Hanoi (VNS/VNA)  — The competitive pressure exerted on domesticfashion firms by the increasing presence of world renowned brands isunavoidable, but it could have positive impacts in the long run, experts said.

They said that the Vietnamese consumer market isgrowing, and stiff competition could motivate domestic firms to change theirproduction methods and business practices in order to stay in business.

Since the early 2000s, a series of world famousfashion houses targeting the middle-income group has entered Vietnam, includingSpain’s Mango, UK’s Oasis and US’s GAP.

Sweden’s Hennes & Mauritz (H&M) and Spain’sfashion giant Zara are among the latest entrants in the last few months.

Going by anticipation and crowds that these brandshave generated in their opening days, it is evident that they are meeting ademand, and domestic firms have no choice but to deal with strong competition.

What has to change

Dang Phuong Dung, Vice Chairwoman, Secretary Generalat Vietnam Textile and Apparel Association (VITAS), told the Vietnam NewsAgency that the emergence of more international brands would compel domesticcompanies to diversify their products in all market segments.

The foreign brands are meeting a real demand,according to Samir Dixit, Managing Director, Brand Finance Asia Pacific.

He said in the company’s 2016 Vietnam 50 Report thatforeign brands’ taking over the domestic market is simply inescapable becauseof the ever increasing gap between consumers’ demand and producers’ supply interms of volume, quality and aesthetics.

As the foreign brands enter Vietnam, localbusinesses must be more aware of their own product quality and appropriatelychange their investment orientations, Dixit said.

Dung said most domestic garment producers havefocused mainly on exports, chiefly taking on outsourced production. They havenot been interested in the huge potential of the domestic market; therefore,despite being one of the top textile and garment exporters in the world, thecountry has yet to gain much added value, she added.

Customer favourite

With textile and garment firms tending to specialisein production but not in design, branding and distribution, they will have toadapt fast to be able to compete with the newcomers.

The success of grand openings by H&M and Zaracan be attributed to good marketing and advertising, but it is undeniable that“fast fashion” (where a new trend or design is quickly produced at relativelycheap prices) is now an established customer favourite in Vietnam.

Its young population and rapid improvement in livingstandards has made Vietnam an attractive and fertile territory forinternational fashion brands.

These firms produce wide ranges of clothing fordifferent market segments and sell them at an average price due to diminishingproduction costs that result from mass production.

In the fashion industry, foreign companies towerover their domestic counterparts in terms of capital, professionalism,marketing and customer service, and most importantly, online selling.

A spokesperson for H&M said the brand spent twoyears researching the Vietnamese market, identifying key growth factors like afast-paced economy, an exponential number of fashion-conscious consumers withdistinctive tastes, and a surging density of shopping malls.

Domestic enterprises have begun placing moreemphasis on designing and offering more diverse products of higher quality, andit is even said that Vietnamese enterprises may enjoy some home turf advantage,which enables a cultural understanding of customer habits. 

However, it is evident that domestic brands remainweaker than their international competitions, as Dinh Thi My Loan, President ofthe Vietnam Retailers Association, said at a June 2017 conference onidentifying retail policy risks.

Loan said that more than 200 foreign fashion brandspresent in the country occupying more than 60 percent of the market share.

She noted that major fashion brands in the world arevery interested in Vietnam because of its high annual average market growthrate of between 15 to 20 percent.

There’s confidence

Domestic brands that have made a mark in the marketremain confident and hopeful that they will be able to ride the new waves ofinternational competition.

Do Viet Anh, Director of Boo Fashion Trading Co.Ltd, told Viet Nam News that the continuous stream of foreign brands enteringVietnam’s fashion markets will have some impact on the domestic fashionindustry, but they are likely to be short-term impacts.

In the long run, such competition is definitely agood dose of reality for the country’s fashion market. It will help alterpeople’s shopping habits towards branded products instead of non-branded ones,he added. 

The looming presence of these foreign brands willalso help customers compare domestic and global fashion products, andunderstand that prestigious Vietnamese brands are not inferior, Anh said.

Nguyen Tiep, NEM Fashion’s Head of MarketingDepartment, also held the same view despite the two brands’ differentdemographics.

Tiep told Viet Nam News that his company wouldimplement a business strategy to boost a line of customers’ favourite productsin order to increase its competitiveness.

The company will also focus on strengthening itspoint of sale customer service and improving overall customer experience, Tiepsaid.-VNA