From China to Vietnam - Drivers for Relocating Fashion Manufacturing: By Ammar Saif

From China to Vietnam - Drivers for Relocating

Fashion Manufacturing
Introduction/Scope
Apparel is one of the oldest and largest export industries in the world. Apparel production is the
springboard for the national development, and often it is the starter industry for countries engaged
in export-oriented industrialization due to its low fixed costs and emphasized on labor intensive
manufacturing.
Global fashion industry has been expanding at a rapid speed through the time. Fashion industry has
experienced major shifts globally from Western Europe, USA and Japan to South Europe and Central Europe
and China. In recent China, India and Bangladesh has emerged as the largest players in apparel
manufacturing suppliers and China has the biggest share among all due to the continuous investments in
apparel industry and cheap labor costs. Chinese industry has a growing interest of shifting to more high-tech
products rather than to low profit and intensive labor oriented textile industry. Also Chinese apparel
producers are transforming themselves from producer to brand manufacturer due to the involvement of
higher profits and growing home fashion industry, beside these factors labor cost in China has also increased
to three folds in its shore cities like Shanghai. All these factors are combinedly resulting in shifting of
apparel fashion industry to new markets for apparel production in-order to compete with rival brands and
companies.
Some countries have taken benefit from the shifting trends of apparel manufacturing industry. Bangladesh,
India, Sri Lanka, Cambodia and Vietnam are taking full advantage of this trend and trying to grab the biggest
share in apparel exports. Although Bangladesh and India are working excellent job and producing high
quality products, but still they are not able to replace China in producing high fashion products. On the other
hand Chinese industry owners are choosing nearby options for cheap labor, ease of travel and managing
factory operations to overcome the issue of increased labor costs in China. This has resulted in more and
more interest in some Far-East countries like Cambodia, Vietnam and Laos. The biggest advantage of
shifting textile industry to Vietnam and Cambodia is the location, cheap labor costs, good infrastructure, high
labor productivity and capability and ease of raw material availability from Hong-Kong, China and selffabric manufacturing industry.
Vietnam has emerged as key player in apparel manufacturing supplier in last a few years. Vietnam has
exported US$ 4.2 Billion to US$8.5 Billion and US$ 13 Billion, which is double in three years. It is the
result of high labor productivity and capability, continuous investment infrastructure by the Govt. of Vietnam
and trade agreements to EU and USA. One of the key advantages of sourcing apparels from Vietnam is its
capability of producing high fashion products which is same like China and capacity of handling small and
medium sized orders which is unlikely not being easily accepted in China. These factors make Vietnam as
the most favorable emerging markets for apparel and fashion manufacturing.
Vietnam is an emerging fashion supplier market gives a great opportunity to be explored by small and
medium sized brands and importers and especially small sized markets. Scandinavia still imports highest
share of apparels from China and due to low volume of orders, Scandinavian brands lacks in negotiation
power and usually have to accept the terms of shipment and prices offered by the supplier in China. New
emerging markets like Vietnam makes a great opportunity for Scandinavian brands and importers as they can

From China to Vietnam - Drivers for Relocating Fashion Manufacturing: By Ammar Saif
gain power of negotiation for prices and volumes with the supplier in Vietnam and in return they can get high
quality products with the higher quality of services. Also good infrastructure of transportation and seaports
make it possible to get undisturbed shipments. One of the biggest advantages of working with Vietnam is the
capability of Vietnamese supplier to communicate in English, which makes the supplier and buyer bringing
on the same level of understanding for better communication, co-ordination and understandings.
All these aspects made me keen interested in new emerging markets for fashion and apparel manufacturing
and especially Vietnam has performed extraordinarily among them. In this research work I will analyze the
current situation of fashion and apparel manufacturing in China and Vietnam and compare costs, quality,
services, infrastructure and capabilities of producing apparels oriented for Scandinavia especially Finland.