Consumers shop at the Vietnam International Fashion Fair 2017 in Hanoi last December (Photo: VNA)
Exports of popular brands have raked in tens of billions of dollars each year – but with a population of 90 million, few firms are focusing on local customers.
Instead, more and more foreign labels are selling in Vietnam.
According to the Vietnam Association of Retailers, more than 200 foreign fashion brands are present in Vietnam, accounting for more than 60% of the market share from medium-end to high-end products.
After a year in the Vietnamese market, Hennes & Mauritz AB (H&M) - Swedish fashion firm – plans to increase the number of its stores to six next month.
Zara also has stores in Hanoi and HCM City.
Meanwhile, other foreign fashion brands such as Mango, Stradivarius, Massimo Dutti and Topshop has recently joined Vietnam’s market.
After a period of developing brands of Vietnamese goods, fashion firms such as Viet Thy, Foci, Sai Gon 2, Ninomaxx and PT 2000, have forced to narrow their production scale.
For instance, Sai Gon 2 Garment Joint Stock Company launched 70-80 new products before but has made only about a half of this number at present. Production for the domestic market of the company has also decreased 20%-25% compared to 2016. Now, Saigon May 2 has accepted to lose the domestic market.
In order to survive in the market, Foci has been forced to cut all new investments and narrowed the store system.
To compete, they are now focusing on selling uniforms and developing more online sales.
Nguyen Van Tang, director of the Manh Cuong Garment Co Ltd, said it is better for his company to export workwear to Japan than to sell at home.
In addition, Hoang Huu Chuong, chairman cum general director of the Nguyen Hoang Corporation, said the trade war between the US and China would make more Chinese goods, including textile and garment products, enter the local market. The textile and garment companies have also faced the problem of counterfeit and fake goods.
Chuong said the authorities need to confiscate counterfeit and fake goods at border gates and market management agencies need to crackdown on businesses and individuals involving in the wrongdoings.
However, local textile and garment enterprises need to overcome weaknesses in design, materials and distribution systems, according to Chuong.
In fact, Vietnam is not lacking in raw materials, said Chuong, adding that it is important to design products made from those materials. If they use foreign design and imported materials, Vietnam would never have a developed fashion industry, he said.
Chairman of the Vietnam Textile and Apparel Association Vu Duc Giang said that it is necessary to start from the training stage to develop the fashion industry.
"We need to train students so that they not only can design clothes as usual and but also design from yarn and fabric," Giang told the Thoi bao kinh doanh (Business Times) newspaper.
He said domestic businesses are often not financially stable so developing a distribution system is often tricky. A solution, he suggested, would be for different businesses to work together.
Pham Xuan Hong, chairman of the HCM City Textile and Apparel Association, said the association has proposed creating a design centre in the city to host trade events and encourage better connections for the industry.
Le Tien Truong, general director of the Vietnam Textile and Garment Group, suggested the group’s member companies could share their distribution systems and sell products in each other’s stores.