Difficulties in vietnam’s export of textiles and clothing to the european union market in the period from 1992 to 2007

INTRODUCTION

Background of the study

Globalization has long been a focal point for nations worldwide, with international trade serving a crucial role in socio-economic development Exports, in particular, significantly influence a country's economic growth, prompting many developing nations to pursue export-oriented industrialization Vietnam is actively participating in this global trend as well.

Export activity has significantly influenced Vietnam's economic growth, with goods and services exports now accounting for approximately 70% of the country's GDP, up from 30% in the mid-1990s In 2004, Vietnam's export turnover exceeded $26 billion, reflecting a 28.9% increase from the previous year, which contributed to the highest GDP growth rate in the region Vietnam is among the top 20 least developed nations heavily reliant on clothing exports, highlighting the importance of this sector The competitive global export market has driven improvements in the quality of Vietnamese products, as the country strives to enhance its manufacturing capabilities and technology As a member of organizations like the WTO and APEC, Vietnam is compelled to produce superior goods to maintain a competitive edge, transitioning from an inward-focused economy to an outward-oriented one.

Luận văn tốt nghiệp Kinh tế reduces unemployment and improve living conditions Last but not least, export partly promotes external economic relationships

Vietnam's major exported commodities include rice, seafood, crude oil, coffee, rubber, pepper, and coal, with textiles and clothing being particularly significant These goods are highly sought after by many countries According to Md Golam Robbani (2004), textiles and clothing have historically been crucial in the early industrialization phases of nations like Britain, Japan, and North America, as well as in the export-led growth of East Asian countries Research by Jodie Keane and Dirk Willem te Velde (2008) highlights that textiles and clothing are vital export sources for low-income and developing nations, such as Bangladesh, Cambodia, Sri Lanka, and Pakistan, where they account for over 50% of total manufacturing exports—83.5% in Bangladesh and 80% in Cambodia Maurizio Giuli notes that developing countries now supply more than half of the world's clothing exports and a third of global textile exports, a significant increase from the late 1960s.

The Vietnamese government recognizes textiles and clothing as vital export commodities and consistently supports their exportation Despite facing challenges, Vietnam has achieved significant milestones in this sector, with the General Statistics Office reporting a steady annual increase in textile export values from 1995 to 2010 Key markets for Vietnam's textile and clothing exports include the United States, European Union, Korea, and Japan In 2001, Vietnam's export turnover to the EU reached 741 million Euros, and by 2004, total textile and clothing exports surged to $4.32 billion, marking a 17.2% increase, with exports to the EU alone rising by 32% to $663 million.

As be known, EU has been a large and potential market for Vietnam’s export of textiles and clothing EU is a big area in term of population; it includes

27 member states “The population of the European Union reached 502.5 million on 1 January 2011 according to data provided by the statistical office of the

Luận văn tốt nghiệp Kinh tế

The European Union, located in Western and Northern Europe, has seen its population increase by one and a half million over the past year (Merco Press, 2011) Despite being a union of diverse nations, member states share socio-economic similarities and enjoy a high standard of living Europeans prioritize quality and fashion in their purchases, particularly for fashion items, leading manufacturers to focus on producing trendy, high-quality products.

This research focuses on the challenges faced by Vietnam in exporting textiles and clothing to the European Union The significance of exports to Vietnam's economy, the prominence of textiles and clothing among its exported goods, and the promising potential of the European market are the key reasons for this study.

Union market in the period from 1992 to 2007.

Significance of the study

In his 1998 report, Hal Hill from the Australian National University highlighted that the lack of export success in the textiles and clothing industry often reflects deep-rooted domestic challenges and an inability to leverage potential comparative advantages Despite previous studies addressing the obstacles in textile and clothing exports, specific details remain scarce Khalid Nadvi and John Thoburn (2003) noted that the Multifibre Arrangement (MFA) aimed to protect developed country producers by limiting exports from developing nations, allowing them time to adapt to competition from lower-cost producers Additionally, according to Habubank Securities (2011), Vietnam faces significant competition from China, compounded by the negative impact of the EU's economic status on its textile and clothing exports Furthermore, Sangeeta Khorana and Kwok Tong Soo pointed out that, despite decades of tariff reductions under GATT and WTO, trade barriers continue to be substantial.

This study aims to systematically identify the specific challenges faced by Vietnam's textile and clothing exports to the EU market, which is recognized as a significant opportunity for growth With numerous Vietnamese companies producing and exporting these products, their success is vital for the sector's development and the country's GDP Understanding these challenges allows enterprises to assess their strengths and areas for improvement, facilitating the discovery of effective solutions Additionally, by comprehending the export landscape and the difficulties companies encounter, the government can implement more appropriate regulations and policies Focusing on the clothing industry is essential, as it drives output and job creation in developing countries while providing crucial foreign exchange to support economic growth.

Research aims and objectives

This study aims to explore the challenges faced by Vietnam's textile and clothing exports to the European Union from 1992 to 2007, providing insights for enterprises to better navigate these difficulties Key aspects include identifying internal shortcomings within Vietnamese textile and clothing manufacturing and export companies, recognizing the economic, financial, social, and cultural conditions of the European Union market during that period, and acknowledging the competitive pressures from other exporting nations.

In his research, Maurizio Giuli (n.d.) noted that numerous European textile producers have gone out of business due to fierce competition from newly industrialized countries The European Union represents a significant market opportunity that attracts global companies seeking to capture substantial market shares, with China being a leading exporter in the textiles and clothing sector.

Luận văn tốt nghiệp Kinh tế the world The competition from this country influences the other exporters, including Vietnam Specifically, three objectives are identified as follow:

1 To identify the common weaknesses of Vietnam textiles and clothing export and manufacturing companies

2 To evaluate the bad impact of the state of Europe Union to Vietnam’s export of textiles and clothing to this market

3 To identify China’s competitive aspects, which Vietnam had to cope with in the export of textiles and clothing to the Europe Union market.

Boundary of the study

This study examines the challenges faced by Vietnam's textile and clothing exports to the European Union from 1992 to 2007, beginning with the signing of the textile trade agreement on December 15, 1992 The findings aim to provide valuable insights for Vietnamese textile and clothing manufacturers, helping them identify lessons learned and develop solutions to navigate these difficulties effectively.

Research design

This article begins with an overview of relevant definitions and theories, followed by a literature review that evaluates previous studies related to Vietnam's textile and clothing exports, highlighting their strengths and weaknesses The methodology chapter outlines the research strategy, data collection, and analysis methods employed by the researcher After data collection, a comprehensive analysis is conducted, and the findings are discussed in the results chapter Finally, the article concludes with key insights and actionable recommendations.

LITERATURE REVIEW

Introduction

The textiles and clothing industry is one of the oldest in the world, playing a crucial role in the economic growth of many nations through manufacturing and exporting goods to international markets As a result, numerous articles and studies have been published to explore various issues related to this industry.

In the second chapter of the literature review, we explore relevant definitions, theories, models, and issues related to each objective After thorough evaluation, we identify and select the most appropriate models for the study.

Common weaknesses of Vietnam textiles and clothing export and manufacturing companies 14

Exporting is crucial for the textile and clothing (T/C) industry, driving economic growth and sector development Expanding into international markets significantly increases profits, especially for companies that can capture a large market share Many producers find that the domestic market alone cannot meet their business potential, prompting them to seek opportunities abroad for greater profitability Additionally, exporting allows companies to access new knowledge and experiences, as operating in foreign markets requires different strategies tailored to each country's unique culture and economic conditions Finally, engaging in export activities enables domestic firms to attract foreign capital through partnerships and contracts, enhancing their operational capabilities.

