As per Vinatex’s (Vietnam Textile & Garment Group) current production capacity of the textile and garment industry has exceeded $35 billion per annum. Vinatex noted that 2016 was tough for the industry as demand from the largest export markets fell — exports to the US decreased 3.4 per cent, Japan 2.6 per cent and to South Korea by 2.1 per cent. Market analysis firm VIRAC notes the domestic garment market has small scale — when compared to other markets — because of low spending per capita in Vietnam.

Vietnamese garment companies will have to face two big problem: presence of counterfeit goods; and products imported across the border and low capability of enterprises in distribution, design and branding. A Vinatex report shows in rural areas, Vietnam’s textile and garment products have to compete with imported products with no clear origin, while in urban areas they have to compete with imports from the US, the UK and ASEAN.

While Vietnamese enterprises are reluctant to develop the domestic market, foreign retailers and fashion brands are having a field day. Maison, for example, has been bringing mid- and high-end fashion brands to Vietnam and distributing products of 21 brands, including Christian Louboutin, Karen Millen, Coast, Max&Co, Max Mara, Oasis, Charles & Keith and NYS and owns 44 shops in Vietnam.

Son Kim Fashion, following success with brands such as Jockey, Vera, Wow and J. Bus, has partnered with two Japanese investors Williamson-Dickie and Sumitex International to bring the US Dickies brand to Vietnam. Japanese Uniqlo with 2,000 shops worldwide is preparing to open two shops in Vietnam this year. Meanwhile, Forever 21 would come to Vietnam next year. While Vietnamese garment companies think the domestic market is too small, foreign investors consider Vietnam the new land to exploit with the garment market valued at $4.5 billion.