Vietnamese garment firms struggle to conquer domestic market

Domestic garment market has a great potential as world famous fashion brands have been increasing their presence in Vietnam’s market. Amid the situation, local garment companies have adopted marketing strategies so as to promote their approach to customers and increase market share in home ground.

Vietnam's fashion products struggle to compete with imported ones. (Photo: SGGP)

Vietnam's fashion products struggle to compete with imported ones. (Photo: SGGP)

Vietnam’s garments exports have posted high growth for many consecutive years with export turnover always 5-10 percent higher than previous year. Up to now, Vietnamese garments have been available on the market of nearly 200 countries. Last year, garments exports exceeded US$36 billion, up 16.1 percent compared to that in 2017. Although Vietnamese garment companies have showed great performance in export, they are still struggling to gain ground right on their home ground.

Mr. Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association (VITAS), admitted that despite several barriers from large markets, garments and textiles industry was extremely successful in export last year but it faced difficulties in domestic market. Growth of garment products of large producers in domestic market was extremely low with some even much lower than their set targets.

According to Mr. Giang, when free trade agreements become effective, import tariffs reduce and retail market is opened for foreign enterprises, several foreign fashion brands including Zara, H&M, Topshop and Old Navy have landed in domestic market and directly competed with Vietnamese ones. Meanwhile, local fashion industry has not actually kept pace with global fashion trend yet. Fashion designers and firms still have to do things on their own as there is no school for training of professional fashion designers.

In addition, local consumers tend to prefer imported clothes to domestically-made ones despite the campaign to encourage Vietnamese people to give priority to made-in-Vietnam products.

How to effectively approach domestic market is an urgent matter for garment firms this year. According to the VITAS, there are five factors to achieve sustainable development for garments industry.

Particularly, firms have to carry out strategy to develop technology. Of which, they have to build 3D technology for fashion creation as human cannot meet the rapid movement of market. Next, they have to build resources; which means that they have to have the ability to train professional designers, increase their fashion vision and foreign language in order to update global fashion trend.

In addition, firms have to set up distribution network. Of which, they cannot skip the traditional distribution network but also have to focus on e-commerce channel because consumers, especially young ones, tend to go shopping online these days. At the same time, they have to standardize their business ethics and services and catch up with the fashion trend so as to be responsible for their products till the end to build trust in consumers.

Lastly, the Government should build industrial zones which include waste water treatment facilities and call for investment into fiber textile and dyeing factories to complete the fabric production chain for garments industry. This will be the foundation to localize fabric source in order to help garments and textiles industry to shift from processing to designing and exporting garment products under Vietnamese brands. More importantly, by this, local firms will be able to make the most out of free trade agreements that the country has signed.

Although it remains difficult for local garments firms to enter domestic market, some firms have had detail solutions. For instance, Phuong Dong Garment Company with FHOUSE brand will establish a commercial company to draw out trading strategy for this brand to return to home market. At the same time, it also has solution to develop designing and materials to make products that meet demand of local consumers. As for Corporation 28, besides upgrading machinery to improve productivity and quality and reduce cost prices, the firm has opened more stores for consumers to approach its products more easily. It also sends it products into supermarkets to gain market share and increases market coverage for their products to be easily recognized by consumers.

Besides, firms which used to mainly focus on export have also started to aim for domestic market. Small firms also become more positively in winning consumers by investing in designing, improving product quality and restructuring cost prices.

By Ai Van – Translated by Thuy Doan

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