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ToggleLow-cost labour, tax incentives, a long history of manufacturing clothing and apparel, and a broad drive among clothes makers and brands to diversify their supply chains has seen garment and textile manufacturing become a major industry in Vietnam.
Getting clothes made in Vietnam for foreign firms and brands, however, is not always easy. From finding the right supplier to ensuring the right materials are used, and ensuring intellectual property protection, there are a myriad of considerations that need to be made.
Understanding the nuances of manufacturing clothes in Vietnam including the country’s unique business environment and business practices can be key to ensuring a high-quality product is delivered on time.
Business structures in Vietnam
Open a clothing factory in Vietnam
Setting up a factory in Vietnam involves navigating certain legal and regulatory requirements, including obtaining investment licences, complying with labour and environmental laws, and ensuring workplace safety.
Vietnam’s government actively encourages foreign direct investment in the textile sector through tax incentives and support for businesses that invest in sustainable practices. Key manufacturing hubs, such as Ho Chi Minh City, Hanoi, and Da Nang, offer excellent infrastructure, including industrial parks designed to support large-scale production, making them ideal locations for establishing a clothing factory.
Despite the benefits, companies need to consider challenges such as rising competition and increasing wage growth, particularly in major cities. However, with careful planning, investment in modern technologies, and a focus on sustainability and ethical practices, Vietnam remains an ideal location for clothing manufacturers looking to enter or expand in the global apparel market.
For more information see: How to Open a Factory in Vietnam: Ultimate Guide 2024
Use a local clothing contract manufacturer
The most common means of manufacturing clothes in Vietnam is contract manufacturing whereby a local factory that already exists manufactures a brand’s clothes on a contractual basis.
Most big apparel brands like Nike and Adidas use contract manufacturers, whereby almost everything is taken care of by the Vietnam-based factory. Note, however, that the size of these big brands and their buying power gives them a lot of control over their contract manufacturers which they often exercise to ensure quality. Smaller outfits might, however, find that they have a lot less control using contract manufacturers than they would if they built their own local business.
Clothes manufacturer factory visits in Vietnam
Most Vietnamese clothing manufacturers will have worked with foreign firms before and likely will not expect any special treatment. That said, there are a few little Vietnam-specific, cultural nuances that can help to build and strengthen relationships.
The value of connections in Vietnam
Cold-calling Vietnamese businesses is unlikely to yield results. In fact, it’s quite common for phones to go unanswered and for Vietnamese businesses not to respond to emails. Instead, business in Vietnam is generally done through connections. This can be both good and bad. On the one hand, working local connections can result in better deals. On the other, it can result in good suppliers not being considered because they simply don’t know the right people.
Getting around Vietnam
A solid number of clothing manufacturers in Vietnam are located in industrial clusters. With this in mind, buyers can usually visit a few factories in relatively quick succession.
Note that, the bulk of Vietnam’s clothing manufacturers are located in southern Vietnam. Ho Chi Minh City and neighbouring provinces Dong Nai and Binh Duong are key hubs for clothing manufacturing. All three provinces are well connected with about an hour or two travel time between them.
Raw material availability in Vietnam
Vietnam’s location in the southeast corner of mainland Southeast Asia puts it in a prime location for accessing raw materials. This section covers the availability and accessibility of said raw materials.
Fabric
Vietnam has a strong textile and garment industry, but its domestic availability of raw materials, particularly fabrics, still poses challenges. While the country is one of the largest exporters of garments, it imports a significant portion of its fabrics, primarily from China, South Korea, and Taiwan, to meet its manufacturing needs. Vietnam produces some fabrics domestically, such as cotton, polyester, and denim, but local production is often insufficient to meet the demand of its fast-growing garment sector.
Leather
Leather, unlike rubber, is not as common in Southeast Asia with countries like Italy, the US, and Brazil accounting for the bulk of the world’s leather exports. That said, Vietnamese clothing manufacturers have managed to secure relatively stable supply lines of leather in the region.
Locally China, South Korea, Taiwan, and Thailand all supply leather to Vietnam and accounted for about US$4.24 billion of Vietnam leather imports out of a total of about US$5.58 billion in 2023.
That said, Vietnam clothing manufacturers also use imported leather from the US, Italy, and to a lesser extent Brazil among a handful of other nations.
Textiles
With major cotton producers in the US in the east and Australia to the south and the bulk of processing said cotton carried out in China to the north and India just a hop, skip, and a jump to the west, Vietnam is at the centre of the world’s textiles supply. This can be hugely beneficial to Vietnam’s clothing manufacturers when looking to access suppliers of yarn and fabrics.
Intellectual property protection in Vietnam for clothing brands
Intellectual property protection can be an issue in Vietnam. Knock-off clothes can be found at local markets and small clothing stores all over the country. These are usually sold at a fraction of the cost (and are a fraction of the quality too).
Notably, Vietnam is a signatory to most of the world’s biggest intellectual property agreements, including the Berne Convention on copyright, the Patent Cooperation Treaty, the Madrid Protocol, and the Paris Convention. However, numerous problems exist in enforcing these agreements.
