 7.09 8.90 12.36 13.95 11.85 13.72 4 Hungary 1.20 1.06 1.57 0.85 0.54 0.00 5 Czechoslovakia 0.47 0.89 0.31 0.64 1.48 0.33 6 Libya 0.09 0.53 0.40 0.04 0.00 7 Canada 0.74 0.49 0.24 0.36 0.84 1.52 6 Cuba 0.00 0.03 0.41 0.00 0.00 0.00 9 Dominican Republic 0.00 0.04 0.00 0.00 0.00 0.00 10 Panama 0.00 0.00 0.03 0.02 0.05 0.00 11 Chile 0.00 0.00 0.00 0.03 0.00 0.00 12 Saudi Arabia 0.00 0.01 0.02 0.03 0.28 0.00 13 China 0.00 0.01 0.00 0.05 0.01 0.22 14 Hong Kong 14.28 10.08 5.01 3.10 3.04 2.22 15 Indonesia 0.02 0.06 0.00 0.00 0.01 0.00 16 Japan 13.46 18.56 26.84 29.05 33.29 27.09 17 Cambodia 0.00 0.13 0.00 0.00 0.00 0.05 18 Laos 1.03 0.57 0.64 0.29 0.13 0.26 19 Malaysia 0.00 0.08 0.07 0.86 0.43 0.63 20 South Korea 7.41 7.67 5.14 5.63 6.41 6.33 21 Singapore 0.10 0.80 1.32 0.75 1.17 4.65 22 Taiwan 5.43 10.25 13.20 18.59 17.97 16.47 23 Thailand 0.26 0.09 1.17 0.05 0.07 0.18 24 New Caledonia 0.00 0.00 0.00 0.00 0.00 0.00 25 Austria 0.31 0.26 0.22 0.37 0.25 0.31 26 Finland 0.00 0.00 0.02 0.11 0.05 0.19 27 France 1.07 3.03 3.72 4.21 2.98 4.62 28 Iceland 0.00 0.05 0.00 0.00 0.00 0.00 29 Italy 0.04 0.75 1.36 0.99 0.74 2.26 30 Luxembourg 0.00 0.03 0.00 0.00 0.00 0.00 31 Holland 0.81 1.37 1.70 2.40 2.88 3.58 32 Norway 0.34 0.04 0.20 0.06 0.15 0.47 33 Romania 0.00 0.42 0.04 0.02 0.00 0.00 34 Sweden 0.30 1.24 0.19 0.13 0.20 0.90 35 Switzerland 0.00 0.05 0.17 0.27 0.30 2.83 36 England 0.08 0.64 1.04 1.12 1.74 0.01

132 Table 7: Percentage of Garment Export Value by Countries – Destinations (continued) No. Country 1992 1993 1994 1995 1996 1997 37 Australia 0.00 0.15 0.30 0.16 0.74 1.39 38 Belarus 0.00 0.07 0.00 0.01 0.00 0.00 39 Russian 28.37 15.55 7.89 3.12 2.51 3.45 40 Ukraine 0.00 0.01 0.74 0.56 0.14 0.12 41 Belgium 0.00 0.05 0.10 0.25 0.29 1.51 42 Denmark 0.00 0.02 0.10 0.17 0.26 0.46 43 Monaco 0.00 0.03 0.00 0.00 0.00 0.00 44 Spain 0.02 0.07 0.30 0.25 0.41 1.12 45 Mongolia 0.00 0.00 0.00 0.00 0.00 0.00 46 Kuwait 0.00 0.00 0.00 0.01 0.00 0.00 47 North Korea 0.00 0.00 0.00 0.01 0.00 0.00 48 Egypt 0.00 0.00 0.00 0.00 0.00 0.00 49 USA 0.00 0.00 0.00 1.51 1.03 1.92 50 Venezuela 0.00 0.00 0.00 0.03 0.00 0.00 51 United Arab Emirates 0.00 0.00 0.00 0.15 0.06 0.00 52 India 0.00 0.00 0.00 0.01 0.00 0.01 53 Palestine 0.00 0.00 0.00 0.00 0.00 0.00 54 New Zealand 0.00 0.00 0.00 0.01 0.03 0.12 55 Argentina 0.00 0.00 0.00 0.06 0.01 0.00 56 Mexico 0.00 0.00 0.00 0.03 0.05 0.00 57 Portugal 0.00 0.00 0.00 0.01 0.00 0.06 58 Brazil 0.00 0.00 0.00 0.00 0.01 0.07 59 Philippines 0.00 0.00 0.00 0.03 0.00 0.08 60 Algeria 0.38 0.00 0.00 0.00 0.00 0.00 61 Eastern Europe 0.00 0.00 0.00 0.00 0.32 0.00 62 Ireland 0.00 0.00 0.00 0.00 0.02 0.00 63 EU 0.00 0.00 0.00 0.00 6.25 0.00 64 Israel 0.00 0.00 0.00 0.00 0.01 0.00 65 Jordan 0.00 0.00 0.00 0.00 0.00 0.00 66 Singapore 0.00 0.00 0.00 0.00 0.37 0.00 67 Turkey 0.00 0.00 0.00 0.00 0.00 0.00 68 Middle East 0.00 0.00 0.00 0.00 0.08 0.00 69 Uruguay 0.00 0.00 0.00 0.00 0.00 0.00 70 Iran 0.00 0.00 0.00 0.00 0.00 0.01 71 Other countries 15.18 14.24 12.24 9.05 0.00 0.00 Source: General Statistical Office.

