With a population of 87 million people and 4 million tourists a year, the local market is a target that Vietnam's textile and garment companies aim at in the context of economic recession and hard time for export. However, after many years of reaching overseas markets, it is not easy to dominate the domestic market.
Exit door
Le Quoc An, President of Vietnam Textile and Garment Association, worryingly said: Vietnam's textile and garment is facing many difficulties in export. This situation not only occurs in the last months of 2008 but will also last in the whole year of 2009.
To reverse the situation, enterprises have to find their way-out by turning back to the local market. In October 2008, the national distribution network of Viet Tien Garment Joint Stock Corporation intensively carried out marketing activities to launch in the market its new brand Smart Casual - office fashion for middle-aged class. This is one of the Company's strategies to win the home market. Viet Tien is one of the leading companies in the Vietnam textile and garment industry that has dominated the domestic market with such brands as Viet Tien, Vee Sendy, and TT-up. To further exploit the advantage of home market, Viet Tien has invited 40 designers and introduced more high-classed fashion brands that clearly show the market segments like Fan-Fciar for office-men, or Manhattan for the young officials.
Not only Viet Tien but a number of other textile and garment enterprises also turn to serve local consumers, for example Thanh Cong Textile and Garment Company, Nha Be Garment Company, etc. Ngo Thi Bau, Director General of Nguyen Tam Fashion Company - Foci, said Vietnam with the young generation occupying 60 per cent of the population was the potential market for fashion business. On the occasion of commending typical textile and garment companies in 2008, up to one third of 51 enterprises were evaluated to well dominate the home market. In terms of suits, domestic and overseas consumers are reminded of brands Novelty and Cavaldy of Nha Be Company. Similarly, some other brands that found a firm position in the local market are Mollis, and Pop (Phong Phu Corporation), Three Camels, and Brilliant (Viet Thang Textile), Lencii (Thai Tuan Weaving), Lenviet (Vietnam Wool Company), Nosi, Jump, and Bloom (Hanoi Textile and Garment), Pharaon Series, and MMTeen (Garment 10), F-house, and F-Jeans (Phuong Dong Garment). Local consumers are no longer unfamiliar with the fashion brand Wow for women made by Son Kim Investment and Development Limited Company. Noticeably, developing distinguished products to reduce competition pressure is also a direction that many enterprises select. Most typical is Kico clothes brand for kids made by Nguyen Hoang. Especially, some companies consider the domestic market as the place for them to share creative designing ideas like Sai Gon DK Tie Textile and Garment Limited Company. The Company's employees can weave and sew a tie by a customer's design in 21 minutes.
Regarding successes in the home market, it is impossible to skip Vietnam Fashion Trading Company with the system of Vinatex Mart. To date the system has grown into 52 shops, supermarkets and trade centres in 22 cities and provinces, specialising in trading fully home-made textile and garment products. The Company sells 320,000 article codes and more than 11 million products a year. Director Nguyen Thi Hong Huong said: "The Company will design a detailed routine of annual consumption power by 2015 for each category so as to invite the cooperation of designers and producers. Together with upgrading the existing sales points, the Company will open new ones, especially in crowded areas to obtain the target of 80 outlets by 2010".
Overlooking a lucrative piece of cake
It can be seen that after a long time, many textile and garment enterprises as paying too much attention to production for export has ignored the home market, which is considered as "a nice piece of cake of many people's desire". Economic crisis, export difficulties are the good opportunities for these businesses to take a serious look at the local market. However, to control the home playground, they must conduct methodical studies on consumption demand and tastes.
One important element is that enterprises must own home fashion brands. Phan Van Kiet, Viet Tien Deputy Director General, remarked: "There are only a few fashion brands for the domestic market. If this market is not concentrated, Vietnam's fashion industry will face a lot of difficulties when the retail market is open for international fashion brands in 2009".
Sharing this concern, Le Quoc An, Vinatex President, worked out that a cheap fashion product was sold at VND60,000 while its whole sale price was VND50,000, so the profit would be VND5,000 a product if the unit price was VND45,000 (including production and distribution costs). Meanwhile, the ratio for a medium-priced product is VND150,000 - VND115,000 - VND85,000 (including design, materials, production, and distribution costs), then profit is VND30,000 a product (6 times higher than the cheap product). The ration for a high-ranked product is VND1 million - VND800,000 - VND550,000 (including brand name, design, materials, production, and distribution costs), the profit left over is VND250,000 a product (50 times higher than the cheap product). This fact proves that the brand name always creates added value and the duty for the survival of enterprises is to build brand names for the local market.
Moreover, to affirm a position in the home market, Vietnam textile and garment companies have to overcome their internal weaknesses. Although Vietnam is able to maintain its strength in the world market, it just stops at processing phase. Meanwhile, fashion technology is a chain of five elements: brand name - design - materials - production - distribution. Unfortunately, few businesses focus on developing all these five elements evenly. Designing is more or less emphasised, production is based on the advanced technologies, but materials, sales and brand name establishment remain the shortcoming of the Vietnam textile and garment industry.
With the self efforts and planned supports from the Vinatex such as the solution to boost the supporting technologies at the cost of VND2.6 billion in cooperation with training courses provided by international fashion centres, the textile and garment is hoped to receive better competitiveness in conquering the home market, from then on to nurture a more ambitious plan!
According to surveys by Vinatex, domestic fashion consumption will reach US$5 billion in 2009, and able to go to US$5.5 - 6 billion by 2010, up by 18 - 20 per cent.
The results of textile and garment consumption survey carried out by Vinatex and the Centre for Business Research and Enterprise Support in Hochiminh City in October 2008 show that consumers spent VND150,000 - 500,000 a month to buy clothes, which accounted for 18 per cent of monthly living expense, ranked only behind food. The age group of 20 - 25 tops the list of buying frequency with 46.4 per cent, followed by the group of 26 - 35 years old with 23.8 per cent. 70 per cent of consumers buy fashion clothes once a month or once every two or three months. The most favourite promotion scheme is price discount (73.1 per cent) compared to sales cards (16 per cent) and gifts (10.9 per cent).
D.N
Vietnamese
