Indian denim mills strategically ready to enter Vietnam Language, logistics, and duty for domestic consumption, are established challenges for Indian mills when they explore Vietnam, and it is no different...
Language, logistics, and duty for domestic consumption, are established challenges for Indian mills when they explore Vietnam, and it is no different for denim mills, but now after their consistent efforts in recent years, some of them are ready to take-off in a big way. At least 10 Indian mills have explored Vietnam and few of them have not only succeeded, but have also continuously registered growth, finding their way to get space in this country. And it seems natural as Vietnam’s denim export to the US has grown nearly 35 per cent in 3 years. The recently signed CPTPP and expected FTA with EU, further add a bright prospect to the growth of exports from this country. Moving on, the increasing complications of sourcing from China, particular after the ongoing trade war with the US, goes in India’s favour. Team Apparel Online which was recently at the denimsandjeans event in Vietnam explored how Indian denim mills are increasing their exports in this beautiful country.
Vietnam, the world’s third largest apparel exporting country, targeting to achieve US $ 50 billion by 2020 and currently at US $ 31 billion, is a growing opportunity for Indian denim mills, yet many issues still pose a challenge. One of the biggest challenges is logistics and despite the best efforts by Indian mills, it takes minimum 25 days, from dispatch to delivery of goods destined for Vietnam. To counter this time slack, many mills are keeping or looking to keep stock in Vietnam or are maintaining a warehouse. These mills are also looking for nomination business, which is another prospective solution to the logistics challenge. It also becomes important, as nearly 65 per cent exporters of Vietnam use fabric of nominated suppliers. Along with nomination, some Indian mills are initially targeting Vietnamese domestic brands which normally place orders for 2-3 seasons per year.
KG Denim, Coimbatore, moving towards having deep roots in Vietnam, has been successful in connecting with some domestic brands and getting reasonable volume orders from them. Mohanraj, AGM – Exports of the company shares, “Regarding fabric supply to the Vietnamese exporters, only nominated programmes by the brand can do well otherwise enquirybased orders don’t have much scope. We are trying to get the nomination to tap exporters, especially for US market. It will take time but will definitely take place. Some more international brands are entering Vietnam, so nomination seems important. Though compared to exporters, domestic brands (catering mainly to ladies and kids) have small order sizes and companies working with local brands/labels have to pay duty (nearly 18 per cent), yet we are satisfied to work with them as they are growing. Similarly, their order size is also increasing. It is comparatively easy to work with local brands as they have enough lead time to absorb the shipping time, when compared to exporters.” Recycled polyesterbased denim and recycled Tencel are two of the interesting offerings by the company.
Another company from Coimbatore, KG Fabriks Limited has been putting efforts into this market from the last 4 years and has recently succeeded in getting some volume business and new customers and that too from Hanoi. (Garment industry in Vietnam is majorly situated in HCM City and Hanoi). As of now, the company is working with selected 8 to 10 clients. KR Thamarai Selvan, Assistant Manager Marketing of the company is of the opinion, “Good thing about Vietnam is the opportunity to get good volume/container orders. Only local brands ask for small quantities
but even in that case, price is good.
All Vietnamese are very well-versed with Chinese mills but not with Indian Mills so we have the limitation of getting new contacts by participating at sourcing event, only.” Expecting 30 to 40 per cent growth in orders from Vietnam, the company is as of now managing its logistics well, as most of the demand it gets is for regular products and there is a concerted effort to push for early confirmation of order. KG Fabriks claims to use only 3 litres of water to produce one metre of denim fabric. Use of sulphur colour rather than reactive is another attraction of the company’s products. Maximum stretch through advanced technology, but with minimum spandex, is the company’s other interesting offering.
Similarly, another Indian mill Anubha Industries, Surat (Pratibha Group) which is pushing its offerings into this market from last three years, is now geared up for good business. The company is in the process to start its office in Vietnam and is looking to hire local professionals. Amit Desai, Sr. Manager – Export Marketing of the organisation shares, “We are continuously meeting with new buying houses, brands and jeans manufacturers here and exchanging ideas in product requirement and our offering. With our local office and Vietnamese professionals, we will definitely get a much better response as there is a lot of potential here and they are now seriously looking for Indian fabric.” Amit feels that duty structure of Vietnam is an issue in importing Indian fabric. The company is discussing this issue with associations. Known for sustainable denim and piece-dyed fabric, the company is GOTS, Oeko-Tex and OCS certified, producing 20 lakh metre of fabric per month. It is promoting wider width denim as it helps the jeans manufacturers to reduce their cost. Like the above-mentioned mills, Aarvee Denims & Exports, Ahmedabad too has been exploring this market with comparatively limited focus, but is now geared up with full preparations and getting positive indications too. Recently participating for the first time at the denimsandjeans event, the company initiated its first ever big effort for Vietnam. Pankaj V. Arora, VP – Marketing of the company shared the reasons for larger focus on Vietnam now. “We were working with many brands of late through Bangladesh. Significantly, Bangladesh and Vietnam are working on a very similar model in terms of garment export; Vietnam is catching up with Bangladesh so we felt that it is high time for our company to be present effectively in Vietnam,” he explains.
Having expertise in cotton spandex with the lowest shrinkage, Aarvee Denims researched about Vietnam and realised that overall there is stiff competition from China. Accordingly, it plans to encounter this challenge by focusing on the company’s strength which is 100 per cent cotton and cotton spandex base. With regard to the company’s strategy to surmount challenges in this market, he says, “Compared to China, we have an edge in logistics in case of Bangladesh, yet China is doing very good business with Bangladesh, so similarly we do the same with Vietnam. We are building our base for handling the Vietnam market and I am sure that we will succeed.” Pankaj further added that initially, the company will focus on such range of fabrics which can be delivered much faster and can be also produced within the less lead time. “We have price advantage over China so the customer will bear with us a little bit on logistic disadvantage, hence it seems to be a win-win situation for us as well as Vietnamese garment exporters,” adds Pankaj. As the company is working with some of the most-toughest countries of the world like Latin America, language is not a big issue for them.
Sandeep Agarwal, Founder, denimsandjeans.com who is connecting denim mills from across the globe with Vietnam through his event, also feels that language is not a problem and it is easy to find good professionals in Vietnam who can work for Indian companies; they just need to use them correctly and that will open all the channels. According to him, the logistics issue he adds needs to be tackled through collective approach or in support with trade associations. “Traditional ways of working will not work here in Vietnam, so new and collective efforts will open the gate and clients will have more confidence in Indian companies. China is now getting out of the race slowly and buyers are looking for a replacement, so this is the best time for Indian companies to explore Vietnam,” concludes Sandeep.
(L-R): Vinsline, Manager – Operations, Tap International Company; Mohanraj, AGM – Exports, KG Denim; and Abhi (Asst. Manager – Marketing), Tap International Company Limited
(L-R): KR Thamarai Selvan, Assistant Manager Marketing with S. Krishna Raja, Sr. Marketing Manager, KG Fabriks Limited
(L-R): Bhavesh Patel, Manager Marketing, Anubha Industries; Alok Kumar Trivedi, Country Manager, Gateway Next Ltd.; and Amit Desai, Sr. Manager – Export Marketing, Anubha Industries
Sandeep Agarwal, Founder, denimsandjeans.com
Pankaj V. Arora, VP – Marketing, Aarvee Denims & Exports