133 Table 8: Export Value of Garment by Type of Production Unit, Vietnam

Unit: USD1000 Domestic Sector No. Year Total Foreign Invested Sector Total SOE Coopera- Private Mixed Household tive Sole Proprietor 1 1992 201,974 201,974 166,629 5,049 9,089 21,207 0 0 2 1993 238,847 238,847 179,135 7,165 15,525 37,022 0 0 3 1994 475,607 418,534 297,547 10,646 28,536 81,805 0 57,073 4 1995 765,461 616,196 417,942 27,557 38,273 132,424 0 149,265 5 1996 993,173 829,299 584,979 29,795 39,727 174,798 0 163,874 6 1997 1,199,664 1,007,718 698,204 41,988 53,985 213,541 0 191,946 Source: General Statistical Office.

134

Table 9: Export of Garment and Textile Products to EU by Country

1993 1994 1995 1996 1997 Country Value percent Value percent Value percent Value percent Value percent (USD) (USD) (USD) (USD) (USD) Germany 149,363,457 61.73 144,655,530 56.59 160,992,417 49.65 174,943,222 44.10 185,991,05 42.05 8 France 30,637,650 12.66 29,362,556 11.49 41,553,987 12.82 56,615,278 14.27 64,233,620 14.52 Holland 25,116,317 10.38 27,301,846 10.68 37,121,151 11.45 54,645,671 13.78 55,065,483 12.45 UK 12,052,716 4.98 14,273,268 5.58 20,208,496 6.23 29,280,659 7.38 40,719,231 9.21

Italy 16,549,973 6.84 17,093,491 6.69 20,882,023 6.44 26,080,473 6.57 28,805,069 6.51 Spain 1,767,524 0.73 10,589,182 4.14 14,101,576 4.35 18,052,966 4.55 26,530,305 6.00 Belgium 3,985,549 1.65 9,138,135 3.58 10,537,249 3.25 11,205,053 2.82 11,898,320 2.69 Sweden 0 0.00 0 0.00 7,272,521 2.24 7,999,785 2.02 9,662,851 2.18 Denmark 1,714,476 0.71 2,430,154 0.95 3,676,919 1.13 6,081,692 1.53 7,276,376 1.65 Austria 0 0.00 0 0.00 5,464,133 1.69 6,740,601 1.70 5,393,439 1.22 Finland 0 0.00 0 0.00 1,279,913 0.39 1,950,050 0.49 2,826,351 0.64 Greece 646,165 0.27 460,480 0.18 514,066 0.16 684,238 0.17 1,535,861 0.35

Portugal 0 0.00 128,190 0.05 417,287 0.13 1,603,453 0.40 1,329,637 0.30 Ireland 65,848 0.03 172,975 0.07 202,501 0.06 702,246 0.18 828,394 0.19 Luxembourg 50,400 0.02 0 0.00 0 0.00 112,091 0.03 191,576 0.04 Total 241,950,075 100 255,605,807 100 324,224,239 100 396,697,478 100 442,287,57 100 1 Source: General Customs Office

136 ANNEX 4: Comparison between FOB and CMT Business Roger Fielding, Geoffrey Willis & Associates, UK Constituent Part/ Task required FOB CMT