There have also been extensive efforts to crack down on the sale of fakes, however, it very much seems like when one counterfeit goods outfit is dismantled another quickly pops up to take its place. As a result, Vietnam basically has a permanent position on the US Trade Representative’s Special 301 Report watchlist which monitors intellectual property protections around the world.
All of that said, a lot of this is part and parcel with doing business in an emerging economy. With this in mind, the risk is not really much worse than in other parts of the world competing for clothes manufacturing business.
It’s also worth mentioning that local firms dealing with foreign brands tend to be mindful of how the misuse of intellectual property can damage their reputation and tend to steer clear.
Foreign clothing brands manufacturing in Vietnam
Vietnam has become a major hub for clothing manufacturing, attracting numerous international brands due to its competitive costs, skilled workforce, and favourable government policies.
Many renowned foreign clothing brands have established manufacturing operations in Vietnam to capitalise on these advantages.
Some of the most prominent foreign clothing brands manufacturing in Vietnam include:
Vietnam has become a key manufacturing hub for many prominent foreign clothing brands due to its skilled workforce, competitive labour costs, and favourable trade agreements. Some of the most well-known global brands that have set up manufacturing operations in Vietnam include:
Nike
Nike, one of the world’s leading sportswear companies, has been manufacturing in Vietnam for decades. A significant portion of Nike’s footwear and apparel production is sourced from Vietnamese factories, making Vietnam one of its top manufacturing locations globally.
Adidas
Adidas, another major player in the global sportswear market, also relies heavily on Vietnam for its production. Vietnam is one of the largest sourcing countries for Adidas’s footwear and clothing, benefiting from the country’s well-developed textile sector.
H&M
The Swedish fast fashion giant H&M has been sourcing its products from Vietnam for several years. Vietnam’s ability to produce high-quality garments at competitive prices makes it an ideal manufacturing base for H&M’s extensive global supply chain.
Zara (Inditex)
Zara, owned by Inditex, the world’s largest fashion retailer, sources many of its products from Vietnam. The country’s garment sector supports Zara’s fast-paced production cycle, ensuring quick turnaround times for the company’s fashion-forward collections.
Uniqlo
Japanese retailer Uniqlo has expanded its production network to include Vietnam, taking advantage of the country’s efficient garment factories. Vietnam plays a key role in producing Uniqlo’s signature casualwear and basics, known for their high quality and affordability.
Puma
Puma, a leading sportswear brand, also manufactures a substantial portion of its products in Vietnam. The country’s advanced manufacturing facilities and ability to produce complex footwear designs have made it a critical part of Puma’s global supply chain.
The North Face
Known for its outdoor gear and technical apparel, The North Face relies on Vietnam for producing many of its products. Vietnam’s experienced factories are capable of handling the intricate construction required for high-performance outerwear and sports gear.
These global brands have chosen Vietnam as a manufacturing base due to its cost advantages, skilled labour, and reliable production infrastructure. With the continued growth of Vietnam’s textile and garment sector, the country remains an attractive destination for apparel manufacturing.
Key clothing manufacturing locations in Vietnam
Vietnam’s clothing industry is concentrated in several key regions, each with its own unique strengths and characteristics.
Southern Vietnam is the largest centre for clothing manufacturing, with Ho Chi Minh City and surrounding areas, Dong Nai Province, and Binh Duong Province being prominent hubs. This region offers a well-developed infrastructure, a skilled workforce, and a favourable business environment.
Central Vietnam, including Da Nang and Quang Nam Province, has a growing clothing industry with a focus on mid-range to high-end products.
Northern Vietnam, while not as heavily concentrated in clothing manufacturing, has a growing number of factories and suppliers, particularly in Hanoi.
It’s important to note that the specific locations of clothing manufacturing facilities may vary over time as the industry continues to evolve and expand.
How to find a clothing manufacturer in Vietnam
Business matchmaking services are platforms that connect businesses with potential partners, customers, or investors. These services often specialise in specific industries or regions, allowing businesses to find the most relevant connections. Matchmaking services can be particularly valuable for small and medium-sized enterprises (SMEs) that may lack the resources or networks to find suitable partners on their own.
By leveraging matchmaking services, businesses can expand their networks, discover new opportunities, and potentially form strategic alliances. These services can also help businesses to enter new markets, find suppliers or distributors, and secure funding. Matchmaking events, such as trade shows and conferences, are often organised by matchmaking services to facilitate face-to-face interactions between businesses.
What’s next?
Vietnam clothing manufacturers are a dime a dozen and with excellent access to key raw materials and relatively low-cost labour, making clothes in Vietnam can be relatively easy and cost-effective.
There are a number of big brands manufacturing clothing in Vietnam already and they have been for years. In this context, Vietnam is well prepared for new brands to enter the market, and with the right support, foreign brands can realise real value in clothing manufacturing in Vietnam.
With this in mind, to keep abreast of what’s happening in Vietnam’s clothing manufacturing industry, foreign clothing brands should make sure to subscribe to the-shiv.