Each week I conduct a webinar to share with you six tips for producing apparel in Vietnam. I also answer questions on a first come first serve basis. Would you like to join the webinar?
You can join the webinar on your laptop or mobile phone.
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Make sure Vietnam makes business sense for you.
Plan to produce more than 1,000 in Vietnam or start locally.
Pay a design studio to help you choose the details of your design and create a tech pack for you.
Know what kind of factory you would like to work with and visit them to confirm they meet your requirements.
Managing production in Vietnam by email is not realistic. Someone should be in Vietnam to oversee development, sampling and production. Someone you trust.
Before you start learning about production make sure you have a loyal following.
After you sign up please send me your questions in advance so I can prepare answers and prioritize who to answer first.
Please read this article I wrote about tech packs prior to the webinar. I will be referencing this article.
The next question they will ask you is: what is the quantity per style per color and how often will the order repeat. We all know that you want to reduce your risk. You want to produce as little as possible and sell out your inventory before ordering more. The thing is, you will be getting a 100% to 600% mark up when you sell your garments. What will the factory make? The factory is lucky to make a buck on each piece. If you only want to produce 300 or even 1,000 the factory will most likely breakeven or lose money. Hence think twice about producing overseas if you are doing less than 1,000 pieces per style per color. During the webinar I will take you through a number exercise to illustrate this point. This is what I do as an apparel manufacturing consultant in Vietnam helping clients.
Read more about MOQs here.
Start your Vietnamese production in three steps. I am assuming you haven’t documented your designs and have not found a reliable factory. This is my manufacturing consultant in Vietnam best practice advice.
1. Hire a professional tech pack freelancer to create your tech pack(s).
2. Communicate the big picture by listing your preferred purchase order quantities.
3. Email your tech pack and preferred purchase order to Vietnamese factories and follow up aggressively.
All the big names like Mango, Zara and Forever 21 use tech packs when producing garments in foreign countries - it is an industry standard practice. A tech pack is a technical document that describes all the details of your garment. You will spend at least $500 per tech pack, but in the end, you will save $1,000s. Don’t waste your time or the factory’s time contacting them without tech packs. To create a tech pack correctly requires training and experience in garment technology. In another chapter I describe in detail what goes into tech packs. Below I introduce you to fashion incubators and freelancers who can help you create tech packs. Trust me on this point, hire a freelancer, then your chance of getting it done right the first time is high. The quickest way to get accurate quotes and samples made is by having perfect tech packs prepared in advance. The only missing piece of information will be quantities. This is why I suggest step two, communicate your quantities.
Communicate the big picture by listing your preferred purchase order quantities. Show the quantities broken down by style, fabric, color and artwork. This is important because the price is based on quantity and factories have minimums they must meet for knitting, weaving, dyeing, printing and embellishing which I describe later. If the quantities are too low then factories can not offer cheap prices. Also, if your quantities don’t meet their minimum’s then they will tell you right away and save you time and money. Million dollar manufacturing consultant in Vietnam tip.
The third step is to contact factories. There are three ways to contact factories in Vietnam. You can can find them on websites like Alibaba.com, Globalsources.com, and Foursource.com. You can contact Vietnamese garment associations like Vitas, Vinatex and Agtek. Or, you can meet factories at trade shows like Sourcing at Magic, Globalsources Fair, or Canton Fair. Once you have the factory contact details, email them your tech pack(s) and preferred purchase order quantities. I recommend you attend trade shows to meet the factories in person. See the samples they have at the show, get an idea on pricing and show them your tech packs to confirm they can produce what you want in the quantities you want.
Follow up aggressively with the factories that meet your requirements. Push them to get quotes within two weeks. Compare the prices and customer service levels you get from each factory. Then, when the feeling is right, travel to Vietnam to visit the factories. Work face-to-face with them as they make a counter sample, then negotiate the final price per piece. Be prepared to make a deposit, usually 20%, and approve pre-production samples. This is my best garment and textile expert in Vietnam advice.