Select base fabric & trim Yes No

Design garment Yes No

Sample garments for selection Yes No

Refine design, resample Yes No

Make sample to customers’ requirements No Yes

Develop quality specification Yes No

Receive quality specification No Yes

Quote price and delivery Yes Yes

Agree price, payment method and delivery Yes Yes

Schedule production Yes Yes

Order raw materials Yes No

Progress delivery of raw materials Yes Yes

Receive raw materials Yes Yes

Cut Yes Yes

Sew Yes Yes

Finish Yes Yes

Pack Yes Yes

Warehouse, ship & invoice Yes Yes

137 ANNEX 5: List of Private Sector Garment Companies with More Than 100 Workers * (main cities and provinces only)

No. English Name Address City/Province Tel. Fax. Main Activities 1 30-4 LEATHER GARMENT Industrial Zone Ward 9, Ho Ho Chi Minh 8443332, 8442464 Garments MAKING FOR EXPORT Van Hue Str., Phu Nhuan 8441026, making, and JOINT-STOCK COMPANY Dist. 8445853 leather items. 2 A Dai garment Co.Ltd 220 Bis Highway 14 Ward Ho Chi Minh 8428624 Gament 17 Tan Binh Dist making 3 An Hiep Chau Co.Ltd 3 Area Str., Phuoc Long B Ho Chi Minh 8962523 8961701 Garments Ward, Dist 9 making 4 An Phu Chau Co., Ltd. Khu Pho 3, Phuoc Long B Ho Chi Minh 8962523 8961701 Jackets and Ward, Thu Duc District other garments 5 AN PHUOC GARMENT 18B Su Van Hanh, Phuong Ho Chi Minh 8655188 8350058 Jackets, shirts, EMBROLDERY AND 12, Quan 10 8350059 children's SHOES CO., LTD clothes, brassiere and sport shoes 6 APC CO., LTD Xom Moi Hamlet, Phuoc Ho Chi Minh 8962523 8961701 Jackets and Long Village, Thu Duc Dist. vests

7 Ban Co Garment Export 116-118 Ban Co St., 3 Ho Chi Minh 8392808 Shirts and Cooperative District other clothing 8 Binh Dong Garment Co.Ltd 301bc Binh Dong Station, Ho Chi Minh 8563875 8567487 Garments Ward 14, Dist 8 making 9 Binh Hoa Garment Co. Ltd 111 Phan Dang Luu Str, Ho Chi Minh 8447678 8445385 Garments Ward 7, Phu Nhuan Dist making 10 Binh Minh Industry garment 308 Pham Van Hai Ward 5 Ho Chi Minh 8915006 8915007 Clothing items Co.Ltd Tan Binh Dist 11 Binh Minh Production and 30-6 Str., Quang Trung Thai Binh 831674 834010 Towels, Trade Import Export Co. Ltd Ward, Thai Binh Town industrial sewing thread 12 Binh Son Garment Co.Ltd 1119 Xo Viet Nghe Tinh Ho Chi Minh 8992755 8991386 Garments Str., Binh Thanh Dist 8991386 making 13 Cao Minh Garment 146/150 Pasteur, Quan 1 Ho Chi Minh 8234588 8738261 Garments Enterprise making 14 Chanh Song Long 361/4/4 Nguyen Van Luong Ho Chi Minh 8754466 8763855 Indutrial Processing And Trading St., 6 District sewing and Service Co., Ltd. other trading activities 15 Cho Lon Garment Co.Ltd Binh Dang Industrial Zone, Ho Chi Minh 8501020 8503103 Garments & Ward 6, Dist 8 clothing 16 Cuu Long Garment 112B Hong Ha Road, Ho Chi Minh 09070732 Jackets, shirts Company Ltd. Phuong 2, Quan Tan Binh 9 8- 8485483 17 Dai Son Co.Ltd 229 Ton That Thiep Str., Ho Chi Minh 8583819 Garments Ward 12, Dist 11 making and other laundry activities 18 Dai Trien Trading and 48/3a Xuan Thoi Dong, Tan Ho Chi Minh 8914817 8914125 Garments for Indutry garment Co.Ltd Xuan export

* Source: VCCI, MPDF. Details accurate at the time of publishing. MPDF takes no responsibility for inaccurate information.

138 19 DAI VU GARMENT CO., 877 Nguyen Trai St., Dist. 5. Ho Chi Minh 8550472 8960695 Making LTD garments for export and domestic market 20 De Nhat Industry Garment 90/2 Pham Van Chieu Str., Ho Chi Minh 8950851 Garments Co.Ltd Ward 12 Go Vap Dist making 21 Dieu Thuong Co.Ltd Long Duc Hamlet, Tam Dong Nai 511035 511038 Garments Phuoc Village, Long Thanh making Dist 22 DONA-BITI'S 1/1 National Road No. 15, Dong Nai 813887 813786 Garments & Tam Hiep Ward, Bien Hoa shoes making City 23 DONATEX K3 Thong Nhat, Bien Hoa Dong Nai 823020 817630 Garments City making 24 Dong Anh Co.Ltd Vinh Thuan Commune, Ho Chi Minh 960614 960616 Bleaching Long Binh ,Dist 9 dying cloth, fibers. Wood processing 25 Dong Hoa Garment Co.,Ltd 308/6 Cach Mang Thang Ho Chi Minh 8495710 8442018 Garments Tam St., Tan Binh District making 26 Duc Duoc Garment Co., Ltd. 390 Hoang Van Thu St., Ho Chi Minh 8442731, 8449967 Making tents Ward 4, Tan Binh District 8449967 27 Duc Phuc Embroidery 17 Cong Hoa Ward 4 Tan Ho Chi Minh 8421558 8110938 Garments Co.Ltd Binh Dist making 28 Giai Nong Garment Co. Ltd 461 Ngo Quyen Str., Ngu Da Nang 831081 826621 Garments Hanh Son making 29 Hai Son Garment Trade 390 Hoang Van Thu St., Ho Chi Minh 8424955 8446767 Garments Production Co. Ward 4, Tan Binh District making 30 Hai Thinh Co. 15 Le Thanh Ton St., 1 Ho Chi Minh 8220193 8231864 Garments District making 31 Hepro Co. 40A Truong Trinh, Dong Da Ha Noi 8 694788 Jackets and knitted wear. 32 Hien Dat Garment 42/42 Village Road No. 13, Ho Chi Minh 8496103, 8495924 Sewing Embroidery Co., Ltd. Ward 15, Tan Binh District 8495975 jackets, gymnastic clothes and shirts. 33 Hiep Hung Co., Ltd. Head Office, 44 Hang Ha Noi 8264941 8285241 Garments and Trong St., Hoan Kiem embroidery for District export. 34 Hiep Thanh Export Garment 311 Bis Ho Van Hue St., Ho Chi Minh 8453033 8453033 Garments Co. Phu Nhuan District 35 Hiep Thanh Industry 182 Duong Ba Trac Str., Ho Chi Minh 8569372 Garments garment Co.Ltd Ward 2, Dist 8 making 36 Hieu Uy Garment Export 220/5 Slope M, Gia Tan 1 Dong Nai 867883 867746 Garments, Co.Ltd Thong Nhat Dist embroidery 37 Ho Guom Garment Co. Ltd. 7B Tuong Mai, Truong Dinh, Ha Noi 6621111 6621 111 Garments Hai Ba Trung 6620924 production

