Sourcing in Asia has become a matter of critical importance to companies around the world. To ensure efficiency in the supply chain while maintaining high quality at low cost is, for some firms, a matter of survival. Due to this, many companies are expanding, or moving operations, from China to Vietnam and other ASEAN locations. Countries in this region will continue to play an increasing role for professionals sourcing in Asia.
Global demand for textile and apparel is growing along with this shift in sourcing opportunities. Vietnam has proven capable of producing labor-intensive products, including textiles and apparel, at a lower cost. It has thus emerged as a leading sourcing destination for textiles and apparel.
Some positive factors include:
- Center of garment manufacturing
- It is the world’s 2nd largest garment exporter after China
- Preferential market access
- Membership in the CPTPP and EU FTAs has a significant impact trade and investment
- Competitive factors
- Low labor costs that are up to 50% cheaper than China’s
- Low facility development costs
- Many Chinese and Taiwanese owned factories
- Fiscal incentives from the government for development
There are also many risks to sourcing in Vietnam, especially for new-comers and middle and small-sized enterprises.
- Finding and vetting reliable suppliers
- Longer lead time due to supply and infrastructure issues
- Lack of technical know-how in the production process
- Higher rate of defects and failure to meet shipping schedules
HQTS has long had operations in Vietnam and throughout ASEAN countries. Some suggestions our staff has made to help mitigate the risks of sourcing in Vietnam include:
- Establish a method for clear communication and understanding of expectations
- Production monitoring to ensure expectations are met
- Engage a 3rd party inspection and testing facility
- Factory audits and supplier evaluations
- Pre-production monitoring and upstream supply chain audits
- During production inspections and quality control monitoring
- Final check for appearance, workmanship, functionality, specifications compliance, packaging, labeling, loading, and container assessment.
Current politics almost dictate that importers must consider Vietnam and other ASEAN countries as a possible region for sourcing your products. Mitigating risk and improving the bottom line are crucial to making a success of it. Working with a company like HQTS Group Ltd. can help.