Hai Phong, Hải Dương or Thái Bình! Ready to rub shoulders with big boys

by Apparel Resources

17-July-2019  |  12 mins read

Amann Group

Vietnam’s apparel and textile industry has traditionally centred around Ho Chi Minh City and Hanoi, which have been the two very important apparel hubs of the nation. Da Nang, in Central Vietnam, too has seen quite a few garment industries come up over last few years though it still has some distance to cover. To an outsider, however, the industry basically thrives in these three cities located in three different directions of the country.

Team Apparel Resources (AR), during its numerous visits to Vietnam over the last few years, has tried to explore other lesser known but equally significant hubs in the country – mainly to ascertain why they cannot be ignored. While covering Nam Dinh’s slow but steady growth as a garment hub, Team AR in one of its earlier issues vehemently stated that if the Government works on policies favourable for the province, then Nam Dinh could very well regain those glorious days for which it was known in the pre-’90s.

When the Seidensticker Group, which produces some of the finest quality shirts, launched its second production plant in the port city of Hai Phong, Team AR decided to find out what was attracting all the apparel groups – big and small – to small cities like Hải Dương, Thái Bình or Hai Phong.

The group made it clear that the objective behind the opening of this new factory was to satisfy the continuous demand of producing sustainable products. Back in 2007, the Group had opened its maiden company-owned production plant in Chi Linh near Hanoi, while today, a decade later, the Group’s preference for a place like Hai Phong shows the gradual emergence of small hubs in the country. Both the plants in the country cover a total area of 22,500 square metres employing over 1,500 people.

While the Chi Linh plant has been consistently producing shirts and blouses for over a decade, this new plant at Hai Phong intends to make dresses for its private label business. Explaining the same, Gerd Oliver Seidensticker, Co-Managing Partner at Seidensticker Group, mentioned “In addition to our brand, the private label section is growing rapidly as a part of the group of companies and this makes the plant at Hai Phong more significant.”

Hai-Phong

Hai Phong, which is the third largest city in Vietnam, is gradually emerging to be favourite with many apparel establishments mainly owing to its logistics facility as all goods can be easily consolidated in the Hai Phong port. “One of our vendors Regina Miracle has its factory in Hai Phong, which is now planning to further expand its workforce. The factory is built in the new VSIP park, which is highly developed,” substantiated Rahul Verma, Director of Quality, L Brands/Mast. Nomura Fotranco, Vina Mode International, Hop Thinh, Witco, SaoMai Trading Co. Ltd., are some other prominent apparel or footwear companies that have established their base in Hai Phong.

The north of Vietnam, which boasts of cities such as Hai Phong and Hải Dương, is becoming a favourite with every Chinese supply chain majorly owing to these cities being very close to China. Rahul adds “There is a direct flight from Shenzhen (China) to Hai Phong, much to the delight of the Chinese businessperson, who now don’t have to fly via Hong Kong.”

Similarly Mayhai, which is one of the prominent apparel manufacturers in Vietnam since last two decades, has all its factories in Hai Phong. Just 9 kilometres from Hai Phong port and 120 kilometres from Noibai International Airport help the firm deliver products to the port or the airport in no time.

There isn’t much that any company asks for! “Hải Dương, Hai Phong, Thai Binh or Nam Dinh are all close to Hai Phong port, Besides, the skill sets among the workers are good at all these places and most importantly land prices are also good. The industrial parks too are of high standards and this is what every company looks for. The only concern is that the Hải Dương and Hai Phong roads are increasingly getting busy,” said Greg Fleming, Chief Operational Officer, Elise Fashions.

Agreeing to what Greg said Hanh Van Nguyen, CSR Advisory, Audit and Training Manager, OneStep Viet Co. Limited said, “If you want a location near port, then there is nothing better than Hai Phong. Hai Phong has an international port. As far as land cost is concerned, I think both Hai Phong and Hải Dương are on same level. The regional minimum wage, however, is higher in Hai Phong.