38 Hoa Binh Atr and handicraft 55 Hang Trong Str., Hoan Ha Noi 8259402 8258665 Production of Co. Ltd Kiem Dist handicrafts. Garments making 39 Hoa Binh Import Export 64 Truong Dinh Str., Hai Ba Ha Noi 6620964 6621411 Garments Co.Ltd Trung Dist 6620769 making 40 Hoan Cau Garment Co. Ltd. Truong Tho, Thu Duc Ho Chi Minh 8962010 8962009 Garments

139 41 Hoang Gia Embroidering 144 Tran Phu St., Ward 4, 5 Ho Chi Minh 8350993 8399522 Producing Garment Co., Ltd. District children's jersey wear; sport wear; jackets; trousers and shirts. 42 HOANG HAI CO., LTD 213/24 Nguyen Thien Thuat Ho Chi Minh 8358971 Garments & St., Dist.3, Trading 43 Hoang Mai Co.Ltd 23d Phuc Tan, Hoan Kiem Ha Noi 8264940 Garments Dist items 44 Hoang Trang Embroidery 89 Nguyen Dinh Chieu Ho Chi Minh 8462062 8459237 Garments, Co.Ltd Ward 4 Phu Nhuan Dist embroidery 45 Hong Phuc Textile, Garment 64/1 Road 14, Tan Binh Dist Ho Chi Minh 8551953 8551025 Garments Co.Ltd making 46 Hong Quan Textile Km 3, Highway 10, Quang Thai Binh 831689 831918 Production of Enterprise Pte Trung Ward, Thai Binh cotton towels, Town cloth. 47 HONG THAI IMPORT 67 Bis Highway 14, Ward Ho Chi Minh 8561158 8563985 Garments EXPORT GARMENT CO. 20, Tan Binh Dist 8570453 making LTD. 48 HOP HOA TEXTILE 12 Nam Vinh Tra Str., Ky Ba Thai Binh 831844 Woolen COOPERATIVE Ward, Thai Binh Town carpets. 49 Hung Phuc Export Import 64/1 Village Road No. 14, Ho Chi Minh 8551953 8551025 Garments Garment Co. Ltd. Tan Binh District 50 Hung Sang Co. Ltd. 155A Lac Long Quan St.,, Ho Chi Minh 8555975, 8551700 Making 11 District 8558328, garments. 8558510 Producing footwear. 51 Huu Nghi 2 Garment and 80 E Highway 13 Ward 16 Ho Chi Minh 8496033 8496033 Garments Trading Co.Ltd Tan Binh Dist making 52 Huy Hoang Garment And 128B Phan Dang Luu St., Ho Chi Minh 8443503, 8440153 Industrial Construction Joint-stock Co Phu Nhuan District 8442086 embroidery and garments production

53 Khai Hoan garment, 231/9 Le Van Sy, Quan Phu Ho Chi Minh 8445710 8111379 Garments Embroidery Co. Ltd Nhuan making 54 Khai Vi Textile Co. Ltd F1/37 Hamlet 6 Vinh Loc, Ho Chi Minh 8772137 7660317 Textile Binh Chanh Dist materials 55 Kim Loc Garment Co.Ltd Group 2, Hiep Thanh Ward, Ho Chi Minh 8919067 8919065 Bags, 2 Dist. handbags, sewing for export. 56 Kim Nam Garment Co.Ltd 1A-B Tran Xuan Soan Str., Ho Chi Minh 8728502 8728502 Garments Nha Be Dist making 57 Kim Thanh Textile, Garment 44/2 Ba Hom Str., Binh Ho Chi Minh 8750745 8750336 Garments Co.Ltd Chanh Dist making 58 Kinh Do Co.Ltd 6/134 Highway No. 13, Hiep Ho Chi Minh 7269473 7269472 Garments Binh Phuoc Ward, Thu Duc making Dist 59 LAN ANH CO., LTD 119 Truong Dinh, Dist. 3 Ho Chi Minh 8203508 8224735 Garments

