CHAPTER 3. DISTRIBUTION SYSTEM OF KEY IMPORTED
3.1.2. The current state of import and distribution of Vietnam’s textile and
3.1.2.1. Trade statistic of textile and garment products between Vietnam and Japan During 2011-2015, Vietnam's textile and garment industry has exported a USD 106 billion worth volume of garments, fibers and fabrics to various large markets in the world such as: the US, EU, Japan, Korea and ASEAN...
Table 3.2. Vietnam's total garment and textile export value during 2011-2015 Unit: million USD
Year Export value
2011 15.831
2012 17.018
2013 21.092
2014 24.692
Estimates for 2015 27.500
Total 106.133
Source: Vietnam Trade Promotion Agency Updated statistics by the General Department of Customs showed that the total export value of Vietnam's textile and garment in the first 9 months hit nearly USD 17 billions, out of which the US accounted for up to 50%.
Table 3.3. Preliminary statistics on export performance to Japan in the first 9 months of 2015 by the General Department of Customs
Unit: USD Commodities Export 2015 Export 2014 Comparing value +/-
(%)
Total 10.428.186.082 11.036.897.648 -5,52
Textiles and garments 2.032.807.976 1.924.562.667 +5,62 Source: General Department of Customs of Vietnam In the following places are Japan (account for 13%) with 9-month export value of USD 2.03 billion USD.The total export of Vietnam to Japan market in 2015 decreased by 5.52% in compare to export in 2014. However, as it is shown here, Vietnam textiles and garments recorded an up 6% respectively in comparison with the same period of last year. It is expected that in the coming period, Japanese garment and textile importers will shift their orders from China to Vietnam
3.1.2.2. The composition of Vietnam’s textile and garment product exported to Japan
Figure 3.2: The composition of Vietnam’s textile and garment product export to Japan
Source: www.vietnamexport.com
20%
7%
48%
3%
22%
Knitted products Kimono
Cotton Products Jackets
Others
In general, Vietnam’s export of textile and garment products to Japan lacks diversity in types. Most of products are artisan and dependent on available designs from customers. Main export product are cotton and knitted clothes (underwear, towels,…) with simple designs and lack of impression. Some other complex products such as jackets, wind coat, kimono,… are being promoted. However, these products need to follow the Japanese’s design, and do not have separate designs.
Most of Vietnam’s textile and garment products exported to Japan are manmade and do not have clearly stated origin in Japan’s stores and supermarkets. Vietnam also does not have any famous textile brand in Japan’s market
Some of Vietnam’s traditional products such as long dress, silk and brocade… have recently attracted more attention and preferences from Japanese consumers. However, due to special characteristics of these products, there has not been any large company, which has a plan to export them in large quantities. The route of these products to Japanese consumers’ hands is most from tourism and from small private stores from some Vietnamese citizens opened in Japan.
To sum up, although textile and garment industry is one of the largest exporting sectors to Japan, it has not created an impressive impact in terms of products (fashion, brands,…), and has not allowed potential of Vietnamese businesses to develop.
3.1.2.3. The penetration of Vietnam’s textile and garment product exported into Japan’s domestic markets
There are currently no official distribution stores of Vietnamese exported textile and garment products in Japan. Most of products are handcrafted so Japanese partner the the complete role of distribution of these goods in Japan’s market. It can be said that Vietnamese businesses just have a very marginal role and have not yet penetrate the Japanese market.
Overall, there are 2 main ways that Vietnamese exported textile and garment products can join Japan’s market. These are as follows:
*The first way:
Vietnamese companies receive contracts from handicraft goods from Japanese companies’ representative offices in Vietnam. Now, there are hundreds of
Japanese representative offices in Vietnam. In each office, there is an expert in each goods sector. Whenever a Japanese domestic companies demand handcrafted textile and garment products in Vietnam, experts from these representative offices will come to Vietnamese companies to negotiate and sign a contracts and take role of monitoring production process and activities. In this way, Japanese partners provide designs, labels, quantity determination,… and are responsible for distribution of finished products in Japan’s market. Therefore, Vietnamese businesses do not need to worry about distribution of their goods in consumption market, but they are often forced to take a fixed price and suffer from low level of efficiency.
The majority of Vietnamese textile and garment companies, including large ones, follow this route to penetrate Japan’s market. Some of them have established long-term partnership with Japanese companies and receive a large number of production orders.
For example, Dong Xuan textile and garment company (Doximex) co-operates with Katakura and HanedaShimpei Industrial Company for products regarding shirts, children clothes and undergarments under the label of “Caron”, “Topvalue”, “ELFindoor”,
“Cecile”…. Additionally, large corporations such as Itochu, Marubeni, Mitsui… often place orders with many other artisan companies in Vietnam. For example, Haosimex supplies T-shirts to Itochu; Viet Tien supplies handcrafted clothes under the label of
“Haruyama” to Mitsui. In the end of 2006, Phuong Duong Joint Stock Company signed a contract for 3-year supply of clothing to Mitsui Corporation. Additionally, Viet Tien Garment Company received a supply order of 15.5 million items for Marubeni Corporation. In general, Vietnam’s textile and garment products are becoming more popular and gaining more trust in Japanese partner companies, therefore the number of order is increasing every year.
*The second way
Investment Japanese companies open textile manufacturing factories in Vietnam (with 100 percent financial capital from Japanese side), produce goods in Vietnam and then export to Japan. Some examples are Kachiboshi Company in LinhTrung Industrial Zone (glove production), Rayho in Haiphong-Nomura Industrial Zone (garment production), LanLan in PhucKhanh Industrial Zone. This channel make up for about 40% of Vietnam’s textile and garment product exports to Japan’s market.
In general, although there is some improvements in the way which Vietnamese textile and garment products enter Japanese market, the export mechanism is still limited and dependent in industrial and commercial corporations in Japan. This mechanism is accessed to be suitable for the majority of Vietnamese textile and garments companies, which are of small scale, short of capital, lack understanding about the Japanese market, and have not penetrated the market.
Applying this mechanism, Vietnamese companies do not need to be worried about their product distribution and thus face lower business rick. Additionally, because Vietnamese products are gaining more attention in Japanese market, this is a safe choice as a first step to penetrate Japan’s market.
However, if Vietnamese textile and garment companies continue to focus on handicraft and do not find a plan to penetrate Japan’s market in the long run, their efficiency will not be able to rise because labor cost is rising. Moreover, they will be more passive and depended on their customers, and unable to react fast to changes in consumers’ demand as well as to market changes. Thus, they will not be able to produce many items, which meet consumers’ demand on time, making it more difficult to penetrate the market and to increase export turnover.
Some companies have started to directly export their products to Japan’s market. A typical example is TrungThuy. Co Ltd together with Miss Aodai brand.
The Miss Aodai brand is gaining more attention in Japan. However, this direct exportation method is only limited to some traditional products such as long dresses, silk and with a small scale. Even large corporations such as Vietnam Garment Company, Viet Tien Garment Company, Nha Be Garment Company,… are still loyal to the traditional method of receiving orders of handcrafted goods.