Vietnam is best known for manufacturing basic ranges of garments. Even though in the South, around Ho Chi Minh City, factories are producing more sophisticated garments, most manufacturers are still focused on big volume orders of simpler styles.
Kiara Garments, a state-of-the-art factory just two hours outside of Hanoi (in Nam Dinh province), is doing something different. It specializes in making more complex mid-tier ladies tops and dresses.
Kiara is one of only around five companies doing ladies fashion in northern Vietnam. The company has invested in specialized machinery to do more advanced styles in order to stay ahead of the market.
“Workers here are very loyal and they learn quickly. They have a good hand and we are able to make good products, said Ravi Chunilal, Managing Director. His company has a dedicated training program to elevate staff skills to industry standards.
“As more investors come in labor is becoming less abundant. Fortunately for us, we are located in a fairly rural area that is considered as Zone 3, where the minimum wages are much lower than in the area around Ho Chi Minh City which is all Zone 1.,” Mr. Chunilal told Inside Fashion.
To find lower cost labor in the south, factories need to be located up to five hours outside of Ho Chi Minh City to start entering the Zone 3 and 4 designations.
Custom Built for Compliance
Kiara’s facility is completely compliant. The company uses lean manufacturing in order to reduce waste (in effort, as well as materials), and the floors are made of epoxy (instead of tiles) so they are easier to clean. The company has invested in machinery that is tailor-made for blouses and can handle soft wovens like chiffons, satins, and light viscose fabrics.
MOQs are generally 3,000 pieces per style with an assortment of colors, however the company can be flexible. Lead times average 90 to120 days from when an order is placed to delivery.
“The situation resulting from the closure of many of the dye houses in China has impacted our lead times. We’re still able to offer 90 days, but we need customers to approve things like lab dips and strike offs quicker (within 24-48 hours) because of delays on fabric from China,” said Mr. Chunilal.
Vietnam’s better factories can offer good quality at competitive prices with a high emphasis on compliance. On a purely price basis, China might still be hard to beat.
“China can make it happen, even at very low prices. However if you want the genuine compliance, due process and quality ‘package’ – at competitive prices - then Vietnam is the right answer.
Vietnam’s biggest challenge remains the lack of domestic raw materials. Investment in sewing operations as far outpaced mill investment and so most fabrics are imported from China. Most of the domestic mills are part of closed loop manufacturers whose materials are used solely for their own garment manufacturing, having little or no capacity to sell outwards.
This has led to a general lack of fabric knowledge amongst merchandisers, pulling Vietnam back behind Bangladesh..
“There’s a critical lack of knowledge about fabrics and this often causes buyers to be initially disappointed in Vietnam factories. They are not able to find showrooms where they can easily piece everything together like they do in China and Hong Kong, The lack of local raw materials has meant that local merchandisers don’t have the experience in putting together entire packages. They are generally being fed fabric from their customers who are nominating it or their China office is telling them what to use,” said Mr. Chunilal. “But that’s where we stand out. We have setup a showroom with a team of capable managers in our Hanoi office – ready to receive customer and work with them on FOB basis, something still not common in Vietnam”
However, with growing demand from existing manufacturers, and continued inward investment in new factories, there’s reason enough for mill investment not to follow. Even without serious growth in domestic weaving capacity, intermediary solutions such as fabric wholesalers and bonded warehouses are expected to start supporting the nation’s apparel supply chain and general awareness.