60 Le Sy Garment Co.Ltd 1111 Huynh Van Chinh Str., Ho Chi Minh 8601239 8601239 Garments Ward 19 Tan Binh Dist making

61 Leather Garment Making for Insdustrial Area, Ho Van Ho Chi Minh 8443332 8442464 Garments export Joint stock Co. Hue Str., Ward 9, Phu making Nhuan Dist

140 62 Lien Hiep garment Co.Ltd Hamlet 1 Linh Tay Ward Ho Chi Minh 8960316 8967468 Garments Linh t©y Phu Nhuan Dist making 63 Lien Phat Plastic and 3a Truong Son, Linh Trung Ho Chi Minh 8966766 8960151 Garments Agricutural Co.Ltd Thu Duc Dist making 64 LIEN PHUONG GARMENT 4 Viet Thang Road, Linh Ho Chi Minh 8966507 8963184 Jackets, PTE. Trung Ward, Thu Duc Dist. Jeans, sportwear for export

65 LIEN THANG GARMENT, 236/62-62B Thai Phien Str., Ho Chi Minh 84.8.5639 84.8.8580 Garments EMBROIDERY TRADING Dist. 11 48 976 making CO., LTD 66 LINH GIANG CO.LTD. Group 4, thi tran Duc Giang, Ha Noi 84.4.8272 84.4.8271 Production of Gia lam Townlet. 043 956 jute footwear. Garments making. 67 Linh Phuong Garment 11D Phan Ke Binh Str., Da Ho Chi Minh 8960385 8962127 Garments Co.Ltd Kao, Dist 1 making 68 Loi Thanh Textile Co.Ltd huyen Vu Ban Nam Dinh 350- Curtain 820051 production 69 LONG HAI TRADING 65 Vo Van Tan Str., Ward 6, Ho Chi Minh 8298243 8299404 Producing GARMENT CO., LTD Dist. 3 8958175 shirts, pullover and sportswear 70 Long Phi Garment Co., Ltd 112B Hong Ha Ward 2, Tan Ho Chi Minh 848 5483 Garments Binh making 71 Mai Son Hai garment Co.Ltd 01 Vo Van Ngan Str., Thu Ho Chi Minh 8960323 Garments Duc Dist making 72 Maika Garment Enterprise 45b Tan Ky, Tan Quy Str., Ho Chi Minh 8755206 8755205 Garments Pte Binh Chanh Dist making 73 MINH HOANG GARMENT 21 B Pham Van Chieu, Go Ho Chi Minh 9965107 8293757 Exporting CO., LTD. Vap District garments, knitting clothes, swimming trunks, especially imitation hair.

74 Minh Phung Garment 210 Lac Long Quan Str., Ho Chi Minh 8650392 8650304 Garments Production, Trade and Dist 11 making. Construction Co.Ltd Trading in fertilizers, cement, steel 75 Minh Thang Garment for 117 A Phuong Sai Str., Khanh Hoa 823422 Garments Export Enterprise Pte Phuong Son Ward, Nha Making Trang City 76 Minh Tri Co. Ltd Mai Linh, Thanh Tri Dist Ha Noi 8622802 Garments making 77 MONDIAL GARMENT Truong Tho Ward., Thu Duc Ho Chi Minh 8962010 8962009 Garments EXPORT IMPORT CO.LTD. Dist. making 78 My Anh Garment Co. Ltd. Son Tay Ha Noi 7655 123 Garments production 79 My Dung garment Co.Ltd Song Than Industrial , Di Binh Duong 852740 852458 Garments An, Thuan An making 80 Nam A Garment Co.Ltd 18 A Hoang Dieu Str., Phu Ho Chi Minh 8440368 8458511 Garments Nhuan Dist making 81 Nam Phu Garment Co.Ltd 545 Huynh Van Banh Ward Ho Chi Minh 8941381 8941381 Garments 14 Phu Nhuan Dist making 82 Nam Phuong Co. Ltd 454A Tran Phu, Bao Loc Lam Dong 864136 862639 Wool Knitwear

