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MNC brands pose stiff competition to domestic ones in Vietnam

For the last 15 years, a slew global fashion brands have entered Vietnam targeting the middle-income group, these include Mango, UK’s Oasis and GAP. Sweden’s H&M and Spain’s Zara are among the latest entrants in the last few months. At the moment, over 200 foreign fashion brands are present in the country occupying more than 60 per cent of market share. Big fashion brands are interested in Việtnam because of its high annual average market growth rate of between 15 to 20 per cent.

Looking at the crowds that these brands have generated in their opening days, it is evident that they are meeting a demand and domestic companies are now looking at ways to deal with competition by changing their production methods and business practices to stay afloat. With textile and garment firms tend to specialise in production and not in design, branding and distribution, they have to adapt fast to be able to compete with foreign brands.

Đặng Phương Dung, Vice Chairwoman, Secretary General at Việtnam Textile and Apparel Association (VITAS), says growth of international brands would compel domestic companies to diversify their products in all market segments. The success of grand openings by H&M and Zara can be attributed to good marketing and advertising but it is undeniable that “fast fashion” is now an established customer favourite in Việtnam. Its young population and rapid improvement in living standards has made the country an attractive and fertile territory for international fashion brands.

These firms produce wide ranges of clothing for different market segments and sell them at an average price due to diminishing production costs that result from mass production. In the fashion industry, foreign companies tower over their domestic counterparts in terms of capital, professionalism, marketing and customer service, and most importantly, online selling.

 
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