The cost of renting shop space has increased at a dizzying pace in Vietnam, with rates now up to US$800-3,000 per month. High rental fees have been one of the main obstacles faced by textile and garment companies in expanding their retail systems.
In the past, only large-scale companies have been able to afford the rates.
According to Ms. Duong Thi Ngoc Dung, director-general of the Nha Be Garment Company, large amounts of money must also be spent on brand name development. Therefore, it has been hard for smaller firms to promote local fashion, she said.
The Nha Be Garment Company has now invested more than VND20 billion (US$1 million) to build and develop its new NBC brand name, and expand its distribution channel and retail stores nationwide.
Meanwhile, the Gia Dinh Textile and Garment Corporation (Giditex) and Saigon 2 Garment Joint-Stock Company with its Gidini and Sanding brands, recently joined forces to open new retail stores.
Cooperating with other firms also helps enterprises offer customers a variety of goods with diversified designs for all ages, said Mr. Nguyen Huu Toan, director of the Saigon 2 Garment Joint-Stock Company.
Giditex has plans to collaborate with other garment enterprises like the Phong Phu Corporation and Saigon Garment Manufacturing Trade Joint Stock Company (Garmex Saigon) to open more stores. The merge will target consumers more effectively and directly, added Mr. Le Dong Trieu, director-general of Giditex.
The Vietnamese fashion industry is currently struggling against competitors from China, Thailand and Korea. The ASEAN-China Free Trade Area (ACFTA) began operations January 1 to evaluate and propose solutions for economic cooperation, investment and commercial exchange between China and ASEAN members in the near future.
Vietnam, Laos, Cambodia and Myanmar are set to join the ACFTA in 2015. Domestic garment companies will thus have five more years to promote their fashion products in local markets.
Experts say the countries should focus on four areas including design, marketing, production, and establishing a distribution network.
After building prestigious brands, Vietnamese businesses will stand to earn more money for every unit of clothing sold to exporters. Currently local businesses earn just a few cents per unit while foreign companies purchase inexpensive local products and then mark them up substantially under famous brand names.
