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Growth is a way of business in Vietnam!

by Deepak Mohindra

27-September-2019  |  4 mins read

AOV September 2019

The debate on why Vietnam is on a winning streak is an ongoing one. Anyone working with Vietnam in any capacity can feel the positivity, and others who are not even directly connected to the country are showing interest to know what this small country has done to become a juggernaut of the global apparel industry.

It is indeed a matter of pride for Vietnam that it has grown so fast in the last few years, despite global challenges. And the biggest positive is that there are expectations that the growth will continue unabated for the next few years.

Of course, the internal challenges continue; the most recent being the rising taxes and interest rates. Reports suggest that there are many firms, which have not been able to make profits despite achieving their set targets and goals for the year – And this happens because of huge loans worth hundreds of billions of dongs, for which these companies have to pay exorbitant rates of interest. This is a concern every small and medium industry has been facing in Vietnam for quite some time now.

So, while the world is talking about how much EVFTA and CPTPP could help industries in Vietnam grow, including apparel and textile sector, the industry is facing its own struggles.

Yet, the ground reality in terms of business growth cannot be ignored. Claims from official sources are already coming in that apparel exports will cross US $ 40 billion this year, after registering US $ 36 billion last year.

Can such figures be ignored, of course not? As media to apparel exporting countries in South East Asia, my team is often asked what Vietnam companies are doing that has given them such wings.

The reply is not so simple, because the efforts have been made over a period of time and the phenomenal statistics have not come in a day. The country has strategically been working to brand its industry as a quality producer of high-end products, for a long time.

Now when China is reducing its penetration in the apparel trade and the US is looking for options, Vietnam is obviously the best choice. Everyone knows that Vietnam has taken advantage of its proximity to China and that a lot of investment from Chinese companies have been made in the country, which has added to the frenzy.

But what many don’t realise is the ground efforts that companies in Vietnam have made to stay competitive, while their Government has fought many battles to forge alignments with key markets that other countries can only dream of!

There is no obvious focus on environment sustainability, but the laws of the land are so stringent that environment compliance is a ‘must have’…, there is no compromise. Similarly the labour laws are inherently labour-friendly and there is no need to monitor as the workers themselves are well educated and informed of their rights.

Further, the buyers know that quality will not have to be closely watched, because it is a part of the training. Workers are diligent and respect the work they are doing. No one needs to keep reminding them that they are working in a global business.

With such a strong foundation, any added advantage is a value add and can only push the industry higher up on the sourcing curve.

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