In my ebooks, I list fashion incubators and freelancers around the world for you to contact. They can either make tech packs for you or introduce you to garment technicians who can. This is some of my best manufacturing consultant in Vietnam suggestions.
I decided the best approach was to find an agent to help me find local manufacturers and manage some leads. This is when I found Chris on Google. His reply to my inquiry was right away and he agreed to meet. Not only did Chris confirm that he could present me with as many factories as I required, but more importantly he really guided me in the sense of taking a step back and before searching any premises he introduced me to all the local details and difficulties that I would encounter when manufacturing in Vietnam. It was very enlightening to see his approach of first understanding what my product was, what I wanted to achieve, what were my needs and the problems were. Together we analyzed these requirements and we were able to narrow down the best manufacturers and approach for the local market. I am ever so thankful for the support, patience and more important for the great knowledge, tips and guidance Chris gave me on the whole process of manufacturing in Vietnam. He is a clothing manufacturing consultant in Vietnam worth knowing.
Thank you Chris!"
Why is the Vietnam price often higher than the Chinese price?
My name is Chris. I am an American who has been living in Vietnam since 2008. I work for a sewing factory as the marketing manager and I guide start ups investigating Vietnam. More and more people are contacting me and they all say the same thing. China is not working for us anymore; we need to find new factories in Vietnam. They expect Vietnam’s famous high quality at a cheaper price than their China price.
There is a low supply of Vietnamese factories with experience and capacity. There is a high demand for capacity – orders normally placed in China are looking for a new home. The problem is that Vietnam is small compared to China. In an article written by Dr. Sheng Lu he shows that, in 2017 China exported to the USA $US27 billion worth of garments whereas Vietnam only exported $US11.5. China has 10 million people working in the garment production business. Vietnam has 2.6 million. Vietnam is opening new factories every month, but will never be able to absorb all the orders running out of China due to the relative size of both countries.
The supply and demand imbalance means that Vietnamese factories are not motivated to offer high quality at low prices. They offer high quality at high prices. Why should they go the extra mile to offer a price cheaper than China when they have enough customers willing to pay their China +1 price?
In the world, there is what I call the best-world-price (BWP) for every garment. The BWP is not just about price. The BWP takes into account customer service, payment terms, on-time delivery, quality control and factory certifications. I believe that China still offers the BWP because they are experienced, they have economies of scale and they produce everything in their own country.
The challenge for apparel sourcing managers today is to stay in China and find innovative factories that do offer the BWP. They still exist, they are just fewer. It is harder to get the BWP due to China’s transition from low labor cost manufacturing to high tech manufacturing. It is harder to get the BWP in China due to the Chinese government environmental crackdown. It is harder to hire the best Chinese factories because they are producing more and more for domestic consumers – not for export. It is harder to get the BWP in China because of rising labor cost in the legacy manufacturing cities like Guangzhou, Shaoxing and Huzhou. But still, China has the BWP price.
The second reason the initial Vietnam price will be higher than a China price is that Chinese factories have more experience in production processes and costing accuracy.
The Chinese have been mastering the art of garment production since the 1980s. Vietnam garment industry came of age when they joined the WTO in 2007. The Chinese have just been at it a longer and figured out all the tricks to maximize production efficiency. Efficiency comes down to how much time it takes to produce one garment with no mistakes. Whether you measure it by garments by line per day or standard apparel minutes. The Chinese are faster.
Vietnamese factories have lower productivity because many of them started off as state owned enterprises and operate very conservatively. The motivation, discipline and training to maximize productivity is not part of the legacy socialist management systems. The same is true for China but China is 30 years ahead of Vietnam in their evolution away from socialist management style.
Vietnam is learning and applying industrial engineering practices to improve production efficiency. They are using sewing templates. They are using folding boards. They are buying automated machines. They are using longer cutting tables. They are using standard allowed minutes to calculate costs. They are implementing software solutions like Intellocut and Intellobuy. Industry 4.0 is just around the corner. In due time, Vietnam factories will become as productive as Chinese factories and the Vietnam price will become competitive - in line with its wage advantage.