Graduating with a degree in Business Process Economics allows domestic enterprises to leverage foreign capital to enhance their operations Additionally, it fosters skill improvement among workers, particularly in the business and management sectors, as they navigate the unfamiliar international markets This challenge motivates employees to enhance their capabilities, especially since products destined for export must meet stringent international standards Consequently, these rigorous requirements push workers to refine their skills, positively impacting the development of the textile and clothing (T/C) industry Exporting serves as a crucial driver for growth, significantly benefiting developing countries like Vietnam However, Vietnamese T/C export and manufacturing companies still face several weaknesses that need to be addressed.

Weakness, as defined by the Cambridge University Dictionary, refers to a specific aspect of someone or something that is ineffective In the context of Vietnam's textiles and clothing (T/C) sector, there are notable weaknesses in manufacturing and export processes A key objective of this study is to identify these weaknesses, which include a lack of skilled labor with experience in management, fashion, and technology, reliance on imported accessories and fabrics, underdeveloped brands, and weak national comparative advantages (Source ASEAN, 2010) The textile industry, characterized by the production of cloth in large quantities, is one of the oldest and most global industries, as noted by Jodie Keane and Dirk Willem te Velde (2008) Historically, this sector was regulated by protectionist measures, including the Agreement on Textiles and Clothing and the Multifibre Agreement However, following the World Trade Organization's actions, these restrictions were lifted in 2005.

Luận văn tốt nghiệp Kinh tế this sector is now controlled by the general rules regulated in the multilateral trading system.

The textile and clothing (T/C) industry is a vast and complex sector, characterized by its diverse range of products, including high-tech synthetic yarns, cotton bed linens, wool fabrics, industrial filters, and haute couture According to Brussels (2003), the manufacturing process involves several intricate steps, such as the preparation and spinning of textile fibers, weaving, finishing, and the production of various textile articles Sangeeta Khorana and Kwok Tong Soo (n.d.) further delineate the production stages, which encompass ginning, spinning, weaving and knitting, dyeing, and garment manufacturing Md Golam Robbani (2004) also highlights these essential steps in the T/C production process, emphasizing the industry's multifaceted nature.

Table 1: Major steps in textiles and clothing production process

Major steps in textiles and clothing production process

The complexity of the manufacturing process increases the number of challenges faced by companies While the basic steps of textile and clothing production are straightforward, numerous related factors significantly influence the quality and pricing of the final products.

Dying, Printing and Finishing (Grey Fabrics)

To effectively address challenges and weaknesses faced by firms, Porter (1990) categorized production factors into several key areas: human resources (including personnel quantity, costs, and skills), physical resources (such as land, water, climate, mineral deposits, and geographic location), knowledge resources (the nation's scientific, market, and technological knowledge), capital resources, and infrastructure Expanding on this classification, Golam Robbani (2004), referencing USITC (2004), further identified infrastructure components as essential elements for trade, which include transportation networks like roads, ports, railways, and airways, as well as the associated shipping and transportation costs.

Access to reliable sources of energy, water, and telecommunications is crucial for production efficiency Labor plays a significant role in influencing both the prices and quality of finished products Defined as the economic resource encompassing all human effort that contributes to the creation of goods or services in exchange for wages, labor is essential for productivity Companies can enhance efficiency with a larger workforce, but unskilled laborers often struggle to meet quality expectations and may take longer to produce goods The National Skill Development Corporation of India highlights specific skill requirements in the garment industry, emphasizing the importance of skilled labor in the textiles sector.

Table 2: Skill requirements in garmenting

Manager - Knowledge of types of raw materials

- Knowledge of types of fabric defects

- Awareness of the price trends of materials such as fabric

- Skills of communication and negotiation

- Ability to calculate the amount of requisite quality fabric required

- Knowledge of types of fabric defects and other quality parameters.

- Communication with fabric manufacturers Merchandising Senior

- Understanding of various production activities

- Ability to handle multiple customers.

Luận văn tốt nghiệp Kinh tế costing.

- Understanding of buyer requirements of design and quality.

- Ability to work closely with other functions

- Skills of time management skills

Design Designer - Design and develop products according to buyers’ requirements.

- Ability to modify existing designs according to the current trends

- Keep abreast with the latest fashion trends in the markets

- Knowledge of Styling, Elements of Design, Fabric Study, Basics of Costing, Pattern Making and Draping.

Manager - Knowledge of pattern making

- Ability to undertake production, inspection planning and control

Line Supervisor - In-depth knowledge of inspection methods and production process

- Knowledge of types of fabrics and understanding of stitching processes.

- Ability to guide sewing machine operators.

Operator - Ability to control machines

- Knowledge of machine maintenance procedures

- Knowledge of Pattern Making, Grading,Draping.

- Knowledge of CAD for Pattern Development

- Ability to sew complete garment.

- Ability to control quality requirements, the orders can be cancelled due to the small issues of quality

- Interacting with the merchandiser to understand customers’ requirements

- Knowledge of in line and final quality testing procedures

Source: National Skill Development Corporation - India (n.d.)

The workforce comprises individuals involved in both the production of goods and the management of business operations, all of whom require specific skills for effective performance Labor costs significantly influence the pricing of finished products The table below illustrates the hourly wage costs across various countries in 1993.

Table 3: Hourly wage costs in the textile industry, selected countries,

Source: Maurizio Giuli (n.d., quoted in European Commission, 1995, from Majmudar M 1996)

In 1993, Vietnam's labor costs were notably low compared to most countries, positioning it with a comparative advantage, second only to China Additionally, the availability and quality of physical resources, such as fabrics, yarns, and fibers, are crucial for the textile and clothing sector; however, challenges arise from poor quality, shortages, and high prices of these raw materials Furthermore, the importance of knowledge resources cannot be overlooked, as insufficient knowledge can result in poor production decisions, particularly regarding technology.

Graduating in Economics requires a deep understanding of market dynamics and financial resources Capital resources, ranging from basic manufacturing tools to advanced computer networks and large office buildings, are essential for smooth operations (Canadian Foundation for Economic Education, n.d.) Insufficient working capital can disrupt daily operations, leading to financial instability (John Nowly, n.d.) Additionally, inadequate infrastructure, such as poor transportation systems, can hinder the movement of goods to international markets, resulting in increased shipping costs and higher product prices Identifying these weaknesses is crucial for a comprehensive analysis of economic challenges.

Despite facing export barriers, Vietnam has experienced notable success in its export activities The value of Vietnam's exports of T/C from 1997 to 2001 is illustrated by the pink line in the accompanying figure.

Figure 1: Textiles and Clothing Exports of Cambodia and Vietnam, 1997-2001 (in millions of US$)

Source: Md Golam Robbani (2004, quoted in USITC, 2004)

Sangeeta Khorana and Kwok Tong Soo (n.d., quoted in Bilkey, 1978; Leonidou, 1995b, 2004) classify export barriers into external and internal categories Internal barriers, which stem from weaknesses within export firms, can hinder their ability to successfully export goods to international markets These barriers are intrinsic to the firm and its home business environment.

Internal barriers to export activities significantly impact firms' capabilities, as outlined by Sangeeta Khorana and Kwok Tong Soo These barriers include transportation issues, inadequate market information, distribution challenges, corruption, insufficient physical infrastructure, and a lack of awareness regarding evolving EU regulations Additionally, difficulties in connecting with new buyers and procedural documentation problems further complicate the export process Kaleka and Katsikeas, along with Leonidou, identified experience, managerial factors, socio-economic influences, and a lack of knowledge as other contributing internal barriers, although these factors are less specific compared to the previously mentioned challenges.