141 83 Nam Son Co. Ltd. Thon Kim Au, Xa Dac Xa, Ha Noi 8765734 8766288 Garments Gia Lam/ 6 Nguyen Trai 8586 312 making 84 NAM THANG TRADING 2/58 Lu Gia blok of flats, Ho Chi Minh 8654358 8654359 Garments, EMBROLDERY GARMENT Ward 15, Dist. 11 embroideries CO., LTD 85 Nam Thanh Co.Ltd 33 Ton Duc Thang Str., Ha Noi 8232326 87320080 Wool knitting, Dong Da Dist garments making 86 New Asia Co.Ltd 79/9 b Xo Viet Nghe Tinh Ho Chi Minh 8990140 Garments Ward 26 Binh Thanh Dist making 87 Ngoc Anh Producing and 19/16 Ho Van Hue Ward 9 Ho Chi Minh 8454688 8454678 Garments Trading Co.Ltd Phu Nhuan Dist making 88 Ngoc Phuong Co. Ltd 231 Tran Nguyen Han Str., Hai Phong 856557 856557 Garments Hai Phong City making for domestic and export 89 Ngoc Thao Agricultural 102 Highway 1, Binh Chanh Ho Chi Minh 8750207 8750079 Trading in products processing, Dist Fertilizers, Trading and Garments sport clothes Co.Ltd and other garments 90 Nguyen Hoang Production, Dong Quan Road, Group 1, Ha Noi 8340482 8360523 Garments Service and Export Co. Ltd. Area 7, Nghia Do Str. making.

91 Nguyen Hong Co. Ltd. K42-43-44-K300 Cong Hoa Ho Chi Minh 8422119 8422155 Producing Str., Ward 12, Tan Binh jackets, shirts, Dist. trousers and children's clothes for export 92 Nguyen Tien Garment 195 Hung Vuong, An Lac, Ho Chi Minh 8- Garments Co.Ltd Binh Chanh Dist 8762805 making 93 Nhat Tan Co., Ltd 22 Au Co, Phuong 17, Quan Ho Chi Minh 496 099 428 506 Production of Tan Binh garments 94 Pacific Garment Co.Ltd 156/34 Thich Quang Duc Ho Chi Minh 8443410 Garments Ward 4 Phu Nhuan Dist making 95 Phat Hung Company Ltd 517 Hong Bang St, District 5 Ho Chi Minh 8558202 8574972 Garments for export and domestic sales 96 Phu Ha Co.Ltd 19 Nguyen Van Thu Str., Ho Chi Minh 8297114 8297648 Garments Da Kao Dist 1 8295658 making 97 PHUC YEN GARMENT 434 Pham Van Hai St., Tan Ho Chi Minh 8441726 8446361 Garments CO.LTD. Binh Dist. making 98 Phung Hoang Garment 422 Ho Van Hue Str., Phu Ho Chi Minh 8449161 8449160 Garments making Co.Ltd Nhuan Dist making 99 Producing, Processing for Group 7 Lang Ha Str., Dong Ha Noi 7760316 7760316 Garments Export Co.Ltd Da Dist making 100 QUANG MINH GARMENT 215-217 Nguyen Van Luong Ho Chi Minh 8751491 8751491 Making and IMPORT-EXPORT CO LTD St, Dist 6. import-export of garments : jackets, trousers. 101 Quoc Binh Enterprise Pte Thien Chi Str., Vinh Binh Tien Giang 838438 838438 Garments Townlet, Go Cong Tay Dist. making

102 QUOC TUAN 553/73A Nguyen Kiem Str., Ho Chi Minh 8455010, 8440418 Garments EMBROIDERING 9Ward ,Phu Nhuan Dist. making. GARMENT UNIT.

