International apparel firms are setting plans to enlarge operations in Vietnam as they see high growth potential in the market, driven by the country’s deepened integration.
Stripe International’s NEM fashion among the most popular in Vietnam
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Stressing on the expansion plans, Tsutomu Harigae, general director and CEO of Stripe Vietnam, told the media that development of small cities will drive up demand for offices too and it is here that Stripe is foreseeing opportunities for new stories.
Ever since its acquisition of Vietnamese NEM Group in 2017, Stripe has been witnessing immense popularity in the country, under the NEM brand, among local population especially among working women in the age group from 20s to 40s.
In its endeavor to lure the middle class in smaller cities, Stripe also intends to start a new brand that will be 10 percent cheaper than current brands. The company aims to have its sales increased by 30 percent on year to US$46.4 million in Vietnam, and sales of US$71.6 million and an operating profit margin of 25 percent in the country in the long run.
Stripe also made it clear that it will send personnel from Japan to further enhance the sewing skills of Vietnam’s garment workers.
Besides Stripe, Fast Retailing Co. Ltd., the owner of the Uniqlo brand, has also started to recruit staff since this month to prepare for the opening of a store in Ho Chi Minh City this fall.
The Uniqlo store will be operated through a joint venture between Fast Retailing and the Mitsubishi Corporation, which will own 75 percent and 25 percent of the company, respectively.
According to a representative from Fast Retailing Co. Ltd., Vietnam will be the fourth country in which Fast Retailing and Mitsubishi have established a joint venture, following Thailand in 2011, Indonesia in 2013, and Russia in 2017.
High growth outlook
Tran Thi Thanh Thuy from the Multilateral Trade Policy Department under the Ministry of Industry and Trade said the Vietnamese apparel market is attractive to foreign firms, those having advanced technologies, experience, efficient governance and strong finances.
The market has so far seen the presence of many other famous clothing retailers over the past few years. Zara and H&M have also made their debut in the country to break open the market of fast and affordable fashion for men, women, teenagers, and children since 2017.
According to the Vietnam Retailers Association, more than 200 foreign fashion houses are present in Vietnam, providing a wide range of products from mid- to high-end products, which hold 60 percent of the market share.
Experts said that Vietnam has become very attractive to foreign fashion houses thanks to its young population, high growing economy and improved income.
“Foreign brands show big interest in Vietnam because of the industry’s high average growth rate of 15-20 percent,” Chairwoman of the Vietnam Retailers Association Dinh Thi My Loan said.
Vietnam's fashion revenue is expected to grow 22.5 percent a year in the 2017-2022 period, reaching US$988 million yearly by 2022, according to German research firm Statista.
The country’s revenue from the fashion segment reached US$486 million in 2017 and US$557 million in 2018, and is predicted to hit US$661 million this year.