The state of Europe Union affected Vietnam’s export of textiles and clothing to this market .21

The European Union (EU) is a unique political and economic partnership among 27 countries, fostering a single market characterized by the free movement of goods, services, capital, and people To achieve the objectives of this single market, the European Commission emphasizes the need for policies that create a favorable business climate across borders Consequently, EU firms must enhance their competitiveness to thrive in this environment, posing challenges for international companies seeking to enter or export to the EU market, as they face significant difficulties in competing for market share.

When evaluating the influences of the state of EU to export nations, Werner

(2001) emphasized the EU trade regime He mentioned mainly EU import quotas, preferential trade agreements, customs tariffs According to Jappe

(2009), the supply chain and the quota regime were also mentioned in the

In their 2007 study, Y ves Bourdet, Joakim Gullstrand, and Karin Olofsdotter applied the gravity model to analyze the impact of EU trade policies on exports from developing countries, emphasizing trade preference schemes, customs unions, regional trading blocs, and exchange-rate regimes While these elements are significant, they represent only a portion of the numerous factors influencing export performance.

To analyze the impact of the EU's state on Vietnam's textile and clothing exports over the past 15 years, the PESTEL model can be utilized This model encompasses six key factors: political, economic, socio-cultural, technological, environmental, and legal According to İhsan Yỹksel (2012, as cited in Dinỗer, 2004; ĩlgen & Mirze, 2007; Lynch, 2009), each of these themes includes specific sub-factors that further elucidate their influence on trade dynamics.

 Political: Relations with the EU, Democratization process, Regional relations, Developments in north Africa and middle east, Political stability

 Economic: National income, Monetary policy, Investment incentives, Fiscal policy, Foreign investment, Energy cost, Current deficit, Foreign debt, Unemployment

 Socio-cultural: Level of education, Life style, Awareness of citizenship,

Obey the rules, Democracy culture, Will to work of the people.

 Technological: Technologic investment policies of government, New patents, Support the research and development activities by government, Rate of change in technology , Adaptation to new technologies.

 Environmental: Transportation infrastructure, Traffic safety, Public health,

Green issues, Urbanization level, Disaster management.

 Legal: Competition laws, Consumer rights, Judicial system, Implementation of laws, International treaties

Politics plays a crucial role in shaping various sectors, often acting as the driving force behind economic growth, which is believed to thrive only in politically stable environments (Ishrat Husain, 2009) Even minor political shifts can trigger significant changes in economics and legislation, impacting trade relations between nations Economic factors, including monetary policies and foreign investments, directly influence trade dynamics Additionally, socio-cultural elements, such as consumers' purchasing power and lifestyle choices, are vital in determining market behavior.

The legal factors play a crucial role in the economic landscape, particularly in relation to exports Key elements such as competition laws, consumer rights, and international treaties significantly impact export activities Ibrahim (1996) highlighted that nearly a hundred investment laws and over a thousand bilateral investment treaties have been established to facilitate foreign investment.

Following Johnson, Gerry Scholes, Kevin Richard Whittington in 2006,

The PESTEL framework is utilized to analyze macro environmental factors that impact business strategies and performance In the telecommunications sector, it is important to focus on relevant factors while excluding those that do not directly relate to the industry.

Despite being part of the EU, the 27 member states exhibit notable differences in their PESTEL factors, which can significantly impact Vietnam's textile and clothing exports It is crucial to identify the unique characteristics of each EU country, as these distinctions influence the selection of the most promising markets for exporting goods For instance, variations in market share percentages among clothing retailers across EU nations highlight the importance of strategic market selection for Vietnamese firms aiming to penetrate these diverse markets.

Table 4: Market share of clothing retailers in main EU countries - Percentages

Source: Maurizio Giuli (n.d., quoted in Texco, 1990)

China’s competitive aspects, which Vietnam had to cope with in the export of textiles and

The European Union (EU) stands out as one of the world's most promising markets, attracting numerous international organizations eager to expand their business and capture market share This heightened competition among exporting nations significantly influences Vietnam's textile and clothing (T/C) exports According to Cambridge University (2013), competition in economics refers to the scenario where businesses strive to outperform one another, particularly in sales Each country possesses unique competitive advantages, and by understanding these dynamics, Vietnam can devise effective strategies to enhance its export performance Notably, China emerges as a formidable competitor; despite Vietnam's strengths in areas like embroidery and needlework, China remains a significant challenge in the T/C sector.

China, with nearly 4,000 years of rich culture, stands as one of the most populous and economically significant nations globally As a leading exporter, it swiftly recovered from the 2009 financial crisis, demonstrating resilience in the face of international market challenges (British Broadcasting Corporation, 2013) By 2004, China had become the world's third-largest exporter and was poised to surpass its competitors, driven by its competitive advantages (Tran Thi Anh Dao, n.d., quoted in Gaulier et al., 2006) The European Union market is a key target for China's textile and clothing industry, which saw exports to the EU rise by 39.9% in volume and 43.9% in value during the first eight months of 2005 (Raphael Minder, 2005).

Porter (1990) applied the theory of nations’ competitive advantage to compare various textiles industries, to identify competitive weaknesses and strengths among countries Its determinants are demand conditions, factor endowment,

In the context of graduation theses in Economics, particularly within supplying and related industries, competition conditions play a crucial role Marco Biselli (2009, as cited in Adams, Gangnes, and Shachmurove, n.d.) emphasizes that "competitiveness is the ability, under present conditions, of a country’s producers to command world markets." Golam (2004), referencing USITC, identifies key competitiveness factors in the textiles and apparel industry, which include business climate, infrastructure, market access, labor and management quality, raw material inputs, service levels, and supplier reliability Each of these factors is categorized to provide a clearer understanding of their impact on competitiveness.

 Business climate: Political stability; Security of production and shipping;

Ensuring personnel safety while minimizing administrative burdens and corruption is essential for a thriving business environment A transparent and predictable legal, commercial, and regulatory framework fosters trust and stability The establishment of free trade zones, along with adherence to internationally recognized health and labor standards, promotes fair competition Additionally, maintaining real exchange rates, offering subsidies and tax credits, and responding to market demand are crucial for driving economic growth.

Efficient infrastructure, including roads, ports, railways, and airports, is essential for the seamless movement of goods in and out of the country Access to dependable energy, water, and telecommunications is crucial for operational effectiveness Additionally, optimizing shipping and transportation times and costs is vital for enhancing overall logistics efficiency.

 Proximity and preferential access to market: Proximity to major markets; preferential access to major markets

 Labor and management: Availability of workers; Availability of qualified managers, including middle management; Compensation rates; Labor skills and productivity

Access to high-quality and competitively priced domestic and regional yarn and fabric production is crucial for success Tariffs on imported raw materials can impact overall costs, while the availability and cost of capital are essential for investing in new machinery and sourcing raw materials Additionally, understanding rules of origin for trade preferences is vital for optimizing supply chains and enhancing competitiveness in the market.

When evaluating suppliers, it is essential to consider their level of service and reliability, which includes their reputation for quality and timely delivery Strong existing business networks, characterized by solid relationships with customers and supply chain connections, play a crucial role in this assessment Additionally, the range of services offered—such as full-package solutions versus assembly options—along with their lead times and ability to accommodate quick turnaround orders, are vital factors Flexibility in product styles, variety, and lot sizes further enhance a supplier's appeal, ensuring they can meet diverse customer needs effectively.