142 103 Quyet Thang Construction 304 Quang Trung Str., Ward Ho Chi Minh 8944546 8940339 Textiles, dying Co. 11 Dist 7 104 RTV Garment Factory Duc Giang, Gia Lam Ha Noi 8272220 8272220 105 SA KY MAY ENTERPRISE 79 Le Minh Xuan St., Ward Ho Chi Minh 8653243 8653243 Producing PTE 8, Tan Binh Dist. 8643799 jackets; sking clothes; shirts, trousers and garments products. 106 SAI GON EXPORT - 553/71 Nguyen Kiem Str., Ho Chi Minh 8452705 8441911 Garments IMPORT GARMENT CO., Ward 9, Phu Nhuan Dist 8441911 Production LTD 107 Sai Gon Fashion Co.Ltd 44/7 Thuan Quang, Tan Ho Chi Minh 8910137 8910948 Production of Thoi Nhat Ward, Dist 12 footwear, Garments 108 SAO MAI JOINT-STOCK A44 Highway 30, My Tra Dong Thap 851452 851423 Garments COMPANY. Hamlet, Cao Lanh Town/ making. HCMC 109 Son Chinh Co.Ltd Dong Tri, Xa Tu Hiep, Ha Noi 8615636; 8615636 Garments huyen Thanh Tri 8615799 making 110 Son Kim Co.Ltd 34 Bui Thi Xuan Ho Chi Minh 8330081 8399087 Garments, civil 8394270 construction 111 Song Be Garment Exports 30-4 Road, Thu Dau Mot Binh Duong 828013 822794 Garments Co.Ltd Town making 112 Tai Vinh Garment Co.Ltd 7B Quang Trung Str., Go Ho Chi Minh 8959300 8943712 Garments Vap Dist making. Production of kid’s bags, bags for export 113 TAN CHAU EXPORT 65/5 Thuan Kieu Hamlet, Ho Chi Minh 8910660 8910661 Producing and GARMENT CO., LTD. Tan Thoi Nhat Commune, 8916130 trading 12 Dist. garments. 114 TAN MINH CO., LTD 38ABC Dong Ho Str., Ward Ho Chi Minh 8640434 8640434 Producing and 8, Tan Binh Dist. trading garments. 115 Tan Phu Cuong Industry 59-60 Truong Cong Dinh Ho Chi Minh 8496120 8496116 Garments Co.Ltd Ward 13 Tan Binh Dist making 116 TAN QUY GARMENT 459/8 Lo I Str., Hamlet 1, Ho Chi Minh 8728203 8728203 Producing PRIVATE EMTERPRISE Tan Quy Dong village, Nha garments. Be Dist. 117 Tan Tien Co., Ltd 797 CMT8, Dist 10 Ho Chi Minh 8645281 Knitwear 118 TAN TIEN GARMENT 90/21 Huong lo 14. P 20. Ho Chi Minh 8752122 8582197 Producing COMPANY Tan Binh Dist 8582195 clothes 119 TAN TIEN IMPORT-EPORT 118/8B Thong Nhat St., Ho Chi Minh 8942534 8940382 Sewing and GARMENT, EMBROIDERY Ward 11, Go Vap Dist. 8941313 embroidery JOINT-STOCK CO. 8958889 8941302

120 TAY DO GARMENT CO., 1A Ly Thuong Kiet Str., Ho Chi Minh 8658992 8658992 Producing LTD Ward 7, Tan Binh Dist children's clothes 121 Thach Kim Co.Ltd 8B Ha Trung Str., Dong Da Ha Noi 8516494 Garments Dist 122 Thai Binh Duong Garment 166/34 Thich Quang Duc Ho Chi Minh 8442544 8442544 Garments Co.Ltd Str., Phu Nhuan Dist making 123 THAI TUAN PRODUCING & 1/148 Huong Lo 40, Cay Ho Chi Minh 8912521 8911437 Textile, fabric TRADING CO., LTD Sop Hamlet, Dong Hung production Thuan Village, Hoc Mon Dist.,

143 124 Thang Long A Co.Ltd 704 Phan Van Tri Str., Ho Chi Minh 8950760 Garments Ward 17 Dist 7 making 125 Thang Long Garment Co.Ltd 47/13 Highway 14 Ward 20 Ho Chi Minh 8565538 8561204 Garments Tan Binh Dist making 126 Thang Long Garment- 10 Road, Phu Khanh Ward Thai Binh 831725 837239 Garments Textile Company Ltd. making 127 Thang Long Textile-Dying To 16, Phuong Bo Xuyen, Thai Binh 839227 Towels making Company Ltd Thi Xa Thai Binh for export 128 Thanh Binh Company Ltd. Ap Tan Binh, Xa Loc An, Dong Nai 844785 Jackets, Long Thanh garments items and fish hooks 129 Thanh Cong Garment to16 Nguyen Duc Canh Thai Thai Binh 833612 838999 Garments Making for export Enterprise Binh Town making Pte 130 Thanh Lam garment Co.Ltd 101 Nam Ky Khoi Nghia Ho Chi Minh 8256241 8398161 Garments Str., Dist 1 making 131 Thanh Tam Garment Co.Ltd 36/9A Quang trung Str., Go Ho Chi Minh 8945791 8945791 Garments Vap Dist making 132 The Hoa Garment Co.Ltd 71 A D2 Van Thanh Ward Ho Chi Minh Garments and 25 Binh Thanh Dist wool dyeing 133 THIEN AN CO., LTD 299/22 Ly Thuong Kiet Str., Ho Chi Minh Production of Dist 11 shirts, trousers, bed sheets, blankets, pillows for children 134 Thien Dinh Garment Co.Ltd 368/1 Kha Van Can, Linh Ho Chi Minh 8961632 8- Garments Chieu Phu Nhuan Dist 8961632 making 135 Thien Phu Garment Co.Ltd 1 Hamlet., Way 15 Tan Ho Chi Minh Garments Thach Tay Village , Cu Chi making Dist 136 Thuan An Garment Co.Ltd ap Hoa Lan- Thuan Giao- Binh Duong 829822 Handbag Thuan An Dist production 137 TIEN BO INDUSTRIAL 44 Le Ngoc Han Str., Hai Ba Ha Noi 8262906 9781211 Garments COOPERATIVE Trung Dist. (179 Kham 8519731 making. Thien, Dong Da dist.) 138 Tien Long Garment Co.Ltd 55 Tran Nhat Duat Str., Tan Ho Chi Minh 8440398 8438550 Garments for Dinh, Dist 1 exports 139 Tien Tien Garment Co.Ltd Phong Thuan A Sub Tien Giang 874712 877962 Garments Hamlet, Tan My Chanh making Hamlet, My Tho City 140 Tran Thanh Cong Textile, 185 Nguyen Oanh Str., Go Ho Chi Minh 8940184 8941270 Garments Embroidery, Garment Vap Dist making Enterprise Pte 141 TRIEU CANH GARMENT 213/58B Hoa Binh St., Tan Ho Chi Minh 8653297, 8653297 Producing CO., LTD. Binh Dist. working gloves 142 Trung Viet Co.Ltd 308 Hung Vuong Str., Vinh Da Nang 822311 826084 Garments, Trung Ward, Da Nang City 846405 Sportswear, Embroidery 143 Truong Duong Garment Co. 28 Kim Bien Ward 13, Dist Ho Chi Minh 8550792 8552146 Garments 5 making 144 Truong Thanh Co.Ltd Lau 3,Cho Lon, Quy Nhon Binh Dinh 826633 826633 Garments making 145 Truong Xuan Co.Ltd Km 2 Dien Bien Str., Nam Nam Dinh 848241 848731 Garments Dinh City making

