Vietnam, from sewer to buyer

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Vietnam has grown from a “production hub for the apparel industry” into a “big fashion market” that has made international casualwear brands to rush setting up retail shops.

Atsushi Tomiyama, Nikkei staff writer has looked into the fact that Vietnam, after years of being sewing supplier for many international clothing brands, has now become one of the buyers.

Fast fashion on the rise

Fast fashion has now becoming more popular in Vietnam because of its quick response to the fashion trends and offers a reasonable price. Since last September, Zara has opened its first store in Vincom Ho Chi Minh City, following by the second one in Ha Noi in the coming month of this year. Also, last Saturday, Sweden's H&M Hennes & Mauritz debuts its first H&M store in the same complex, making Vincom Center mall an emblem of casualwear's growing popularity in Vietnam.

Grand opening of H&M at Vincom Center Dong Khoi, Ho Chi Minh City.

Even though Zara offers products at a much higher price, double of what would find in a Vietnamese street markets, many customers still enjoy shopping clothing at this Spanish chain store.

A Hanoian customer shared after purchasing 10 million VND (440 USD) worth of clothes: "I like how fashionable the design is. It's expensive, but it's good quality. I bought some for friends, too."

The success of H&M and Zara in Vietnam has caught attention of the Japanese fast retailing Uniqlo. The company began recruiting staff in Ha Noi and Ho Chi Minh City in May. U.S. apparel corporation Gap also opened its first Vietnamese Old Navy outlet in Ho Chi Minh City in June and added a Ha Noi location in early September, with a third store to come within the month.

Shifting from sewer to buyer

Vietnam has been a popular sewing supplier since China’s labor costs had risen drastically. Many Vietnamese textile companies have teamed with many foreign apparel and textile such as Aoyama (Japan), Pierre Cardin (France) and many others. Textiles contribute more than 10% of Vietnam's gross domestic product and serve as the country's second-biggest industry.

However, according to Atsushi Tomiyama, the pollution incident in the central province of Ha Tinh has somehow shifted the attention of consumers. Vietnamese customers are increasingly focused on quality and prefer to pay higher price for better quality products. 

Vietnam's total retail sales increased 10.2% in 2016 and per-capita GDP reached 2,300 USD, reflecting rising purchasing power.

The same purchasing behavior reflects on other products such as vegetables. Organic vegetables from Bac Tom or VinEco may cost three to four times higher than street market produce, but that does not spoil their rising popularity.

Many retail shops are selling B-grade goods misappropriated from factories. (Photo: Phunutoday)

The writer believes that despite loosing the sheen as a production hub, but the purchasing power of the growing refined buyer behavior of 93 million people, still oozes appeal.

Besides the positive outlook of the growing purchasing power, foreign fast retailing like Zara and H&M still have to face many challenges.

The Vietnamese market is still flooded with B-grade goods misappropriated from factories. They are roughly equal in quality but only half the price. The author from Nikkei stated the fact from one Hanoi-based source that, local plants sometimes will "deliberately dirty a certain proportion" of output to trade on the black market for profit.

He believes that these illicit competitions are often a desperate attempt to stay avoid harsh terms imposed by foreign companies. However, to ensure healthy market growth and fair competition, the government and other bodies need to take action.

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