Evaluating the business climate is essential for specialists to assess both the costs and risks associated with operations Infrastructure plays a critical role for export firms, as it impacts their ability to transport goods efficiently from domestic markets to international destinations, a challenge particularly evident in many developing nations, such as those in South Asia Additionally, proximity to markets and preferential access enable firms to respond swiftly to customer demands, allowing for timely product launches Furthermore, labor and management considerations are crucial; lower labor costs in developing countries can significantly reduce production expenses and enhance profitability, particularly in the textile and clothing industry, where hourly labor costs vary globally.

1998 is presented in the following figure:

Figure 2: Hourly costs in the textile and clothing industry, 1998 (US$)

Source: Jodie Keane and Dirk Willem te Velde (2008, quoted in OETH, 2002)

The charts indicate that labor costs in China are significantly lower compared to many countries, including India, Pakistan, and Indonesia Effective management skills are essential for firms to operate successfully Additionally, raw material inputs play a crucial role in the textiles and clothing industry, with factors such as quality, price, and availability being critical considerations While some countries have an abundance of materials, others, like Sri Lanka and Bangladesh, face shortages Furthermore, the level and reliability of service from suppliers are vital, as retailers expect high-quality service Md Golam Robbani (2004) noted a growing trend among retailers to become manufacturers without owning factories.

Luận văn tốt nghiệp Kinh tế they seek for full package service from foreign suppliers, not domestic ones It is the warning to domestic suppliers

China holds certain advantages over Vietnam in the global textile industry, particularly regarding labor costs, as highlighted in Marco Biselli's 2009 research The textile and clothing (T/C) industry is notably labor-intensive, raising the question of whether China's labor cost remains a competitive edge when compared to Vietnam, which also benefits from relatively low labor costs.

RESEARCH METHODOLOGY

Introduction

This research has three inter-related objectives set within the context of Vietnam’s export of T/C to the EU market:

Chapter 2 - Literature Review – defines the terms: weaknesses, textiles and clothing, competitiveness, discusses the process of manufacturing and export, the EU market, China’s export of T/C, evaluates old related studies and introduces related theories and models such as PESTEL model, factors of competitiveness, factors of production and list of internal barriers

The Research Methodology section outlines the strategies and methods employed for data collection and analysis to enhance the validity and reliability of the study Additionally, this chapter will address the limitations and potential challenges encountered during the research process.

Research strategy

According to John Biggam (2011), a research strategy outlines the approach for conducting a study, and in this case, the chosen method is historical research This type of research primarily examines events from the distant past, such as the living conditions of soldiers during World War I, but can also focus on more recent occurrences, like the rise of the Internet In this study, the researcher explores the challenges faced by Vietnam in exporting T/C to the EU market from 1992 to 2007.

Luận văn tốt nghiệp Kinh tế by combining events to conclude what difficulties Vietnam T/C export and manufacturing firms had to face with

In this research, the historical strategy is deemed the most appropriate, as other methods such as case studies, experimental strategies, and action strategies are not suitable Case studies typically focus on a single unit or organization, while experimental research, as defined by John Biggam (2011), is aimed at testing hypotheses, which is not the intention of this study Additionally, action strategies are employed to address specific problems within a researcher's environment, but they do not align with the goals of this study Furthermore, surveys are generally used for contemporary research; however, this study spans a non-contemporary period of 15 years, specifically from 1992 to 2007.

For this study, convenience sampling will be employed to select participants, a non-probability approach where not all elements of the population have a chance of being included This method allows the researcher to choose readily available individuals, specifically managers and employees from Vietnam’s textile and clothing export and manufacturing companies, facilitating easier access to participants Although this approach may limit the representativeness of the results, it enables the collection of in-depth qualitative data, which is particularly valuable for exploring challenges in Vietnam’s textile and clothing export sector.

Data collection

To achieve the research objectives, data will be gathered from employees and managers of T/C export and manufacturing enterprises, as their extensive experience in the field ensures greater reliability of the information collected.

In this study, convenience sampling was utilized to gather data through interviews with five participants, comprising two managers and three employees The researcher prepared semi-structured interview questions, which included both open and closed formats, to facilitate in-depth discussions This approach is designed to elicit meaningful responses, enhancing the quality of qualitative data collected.

Secondary data serves as a convenient and expansive resource for researchers, allowing for the triangulation of results through multiple techniques to gain diverse perspectives and qualitative insights (Biggam, 2011) This type of analysis involves examining existing information from various sources, such as published articles, statistical data, and original datasets, without the researcher being involved in the initial data collection (Russell, 2001) Researchers can easily and quickly access secondary data from books, newspapers, journals, annual reports, and websites However, it is crucial to ensure that the sources are reliable and up-to-date, as outdated or unreliable data can compromise the validity of the research findings.

Data Analysis

During interviews, questions are categorized into specific themes aligned with the study's objectives, and they are structured based on established models from the literature.

Comparing participants' responses with findings from the literature review enhances focus for both interviewers and interviewees, leading to the collection of precise and clear data This process is particularly beneficial for data analysis, ensuring more accurate and meaningful insights.

After data collection, participant responses will be reviewed and described, followed by a comparison and contrast of these responses within themed groups of interview questions, as outlined by John Biggam (2011) Subsequently, the responses will be evaluated and synthesized, particularly in relation to secondary data and literature review findings The data analysis approach is further illustrated in the accompanying table.

Limitations

Despite the researcher's efforts to utilize interviews effectively, challenges may arise that affect data quality The accuracy of the collected information largely hinges on the attitudes and behaviors of the interviewees, which can introduce bias and lead to varied responses Additionally, while the data may provide in-depth insights, it should not be generalized to represent all enterprises, as interviewees only reflect their perspectives on common challenges faced by many firms.

The graduation thesis on Economics may not apply to all companies; however, the findings from this research are anticipated to capture the interest of other scholars and contribute valuable insights to the body of work within the textiles and clothing industry.

FINDINGS AND DISCUSSION

Introduction

This study investigates the challenges faced by Vietnam's textile and clothing exports to the European Union from 1992 to 2007, aiming to provide valuable insights for businesses and inform government policy Utilizing a historical research strategy, data was gathered from industry professionals in T/C export and manufacturing through convenience sampling, supplemented by secondary data for a comprehensive analysis The researcher will first describe the collected data, followed by an analysis and synthesis of the findings, which align with the research objectives.

Findings and discussion

4.2.1 Common weaknesses of Vietnam textiles and clothing export and manufacturing companies

This research aims to identify the challenges faced by Vietnamese companies in the textile and clothing manufacturing and export sectors from 1992 to 2007 Interviewees were asked to specify these difficulties based on a provided list of production factors The findings will highlight the key areas where Vietnamese enterprises encountered obstacles.

Interviewees noted that while the quantity of labor was sufficient, there was a disparity in skill levels among workers, with some being more skilled than others Consequently, managers needed to seek solutions to address this imbalance.

Luận văn tốt nghiệp Kinh tế organize short courses to train less skillful workers Of course, firms had to afford the cost of training courses

Most Vietnamese workers in production have only completed grade 12 and lack formal qualifications in T/C production Upon employment, they undergo training from scratch, which requires significant time and resources The pool of new workers with prior experience is minimal, but through training, many can develop their skills However, a portion of workers still requires extensive training Companies often seek employees with higher qualifications to reduce training costs, but in Vietnam, low wages hinder this approach Increasing labor costs could raise product prices, reducing competitiveness against foreign products Additionally, there are very few training centers in the garment sector, resulting in most new workers lacking formal training before employment.