Talking about costing accuracy, when quota restrictions still existed in Vietnam, past performance pricing was used to determine quota allocations and set pricing. Quota restrictions no longer apply but the mentality of gauging future pricing based on past performance pricing is common. It will take years for Vietnam to evolve into using more efficient pricing methods as it took China decades to reach where they are today.
Vietnamese factory owners look at their profit and loss statements to gauge the accuracy of their price. If they turn a profit for the month or year then their Vietnam price is right. In a price breakdown, you have fixed costs like fabric, trims and accessories which are easy to determine. The rest of the price components are more difficult to ascertain. Price components like electricity, water, upkeep, labor, government fees and capital investment are not easily broken down as line items in the bill of materials for each garment. Basically, factories are guessing what the non-fixed costs are per garment. They guess on the high side to protect themselves.
The final reason that the initial Vietnam price is higher than your China price is because of fabric. 86% of the garments produced in Vietnam are made from fabric produced in China, Taiwan or Korea. When Chinese buy fabric from Chinese partners, they get sweetheart deals compared to the price Vietnam buyers pay. The price difference gets even bigger when a Vietnam sewing factory buys small quantities through wholesalers. Then there is the added transportation from China to Vietnam. If imported fabric is not re-exported as a sewn garment within 275 days then 10% duty must be paid to the Vietnamese government. Finally, there is the hidden cost of handling defective fabric. If fabric from China is received and 20% defective, who pays for the cost of getting replacement fabric? Fabric sourcing is Vietnam’s Achilles’ heel.
Yes, there are many large fabric producers in Vietnam like Tiong Liong, Huge Bamboo, Hualon and Formosa who can produce quality fabric cheaply. But, they have long term contracts with the Nikes of the world that use the majority of their capacity. What little capacity is left to sell locally is sold at a China +1 price.
It is important to note that when I refer to Vietnamese factories, I am not including factories operated by Chinese, Taiwanese or Koreans. These foreign owned factories in Vietnam offer the BWP because they bring with them decades of industrial engineering experience. They can hit the Walmart price. They typically are fully vertical or have sweet heart deals with fabric suppliers in China. Good luck getting in. Their MOQs usually start with 5,000 pieces per style per color.
So, what can Vietnamese factories do to offer a price lower than the China price. They can source cheaper fabric, improve their efficiency and qualify for free trade agreements.
What can buyers do to get the BWP in Vietnam? Know your China price to have a reference point. Add a bill of materials to your professional tech packs to facilitate breaking down the price of every component. Pro-actively source fabric, trim and accessories on your own to, again, have reference prices. If you feel that the factory is not efficient, then ask why and encourage them use new technologies like automation, fabric cutting software or templates to improve their efficiency.
If you have a good supplier in China then focus your energy on building that relationship and innovating together with them before investing time and money searching in a new country like Vietnam. It’s not realistic to just fly down to Vietnam, meet some new factories and place orders. Vietnam has its language and cultural barriers that take time to adjust to as in any foreign country. The first price won't be the best price.
There are opportunities in Vietnam and Vietnamese factories are improving every day. If you are dead set on sourcing production in Vietnam then I can introduce you to many factories and you can work with them directly to begin the courtship, start the discovery journey. One thing you can count on is good food, nice weather, friendly people and easy transportation.
If you work with me in Vietnam then I want to make sure you are here for the right reasons.
Contact me today!
1. Which styles do you want to manufacture first?
2. Do you have tech packs?
3. Do you have any special factory requirements?
4. Have you produced before? If yes, then in what country?
5. What quantity per style per color do you order?
6. Does your company have a website?
7. Do you want to work with an agent or directly with the factory?
8. Do you plan to visit Vietnam?
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Overseas Apparel Manufacturing Expert
Ho Chi Minh City, Vietnam
Author and Consultant