144 146 Tuan Nha Garment Co.Ltd 142/1a An Lac., Binh Chanh Ho Chi Minh 8754640 8760867 Garments Dist making 147 Tuong Hung Garment Highway 16, Hiep Thanh, Ho Chi Minh 8911025 8911090 Garments Co.Ltd Dist 12 making 148 Tuong Phat Dye Textile Co., 101/133 Bis Pham Dinh Ho, Ho Chi Minh 855 1537 8583355 Dyed fabrics Ltd. Ward 6, Dist 6 knittings 149 Tuong Vinh Industry 246 Nguyen Hong Dao Ho Chi Minh 8428679 8427902 Garments garment and Trading Co.Ltd Ward 13 Tan Binh Dist making 150 Van Phuc Weaving Van Phuc hamlet, Ha Dong Ha Tay 824663 Production of Combination town silk, woolen carpets 151 Van Thang Co.Ltd 2623 Pham The Hien Str., Ho Chi Minh 8500970 8500972 Garments Ward 7, Dist 8 making 152 VIET CANG SAFETY A13/29 Ten Lua St., Binh Ho Chi Minh 8750479 8752920 Textile and MANUFACTURE CO., LTD Chanh Dist. garments. Sewing labor protective gloves. 153 Viet Dai Garment Co.Ltd 37/3 Highway 13 Ward 15 Ho Chi Minh 8470324 8470324 Garments Tan Binh Dist making 154 Viet Ha Garment Co. 232 Phan Van Tri Str., Ho Chi Minh 8436374 8436374 Garments Ward 10 Dist 7 making 155 Viet Hong Co. 425b Highway 885 Ward 8 Ben Tre 823485 825270 Garments Ben Tre Town making 156 Viet Hung Garment Co.Ltd 10/20 Lac Long Quan Str., Ho Chi Minh 8654709 8657009 Garments Ward, Tan Binh Dist making 157 Viet Nam Garment and O house, Hang Khong Ho Chi Minh 8443618 8445714 Garments footwear Co.Ltd Club, 2 Ward, Tan Binh making Dist 158 Viet Pho Dye, woolen 3 An Duong Vuong Str., Ho Chi Minh 8750505 8750504 Garments Co.Ltd Ward 10, Dist 6 making, woolen 159 VIET THANG JEAN 2/83 Hoa Phu, Hiep Phu, Ho Chi Minh 8961424 8960104 Garments & GARMENT WASHING Thu Duc Dist. Laundry FACTORY 160 Viet Trung Co.Ltd 138 Nguyen Thi Minh Khai Da Nang 892027 826325 garments Str., Ha Chau making 161 Viet Uc Enterprise Pte Moi Sub-hamlet, Long Dinh Tien Giang 834448 Garments hamlet, Chau Thanh Dist making

162 VIETNAM GARMENT, A-Building, Aerial Ho Chi Minh 8443618 Producing FOOTWEAR EXPORT PTE. Navigation Club, Tan Binh 8445714 sport suit, over Dist. coat and children clothes. 163 Vinh Loi Garment Co.Ltd 176-182-184 Tran Hung Ho Chi Minh 8558934 8551574 Garments Dao B Str., Dist 5 making 164 Vinh Phat Co. Ltd Yen Vien Town, Gia Lam Ha Noi 8271484 8273367 Garments Dist making 165 Vinh Thanh Garment Co.Ltd 99/9 quoc lo 1, Tan Thoi Ho Chi Minh 8910102 8910105 Garments Nhat, Dist 12 making 166 Xuan Mai Silk Weaving Nam Dinh Nam Dinh 846649 849499 Silk shantung Workshop (vai dui)

145