Vietnamese workers in the T/C industry are generally skilled, but the overall quality and productivity of products depend on uniformly high labor skills A strong workforce is crucial for Vietnam to compete with exporting nations, particularly China, which boasts a larger and more advanced labor pool While direct production workers possess skills, there is a notable shortage of skilled labor in essential sectors like fashion, business, management, and technology.

Vietnam's labor costs are relatively low compared to other countries, but salaries are on the rise, which has not been matched by an increase in revenue This discrepancy has occasionally resulted in delayed wage payments, leading to worker dissatisfaction Such dissatisfaction can negatively impact the effectiveness of the manufacturing process due to psychological factors.

As be seen, a lot of types of costs, especially the cost of raw materials, the cost of transportation, were high Additionally, salaries paid for workers

The rising costs associated with graduation theses in Economics have made it increasingly challenging for factories to manage their expenses Consequently, many factories face a shortage of working capital, as they struggle to cover these costs while waiting for payments from customers and partners This financial strain often leads to delays in wage payments for workers.

Vietnam's labor costs are relatively low compared to many countries, but this advantage may diminish as manufacturing technologies advance, with machines increasingly replacing manual labor Minh Quang (2010) from the American Chamber of Commerce in Vietnam noted that the country is losing its competitive edge in labor costs While salaries in major cities have risen, the overall average labor cost remains low across Vietnam A critical challenge for Vietnamese firms is to address workers’ aspirations by improving living conditions and ensuring timely payments Failure to do so can lead to worker anxiety and strikes, negatively impacting company reputation and morale among employees.

Interviewees expressed concerns over the limited availability of raw material suppliers, resulting in fewer options for companies While the overall quality of materials like fabrics, yarns, and fibers was generally satisfactory, there were instances of subpar fabrics that were prone to tearing easily.

Production delays occurred due to incomplete supply of ordered materials, leading to waiting times for compensatory batches Interviewees noted that the high prices of these raw materials significantly impacted costs Vietnamese enterprises faced a domestic material shortage, necessitating annual imports of large quantities of fabrics from other countries, which adversely affected revenue Additionally, the depreciation of the VND against the USD compounded the issue, as companies were required to pay for imported fabrics in USD.

Graduation theses in Economics highlight that the import tax on fabrics adds to production costs, leading to higher product prices and diminishing Vietnam's competitiveness in the global market Initially, the textile manufacturing process was not initiated by Vietnamese factories, as approximately 80% of the necessary accessories and fabrics were sourced from abroad.

Table 6: Structure of Imported T&G Commodities of Vietnam (%)

Source: Trade and Competitiveness Research Team (2001, quoted in GSO, n.d.)

The data indicates that fabric was the most imported material, highlighting its scarcity in Vietnam To enhance efficiency and reduce costs, it is advisable for enterprises to source accessories domestically For instance, China successfully produces nearly 100% of its materials, resulting in lower product prices.

In conclusion, Vietnamese enterprises face significant challenges, including material shortages, inconsistent quality, and high prices These issues often lead to delays in delivering goods as per customer orders.

Luận văn tốt nghiệp Kinh tế in production Besides, the unstable status of VND currency will go on being the disadvantage of Vietnam

Interviewees noted that inadequate knowledge of foreign markets hindered Vietnamese companies, leading to nearly 80% of products being distributed through intermediaries This lack of market mastery prevented these firms from advertising their brand names and accessing customers directly, forcing them to collaborate with foreign companies or adhere to production standards set by foreign partners As a result, Vietnamese businesses faced reduced profits and were unable to capitalize on their untapped potential in international markets.

Vietnamese companies struggle with limited market knowledge due to insufficient access to foreign markets, particularly in the EU, where many factories cannot afford to participate in international fairs and exhibitions This lack of exposure hinders their ability to find partners and attract new customers, ultimately affecting their brand promotion Despite a global commercial network, domestic factories receive minimal market information, resulting in delays in producing timely fashion-forward products Furthermore, state-owned organizations established to support these efforts often operate ineffectively, with staff lacking accountability This issue may stem from inadequate government oversight, highlighting the need for increased responsibility in managing the country's commercial network on a global scale.

Vietnam must urgently address the issue of inadequate market knowledge, which significantly undermines the inherent potential of enterprises and hinders industry growth Understanding market information is crucial for success and is a vital task for companies aiming to enter new markets.

CONCLUSIONS AND RECOMMENDATIONS

Introduction

This research investigates the challenges faced by Vietnam in exporting textiles and clothing to the EU market between 1992 and 2007 To fulfill this overarching goal, three specific research objectives have been established.

Chapter 4 presents a detailed analysis of the findings from both interviews and secondary data collection This section will evaluate the previously stated objectives, summarize the results, and provide recommendations aligned with these objectives.

At the end of the chapter, the sub-section of self-reflecting the research process is included as well.

Research objectives: Summary of Findings and Conclusions

5.2.1 Research Objective 1: Common weaknesses of Vietnam textiles and clothing export and manufacturing companies

The interviewees identified 6 main weaknesses of Vietnam textiles and clothing export and manufacturing companies in the period of 15 years from 1992 to

In 2007, significant challenges arose concerning human resources, particularly the inconsistency in labor skills and delays in wage payments, as salaries were increasing while revenues stagnated Additionally, there was a notable shortage of raw materials due to a limited number of domestic suppliers and the high costs associated with importing materials from abroad.

The primary challenges faced by the Vietnamese economy include outdated market knowledge, which hampers timely product development and complicates customer acquisition and brand promotion Additionally, limited capital resources and short withdrawal periods regulated by authorities contribute to low foreign direct investment (FDI) and hinder financial circulation for trade and commerce (T/C) companies The lack of specialized funding for the T/C sector forces firms to rely on high-interest bank loans Infrastructure issues, such as traffic congestion, disrupt the transportation of goods, particularly during peak times, resulting in high freight costs to the EU Lastly, cumbersome administrative procedures, including the difficulty in obtaining Certificates of Origin from the Vietnam Chamber of Commerce and Industry and inconsistent product standards, further complicate the business environment.

Vietnamese firms face several weaknesses in their operations, including inadequate attention to product distribution, brand promotion, and effective marketing strategies They contend with fierce competition from producers in India, Bangladesh, Pakistan, the Philippines, Hong Kong, Korea, and particularly China, which poses the greatest threat Additionally, the technology used by these companies is not sufficiently advanced for the production of high-tech products, leading to a focus on traditional goods Finally, the devaluation of the Vietnamese Dong (VND) presents further challenges for these businesses.

The study reveals an overlooked aspect: despite the challenges faced by Vietnam's T/C industry, government support for manufacturers has been minimal Existing regulations and policies are inadequate, and some state-owned unions operate ineffectively and irresponsibly A prime example is Vietnam's commercial network, which was designed to keep domestic firms informed globally, yet it appears to be ineffective in fulfilling this purpose.

5.2.2 Research Objective 2: The state of the European Union affected Vietnam’s export of textiles and clothing to this market

The export of textiles and clothing from Vietnam to the EU is significantly influenced by socio-cultural and economic factors Market research is complex due to the diverse cultures within the EU, presenting challenges in creating products that meet varied customer needs Vietnamese enterprises must ensure their products are of high quality and fashionable to align with EU consumer preferences Economically, the EU has implemented measures to protect its textile and clothing industry, including the "green mark" for exported goods, anti-dumping and anti-subsidy taxes, and regulations to address trade barriers stemming from WTO laws Additionally, prior to 2005, Vietnam faced lower import quotas compared to other ASEAN nations and China, with a greater number of product types subjected to quotas.

