The Textile Enterprise Weaves a “Dream” Package Deal

Vietnam’s textile and apparel industry is highly open, with nearly 80% of its output exported, consistently ranking among the top industries in terms of turnover. However, it is primarily regarded as a processing industry. This perception arises from the industry’s reliance on imported raw and auxiliary materials, as well as its production based on brand labels.

In recent years, alongside efforts to localize raw and auxiliary materials and build an internal supply chain, domestic textile and apparel companies have particularly focused on taking initiative in design development. Many local enterprises have actively offered, manufactured, and sold products using their own designs.

Recently, Mr. Cao Huu Hieu, CEO of the Vietnam Textile and Apparel Group, announced that in July 2024, the Group will launch a new product development center. This center is a substantial and well-planned investment, specializing in FOB goods (taking initiative in materials and product manufacturing) and focusing on the strategic development of the knitwear chain outlined for the period up to 2025.

“We now have sufficient yarn, fabric dyeing, and garment manufacturing capabilities, but we have yet to establish a design brand that is truly Vietnamese, offering a complete package to our customers, from design to materials and manufacturing,” said Mr. Hieu. “The center aims to address this “bottleneck,” initially focusing on the knitwear sector.”

The center will be responsible for sourcing, developing samples, marketing, domestic business, and export transactions. Additionally, it will serve as a hub to support small and medium-sized enterprises in the yarn, fabric, and garment industries to join the supply chain, gradually introducing Vietnamese designs and ODM (design, manufacturing, and transportation) products to the global market.

Taking the initiative in design development to build brands and enhance the value of products for domestic consumption and export is a strategic orientation that leading textile and apparel companies have pursued for many years.

Alongside the Vietnam Textile and Apparel Group, May 10 Corporation – JSC is also exemplary in developing its design capabilities. Since the beginning of 2023, May 10 has consistently introduced and sold products featuring their own designs.

According to Mr. Than Duc Viet, CEO of May 10, the company currently has over 30 designers and approximately 200 employees engaged in new product design. Along with the application of modern technologies such as 3D and AI in design, Mr. Viet believes that Vietnamese designers have caught up with the world’s design standards in terms of integration.

May 10 continues to collaborate with leading designers from Italy, France, the United States, and the United Kingdom to facilitate rapid integration with top global designers. This collaboration enables the company to create collections for Vietnamese consumers that match international standards in terms of quality, style, and design.

Design and raw and auxiliary materials are intimately linked. Only when a wide range of raw and auxiliary materials are available can designers create beautiful, high-quality designs that meet user needs. Therefore, further strengthening the upstream segment and even achieving self-sufficiency in raw and auxiliary materials is crucial for textile and apparel companies to realize their “dream” of providing a complete package and increasing the added value of their products.

To support the development of raw and auxiliary material sources for the textile, apparel, and footwear industries, the Ministry of Industry and Trade is promoting the establishment of a Transaction Center for the Development of Raw and Auxiliary Materials for the Vietnamese Fashion Industry.

According to the Ministry of Industry and Trade’s Department of Industry, based on the Government’s Resolution No. 115/NQ-CP on solutions to promote the development of supporting industries, the Government has approved the construction of five centers, including three centers for the mechanical industry and two centers for the textile, apparel, and footwear industries. The construction of the two mechanical centers in Hanoi and Ho Chi Minh City has already commenced.

Mr. Le Trieu Dung, Chairman of the National Competition Commission of the Ministry of Industry and Trade, emphasized the importance of taking the initiative in textile materials in the context of integration. He stated that the establishment of the Transaction Center for the Development of Raw and Auxiliary Materials for the Vietnamese Fashion Industry aligns with the industry’s practical development and the Competition Law. With this center, Vietnamese enterprises will be able to strengthen their internal resources and enhance their competitiveness in the market.

Notably, the United States has recently implemented a policy allowing for the application of cross-country subsidy investigations. This policy targets processing industries and various imported raw and auxiliary materials. Consequently, if Vietnam procures raw and auxiliary materials from a third country, and that country subsidizes the production of these materials, Vietnam will be subject to taxes when using them for manufacturing and exporting. Not only the United States but also the EU is considering implementing this policy. Therefore, having a raw material transaction center is necessary for enterprises to diversify their sources of raw and auxiliary materials and avoid dependence on a single market.