Vietnam Garments

The idea to research the opportunities of a CBI/TF programme was based on Dutchinterest to source in Vietnam. Over the past two years the Royal Netherlands Embassy in Vietnam has received 21 business requests from Dutch enterprises interested in doing business with the garments sector in Vietnam. Over the past years over 200 Dutch registered their interest to source in Vietnam at CBI. To make the programme attractive for Vietnamese exporters and create economies of scale this programme will also include the German and UK markets. This programme aims to reduce the transaction costs of doing business with Vietnam for NL/EU buyers. This programme will capitalise in the EU market interest for Vietnam to make a lasting change in the Vietnamese garments sector. Vietnam is recognised by the market for the quality of the products at a good price. However, while most garment manufacturers in Vietnam are able to produce good quality product they are less capable to manage CMT+/FOB orders. The added value of Vietnams production (CMT) is very limited. The first step for Vietnam is to move towards CMT+/FOB production. The trade upwards strategy of this programme will likely increase the profit margins from 0-5% (CMT) to 5- 12% (CMT+) or even to 8 to 22% (FOB). This programme aims to increase the value added and thereby profitability of the exports from Vietnam to the EU. The strategy for this programme is based on the experience of CBIs Macedonian programme. The Macedonian case has shown how working on both ends - demand and supply - from the start can generate results within a relatively short timeframe. The programme aims to create a rippling effect by including the relevant value chain supporters and implementers and assisting them in addressing sector level issues such as trade finance, sourcing and service industry development. This programme thereby aims to contribute to the development of the sector at large, similar to what happened in Bangladesh.