The ongoing Euro Zone crisis has significantly diminished the demand for Vietnamese textile and clothing products in the EU market In response, Vietnamese producers are actively seeking to expand their exports to new markets while simultaneously addressing challenges within their traditional EU market.

5.2.3 Research Objective 3: China’s competitive aspects, which Vietnam had to cope with in the export of textiles and clothing to the European Union market

Vietnam faces significant competition from China in five key areas: a large, cost-effective labor force with advanced skills; lower product prices driven by abundant raw materials and inexpensive labor; a diverse range of appealing products stemming from a robust domestic fashion industry; readily available raw material inputs; and a surge in sales following the 2004 WTO trade liberalization.

Luận văn tốt nghiệp Kinh tế government did to be against the bad impact derived from the elimination of restrictions, as well as its effort in attracting the FDI.

Recommendations

Facing with challenges, Vietnamese enterprises had better find out solutions to resolve existing difficulties, as well as exploit their potentiality thoroughly

Developing human resources is crucial for Vietnam's firms, which can be categorized into two types: production workers and those in business management To enhance the skills of production workers, companies should implement short training courses and consider inviting EU specialists to provide insights into European fashion and technical skills Additionally, relocating the textile and clothing sector to rural areas can reduce labor costs For management personnel, sending select individuals to the EU for business training and market research will enable them to develop effective business strategies upon their return.

Investing in advanced equipment and sewing machines is crucial for enhancing productivity in technology-driven industries By upgrading to modern machines, companies can operate more efficiently, leading to reduced labor costs Additionally, improved technology enables Vietnamese firms to diversify their production capabilities, allowing them to manufacture high-tech products rather than being limited to traditional offerings.

Vietnamese manufacturers should aim to meet recognized quality standards such as HACCP (Hazard Analysis and Critical Control Points) and ISO 9000 to enhance their product quality Achieving these standards will facilitate easier access for Vietnamese products to the EU market by helping them overcome technical barriers.

China's product variety has become a significant competitive advantage, prompting Vietnamese producers to intensify their efforts to compete The fashion industry in Vietnam still faces challenges in matching the diversity and innovation seen in China's offerings.

The lack of skilled designers in Vietnam's developed economy has become a significant weakness for enterprises, making it challenging for them to diversify their product offerings quickly To overcome this, it is advisable for Vietnamese companies to focus on creating unique products that stand out from those produced in other countries By emphasizing these distinctive characteristics, Vietnam can gain a competitive advantage and enhance the visibility of its brand names in international markets.

Many of Vietnam's trade and commerce companies are classified as small and medium-sized enterprises (SMEs), which often lack the capacity to directly distribute products in the EU market Therefore, it is advantageous for these Vietnamese SMEs to partner with EU companies, allowing their products to be marketed under established EU brand names, thus alleviating the challenges associated with distribution Conversely, companies capable of directly accessing the EU market must focus significantly on marketing strategies Given the diverse cultural landscape within the EU, it is essential for Vietnamese firms to develop tailored marketing approaches that cater to specific regions and customer demographics.

To mitigate the impacts of the ongoing Euro Zone crisis, Vietnamese textile and clothing companies should explore new markets However, it remains essential for them to address the challenges faced in the European Union, which has been a traditional export market for Vietnam's textile and clothing industry.

The government support can be considered as a leverage that helps domestic producers to operate more effectively and promote the development of T/C industry

The textile and clothing (T/C) industry in Vietnam is closely linked to several supporting sectors, including cotton and fabric production To foster growth in these additional industries, the Vietnamese government should implement effective policies Unlike China, which has vast land resources, Vietnam faces limitations in available agricultural land for cotton cultivation, making strategic planning essential for sustainable development.

A well-structured graduation thesis in Economics should clearly define its zoning Additionally, it is important to reassess fallow land management Selecting the most suitable cotton variety for Vietnam's climatic conditions is also essential for optimal agricultural outcomes.

The lack of market information is a significant weakness for Vietnam, despite its extensive global commercial network, which is not operating effectively It is crucial for the government to review and enforce stricter controls over this network While numerous fairs are organized to help producers promote their brands and find customers, many Vietnamese firms struggle to afford participation costs Therefore, it is advisable for Vietnam to host fairs in the EU, enabling greater involvement from local enterprises Additionally, the government should implement trade promotion programs with the EU to create more opportunities for Vietnamese exporters.

Capital remains a significant challenge for many T/C companies, often leading them to rely on bank loans and face high interest rates Establishing a dedicated fund for the T/C sector could provide much-needed support Additionally, the government should revise policies to better attract foreign direct investment (FDI) by simplifying the investment process, which is currently viewed as complex and rigid Implementing investment incentives, such as tax breaks and financial support, is crucial for enticing foreign investors Moreover, it is vital for the government to not only focus on attracting new investors but also to assist existing ones in navigating the intricate administrative procedures they face.

The EU has implemented measures to shield domestic producers from competition, and Vietnam could adopt similar strategies inspired by China Establishing a precautionary system that activates alerts when threats to Vietnamese producers arise would be a beneficial approach.

Learning Statement

Studying at Leeds Metropolitan University has been a transformative experience for me, especially as someone without prior work experience in international trade and finance Initially, I viewed this lack of experience as a disadvantage in my master's program However, I have actively sought knowledge from lecturers and gained valuable insights from classmates with practical backgrounds This journey included my first dissertation, which introduced me to new concepts and research methodologies I experienced a range of emotions throughout the process, from excitement in selecting my research topic to discouragement due to limited resources and the challenges of arranging interviews Ultimately, overcoming these obstacles left me feeling accomplished and proud of my progress.

I gained in-depth knowledge of the textiles and clothing industry, particularly the challenges faced by Vietnam in exporting to the European Union market This experience provided me with a clear understanding of the industry's operations, achievements, and existing difficulties Throughout my research, I found myself increasingly interested in pursuing a career in this field, as a deeper understanding often fuels my passion for the subject.

Through the process of implementing my dissertation, I developed essential research skills and gained a clear understanding of the necessary steps involved Despite facing some challenges, my interest in the field and the relevance of the research motivated me to choose this topic Once I selected it, I immediately began searching for relevant materials, although I initially struggled to find sufficient academic resources.

During my thesis research in Economics, I initially struggled to find relevant materials, focusing too narrowly on my specific topic and overlooking related studies that could have informed my work This oversight became apparent when I realized that broader resources contained valuable insights relevant to my subject At the outset, I failed to adequately narrow down my research problem, which complicated my dissertation proposal Fortunately, my supervisor advised me to limit my topic to a specific timeframe, making the research more manageable This experience highlighted the importance of seeking external perspectives, as my inherent biases often clouded my judgment If I were to approach the research again, I would prioritize gathering related materials before finalizing my topic to avoid confusion and anxiety over reference availability Additionally, I faced challenges in selecting appropriate theories and models, which consumed considerable time The methodology chapter was particularly vague for me initially, prompting extensive reading of dissertation guides Furthermore, despite my efforts to schedule interviews in advance, I encountered difficulties in collecting data on time due to the busy schedules of interviewees, especially managers This delay heightened my anxiety about completing the dissertation on schedule, but I managed to adapt, even conducting interviews via telephone when necessary.