Hải Dương is indeed another favourite destination emerging fast with Hai Phong. Regent Garment Factory Ltd., a member of the Hong Kong-based Crystal Group, recently got approval in principle from Hải Dương Province’s People’s Committee to set up its third garment factory in the Nguyên Giáp Industrial Complex in Tứ Kỳ district of Hải Dương province.

Built at a cost of US $ 39 million, this new unit expects to produce 28 million of apparel products. But, most importantly, it will create jobs for nearly 5,000 people. And it isn’t anything new for the company; Regent Garment Factory had set up its first 2 factories at the same city. While, the first in the Nam Sách Industrial Zone is valued at US $ 64 million, the second in the Lai Vu Industrial Zone is worth US $ 124 million, producing 170 million garment products each year.

Like Hai Phong, Hải Dương too has benefits of less labour cost, less land cost and better transportation facilities, so why wouldn’t anyone like to be here! It is imperative to note that the Hải Dương granted licenses to 13 foreign-funded projects (worth US $ 103.3 million) in October 2018.

MXP Factory

Then there is Thai Binh, which is located 110 km from Hanoi. Manufacturing Sportswear Joint Stock Company, better known as MXP JSC, which is one of the prominent apparel manufacturing companies in Vietnam, has already started the construction of its another factory in the Quynh Phu district of Thai Binh Province. This new factory, built at a cost of US $ 16 million, is set on an area of 80,000 square metres and plans to employ a workforce of up to 3,500 people.

The company is excited about the opening of its seventh factory in Vietnam, which is its first in Thai Binh and easy availability of labour has been one big source of attraction for the firm. “Thai Binh is the best for any garment factory. It is near to Hai Phong port, has lower land cost, and has easy availability of cheap labour and that’s why there are so many garment factories here already,” reasoned Anh Nguyen Duc, Sales and Marketing Manager, Knauf Vietnam, while substantiating on why Thai Binh is a favourite of many apparel companies.

Spectre

The TAL Group which, according to its website, manufactures one out of every 6 shirts sold in US, too runs a textile and garment factory in Phuc Khanh Industrial Park in Thai Binh. Around 3,000 people are at present working in that factory. When Spectre first came to Vietnam in 2010 with Minh Tri Company Limited, it opened a factory in Thai Binh and over the last decade the business has been so good that it recently went ahead to open another factory in Nam Dinh, with 100 per cent investment from Spectre A/S in Denmark.

Among many cities and provinces, Quang Nam in central Vietnam is another under-rated province. It is just 1.5 km from Da Nang and is developing so fast that many Korean and Sri Lankan investors have been pouring money in the region. Besides nearness to China, is attracting Chinese investors too. The German-based Amann Group had last year set up a US $ 14 million thread factory in Tam Thang Industrial Park in Quang Nam. It is one of the 15 investment projects in Tam Thang Industrial Park (13 of them being foreign-funded ones) worth US $ 199 million. “Quang Nam has beautiful industrial parks, easy transportation facility and skilled labourers,” said Han Chul Joo, Assistant General Director, MTV Panko Tam Thang Company Limited.

Similarly, Quang Ninh in north-eastern Vietnam is very near to Hải Dương and also to Hai Phong port, and therefore enjoys most of the advantages that these cities have. Also, there is a good availability of human resources, which is luring many companies to this region.

One mustn’t forget here that while Hanoi is the political capital of the country, Ho Chi Minh City remains the commercial capital of the nation. And regions like Hải Dương, Hai Phong or Thai Binh or any other region mentioned above, despite all their skill and locations, have a long way to reach anywhere near the principal cities. However, low cost and readily available workers will keep bringing the companies to all these small cities and provinces. As Nick Nguyen, Sourcing Manager, Fruit of the Loom Europe, summed “All the regions have their own advantages and it depends on what the companies want – it could be local cost, easy availability of workers or easy transportation.”

‘Nothing, no one, is too small to matter. What you do is going to make a difference’.

Madeleine L’Engle, US Fiction Writer

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