I could do it finally Moreover, I had had the feeling of confusion and worry before implementing interviews with participants, because it was the first time I

Completing my graduation thesis in Economics involved conducting interviews that significantly boosted my confidence in communication and interviewing skills Ultimately, I felt a profound sense of satisfaction from successfully finishing my research, as it marked the first time I undertook such an extensive study independently.

Third, I learned how to select, analyze and synthesize data Facing with a lot of various sources of information, sometimes I saw the materials like a mess.

I organized the key insights from my literature review into specific themes, which facilitated a more logical access to the data I discovered discrepancies between the information gathered from interviewees and the literature, necessitating a thorough comparison and analysis of both sources.

The research significantly improved my time management skills, as I had to create an effective study schedule amidst daily fatigue Balancing research and relaxation was essential for maintaining my health, especially when stress from obstacles led to headaches To cope, I took medication and spent more time walking in the park to relax Additionally, reminders from the International Training Project at the Academy of Finance helped me adjust my schedule more flexibly.

My writing and reading skills have significantly improved through the process of developing my dissertation As a non-native English speaker, I faced challenges with vocabulary and sentence structures, often needing to consult dictionaries for new words while reading literature and writing my thesis Despite these limitations, I focused on crafting a coherent and logical dissertation, which not only enhanced my topic-specific vocabulary but also my overall understanding of economics Additionally, my reading skills were strengthened through extensive literature review.

Future students embarking on their own research should choose topics that genuinely interest them This passion will help them navigate the challenges inherent in the research process, making it more likely for them to succeed despite any difficulties they may encounter.

Luận văn tốt nghiệp Kinh tế research I myself love garments and I have intended to work for import and export companies in future; which are my big motivations

The thesis successfully examines the challenges faced by Vietnam's textile and clothing exports to the European Union; however, the findings may not be universally applicable to all companies While some results may resonate with certain enterprises, others may only be relevant to specific firms Nonetheless, these insights are valuable for researchers and contribute to the body of knowledge in the textiles and clothing sector Future studies are encouraged to focus on the strategies employed by Vietnamese enterprises to address these existing challenges.

Participating in this master's course and completing my dissertation has been a pivotal experience in my life, allowing me to explore my abilities and gain confidence in conducting academic research Successfully finishing my thesis after overcoming numerous obstacles has been incredibly rewarding This research process deepened my understanding of textiles and clothing while significantly enhancing my research, time management, writing, and reading skills in English Most importantly, it taught me how to independently navigate and overcome challenges.

Top 20 less developed countries with a high dependence on clothing exports

Source: Jodie Keane and Dirk Willem te Velde (2008, quoted in UNCTAD, 2005 and WTO, 2006)

Some main goods for exportation

Source: General Statistics Office of Vietnam (n.d)

Vietnam’s textiles and clothing export turnover to the Europe Union market

to the Europe Union market

Source: Ho Chi Minh city department of industry and trade, 2004

Interview form

Thank you for participating in this interview, which is a crucial component of my dissertation examining the challenges faced by Vietnam's textile and clothing exports to the European Union from 1992 to 2007 Your insights will be invaluable in exploring various aspects of this topic.

1 THEME: Common weaknesses of Vietnam textiles and clothing export and manufacturing companies

Vietnam companies had to face with difficulties in the process of manufacturing and exporting textiles and clothing (from 1992 to 2007)

Could you specify what difficulties were in terms of the following categories? Please specify difficulties in detail and give examples.

1.2.1 Raw materials (fabrics, yarns, fibers etc.)

1.3.2 Market knowledge (inadequate and incorrect)

1.3.3 Lack of awareness about new buyers

1.3.4 Difficulties in establishing contact with new buyers in foreign markets

1.3.5 Lack of awareness about changing EU legislation

1.5.1 Roads, ports, rail and air for moving of good in and out of the country

1.5.2 Shipping and other transportation times and costs

1.5.3 Access to reliable sources of energy, water and telecommunications.

1.7.2 Procedural in the Europe Union countries

2 THEME: The state of Europe Union affects Vietnam’s export of textiles and clothing to this market

The dynamics of politics, economics, culture, and society within the European Union have significantly influenced Vietnam's textile and clothing exports to this market Over a span of 15 years, from 1992 to 2007, notable changes occurred in the EU, further impacting trade relations and export patterns.

The impact of the European Union on Vietnam's textile and clothing exports is significant, shaped by various factors Firstly, trade agreements such as the EU-Vietnam Free Trade Agreement (EVFTA) have reduced tariffs, enhancing competitiveness and boosting export volumes For instance, the elimination of tariffs on textiles has allowed Vietnamese products to enter the EU market at lower prices, increasing demand Additionally, stringent EU regulations on quality and sustainability have prompted Vietnamese manufacturers to improve their production standards, ensuring compliance and fostering long-term partnerships Furthermore, changing consumer preferences in Europe towards ethically produced and sustainable fashion have led Vietnamese companies to adopt more environmentally friendly practices, aligning with market trends Overall, these factors collectively illustrate how the EU's policies and market dynamics have influenced Vietnam's textile and clothing export landscape.

4.1 Technologic investment policies of government

4.2 Support the research and development activities by government 4.3 Rate of change in technology

3 THEME: China’s competitive aspects, which Vietnam has to cope with in the export of textiles and clothing to the Europe Union market

China stands as a leading exporter of textiles and clothing globally, significantly impacting competition among other exporters like Vietnam As Vietnam navigates the European Union market, it must address the competitive advantages that China possesses in the textiles and clothing sector.

Could you specify what China’s competitive aspects are in terms of the following factors? Please specify them in detail and give examples.

1.3 Security of production and shipping

1.4 Minimal administrative burden and corruption

1.5 Transparent and predictable legal, commercial and regulatory system 1.6 Free trade zones

1.7 Compliance with internationally recognized health and labor standards 1.8 Real exchange rates

1.10 Market demand and economic growth

Efficient transportation infrastructure, including roads, ports, railways, and air routes, is crucial for the seamless movement of goods in and out of the country Additionally, access to dependable energy, water, and telecommunications is essential for supporting economic activities Furthermore, optimizing shipping and transportation times while managing costs effectively is vital for enhancing trade efficiency and competitiveness.

3 Proximity and preferential access to market

3.1 Proximity to major markets; preferential access to major markets

4.2 Availability of qualified managers, including middle management 4.3 Compensation rates

5.1 Access to quality and cost-competitive domestic and regional yarn and fabric production

5.2 Tariffs on imports of raw materials

5.3 Cost and availability of capital to invest in new machinery and purchase raw materials

5.4 Rules of origin for trade preferences.

6 Level of service provided and reliability of supplier

6.1 Reputation for quality and on time delivery

6.2.1 Supply chain linkages 6.2.2 Relationship with customers

6.3 Level of service provided (e.g., full-package versus assembly) 6.4 Lead time and flexibility to respond to quick turnaround orders 6.5 Flexibility and variety in styles or products and lot sizes offered.

Statement of originality and authenticity

FACULTY OF BUSINESS AND LAW

Course: Master of Art in International Trade and Finance

Statement of Originality and Authenticity

This dissertation is exactly an original and authentic piece of work by myself I have totally acknowledged and referenced all materials from secondary sources.

It has not been presented elsewhere for assessment in whole or part

From the early time of doing this dissertation, I have read the Examination Regulations and I recognized the potential consequences of any break of discipline

Local Level Approval: Postgraduate Research Project

LOCAL LEVEL APPROVAL: POSTGRADUATE RESEARCH PROJECT

Low risk project involving human participants

Course: Master of International Trade and Finance

Project Title: Difficulties in Vietnam’s export of textiles and clothing to the European Union market in the period from 1992 to 2007

The participants include: employees and managers of Vietnam’s textiles and clothing export and manufacturing companies

I hereby confirm my intention to conduct this research project as outlined, acknowledging my obligation to adhere to the approval terms for the project's duration I recognize that any substantial changes to the project require prior consent, and I will seek immediate approval for significant amendments before proceeding with any research activities.

Nguyen Mai Chi May 9 th , 2013

Approval – Research Ethics Co – ordinator

This form will be retained for the purposes of assurance of compliance and audit for the duration of the research project and for five calendar years thereafter

Dissertation Proposal

Globalization has become a significant focus worldwide, with international trade playing a crucial role in socio-economic development Exports, in particular, offer substantial benefits for a country's economic growth, prompting many developing nations to pursue export-oriented industrialization Vietnam is also embracing this trend, aligning its economic strategies with global market demands.

Export activity significantly impacts Vietnam's economic growth, contributing approximately 70% to the country's Gross Domestic Product (GDP), a substantial increase from 30% in the mid-1990s In 2004, Vietnam's export turnover surpassed $26 billion, marking a 28.9% increase from the previous year, which positioned the nation as the leader in GDP growth in the region The competitive nature of the global export market has enhanced the quality of Vietnamese products, prompting improvements in manufacturing capabilities and technology As a member of organizations like the WTO and APEC, Vietnam is compelled to produce higher-quality goods to maintain a competitive edge Furthermore, exportation transforms national economic structures, transitioning Vietnam from an inward-focused economy to an outward-oriented one, while also reducing unemployment and enhancing living standards Ultimately, export activities foster stronger external economic relationships.

Vietnam's major merchandise exports include rice, crude oil, seafood, coffee, pepper, rubber, and coal, with textiles and clothing being particularly significant The Vietnamese government recognizes these goods as essential for export and actively supports their trade Despite facing certain challenges in the textiles and clothing sector, Vietnam has achieved notable success in this area According to the General Statistics Office of Vietnam, textiles have consistently ranked among the top export commodities from 1995 to 2010.

The graduation thesis on Economics highlights the consistent growth of Vietnam's textile and clothing exports each year Key markets for these exports include the United States, the European Union (EU), Japan, and South Korea, underscoring their significance as major destinations for Vietnamese goods.

In 2001, Vietnam's export turnover to the European Union was €741,011,500, according to the Ho Chi Minh City Department of Industry and Trade (2004) By 2004, Vietnam's textiles and clothing export turnover surged to $4.32 billion, reflecting a 17.2% increase, with exports to the EU reaching $663 million—an impressive growth of 32% (Ho Chi Minh City Department of Industry and Trade, 2005).

The European Union represents a significant and promising market for Vietnam's textile and clothing exports, boasting a population of 502.5 million across its 27 member states.

As of January 1, 2011, the European Union's population increased by 1.5 million compared to the previous year, highlighting its status as a populous region (Merco Press, 2011) Located in Western and Northern Europe, the EU comprises various member states that share socio-economic similarities With a focus on sustainability, Europeans enjoy a high standard of living, which influences their purchasing decisions in the fashion sector They prioritize quality and style over price, compelling manufacturers to create trendy, high-quality products.

In his 1998 report, Hal Hill from the Australian National University highlighted that the lack of export success in the textiles and clothing industry often reflects significant domestic challenges and an inability to leverage comparative advantages Despite previous studies addressing the hurdles in textile exports, specific and detailed insights remain scarce The Multi-Fibre Arrangement (MFA) was designed to protect producers in developed countries by limiting textile and clothing exports from developing nations, allowing these firms to adapt and compete against lower-cost producers Additionally, as noted by Habubank Securities in 2011, Vietnam faces intense competition from China in this sector.

The EU's economic situation has adversely impacted Vietnam's textile and clothing exports, highlighting the persistent trade barriers that remain despite decades of tariff reductions through the General Agreement on Tariffs and Trade (GATT) and the World Trade Organization (WTO).

This research aims to systematically identify the specific challenges faced by Vietnam's textile and clothing exports to the EU market, which is recognized as a significant opportunity for growth With numerous Vietnamese firms actively producing and exporting these products, their success is crucial for both the industry's development and the country's GDP Understanding these challenges will enable enterprises to assess their current position, recognize their strengths, and identify areas for improvement By uncovering the underlying reasons for these difficulties, businesses can develop effective solutions to enhance their competitiveness in the EU market.

Specific research questions will be explored in this study:

1 What are the common weaknesses of Vietnam textiles and clothing export and manufacturing companies?

2 How does the state of Europe Union affect Vietnam’s export of textiles and clothing to this market?

3 How does competition affect Vietnam’s export of textiles and clothing to the Europe Union market?

The current state of the European Union significantly influences Vietnam's textile and clothing exports, presenting both positive and negative effects On one hand, favorable conditions within the EU can enhance trade opportunities for Vietnamese products, while on the other hand, challenges may arise that could hinder export growth.

9 To evaluate the impact of competition to Vietnam’s export of textiles and clothing to the Europe Union market

This research aims to identify the challenges faced by Vietnam's textile and clothing exports to the European Union market It specifically examines the common weaknesses within Vietnam's textile and clothing manufacturing companies, as well as the influence of EU regulations and competition on the country's export activities.

4.1 Common weaknesses of Vietnam textiles and clothing export and manufacturing companies

The textile and clothing (T/C) industry is a vast and intricate sector, characterized by a wide range of products, including high-tech synthetic yarns, wool fabrics, cotton bed linen, industrial filters, nappies, and haute couture According to Brussels (2003), the manufacturing process involves several complex stages, such as the preparation and spinning of textile fibers, weaving, finishing, and the production of various textile articles, including knitted and crocheted fabrics As the manufacturing process becomes more complex, companies face an increasing number of challenges and related issues.

To effectively identify the challenges and weaknesses faced by companies, Porter (1990) categorized production factors into several key areas: human resources, which include personnel quantity, skills, and costs; physical resources, encompassing land, water, minerals, climate, and geographic location; knowledge resources, defined as a nation's scientific, technological, and market knowledge; as well as capital resources and infrastructure Building on this framework, Golam Robbani (2004) highlighted infrastructure components, specifically identifying essential elements such as roads, ports, railways, and air transport for the movement of goods, alongside the associated shipping times and costs.

(3) access to reliable sources of energy, water and telecommunications. Identifying weaknesses based on above factors and categories is clear and adequate

4.2 The state of Europe Union affects Vietnam’s export of textiles and clothing to this market

When evaluating the impact of the state of EU to export countries, Werner

In 2001, the importance of the EU trade regime was highlighted, focusing on key elements such as EU import quotas, customs tariffs, and preferential trade agreements However, these factors alone do not provide a complete picture of exportation dynamics Jappe (2009) further noted that the quota regime and supply chain considerations play significant roles in the evolution of EU trade policy, particularly concerning textiles and clothing export nations.

Tiêu đề	Difficulties in Vietnam’s Export of Textiles and Clothing to the European Union Market in the Period from 1992 to 2007
Tác giả	Nguyen Mai, Chi
Người hướng dẫn	Christine Ngo, Dissertation Supervisor, Milton Yago, Lecturer
Trường học	Leeds Metropolitan University
Chuyên ngành	International Trade and Finance
Thể loại	dissertation
Năm xuất bản	2012 – 2013
Thành phố	Leeds

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