Weaving for the World
The people who run Vietnam's garment factories have weaved their way to prosperity and success. But they want more. Some are working with Japanese companies to find customers around the world. Today we look at what they're doing to tap global markets for the last in our three-part series on the rise of ASEAN economies.
Hundreds of people are hard at work operating the machines in this textile factory in Ho Chi Minh City. They're churning out a steady supply of shirts, suits and blouses. Workers such as these have played a major role in Vietnam's economic rise.
"This is one of the biggest textile factories in Vietnam. The company exports clothing to Japan, the U.S., and Europe."
Executives at the firm are busier than ever. They recently sold a stake in their business to a trading company in Tokyo.
They're working with their Japanese partner to build a bigger base of customers worldwide. Hiroshi Morita is a manager at the trading company. He expects that a free trade deal among Asian-Pacific nations could open the door even wider.
Both he and his Vietnamese counterparts believe that if the Trans-Pacific Partnership goes ahead, it would clear the path to the US market. That could result in higher sales for both companies.
"We're confident apparel companies would take advantage of the TPP by increasing orders from factories in Vietnam. So partnering with the country's largest textile company is the best way to boost our sales."
Hiroshi Morita / Prominent Vietnam, Itochu Group
Morita and Vietnamese executives expect local competition to intensify, as other people try to muscle in on the market. But they believe they have the contacts and expertise to give them the edge.
"We have a chance, also, we have a challenge. They know very well how to go with the market."
Pham Phu Cuong / Vice President, VINATEX
The managers are already making plans to cater to new customers with new demands. Morita says wrinkle-free clothes are becoming popular with business people in the US. So the factory workers have been making samples of pants.
"Working with the Japanese companies and technical people supporting us, I think we can bring up the best quality out of this factory."
Dang Vu Hung / Vice President, VINATEX
"Our Vietnamese partner has great connections in the country, and we have worldwide marketing clout."
Hiroshi Morita / Prominent Vietnam, Itochu Group
But they hit a snag. The managers need to change the way to source the fabric. Right now they buy it from China...which could pose problems under the TPP.
The managers worry they'll only avoid tariffs on their goods if they use materials from countries participating in the pact. And China is not taking part. Morita has suggested his local counterparts produce the wrinkle-free fabric themselves.
The managers are also looking to companies in Vietnam to expand their supplier network for all the factory's products. This woolen-fabric maker is part of the network.
The factory workers are also getting help from a Japanese textile maker. They're learning how to use materials to create top-notch products.
"We cooperate with the Japanese to supply high-quality products to meet domestic demand. And, this also helps Vietnamese exports."
Do Tuan Anh / Deputy General Director, 28 Corporation
"We have to train workers or think of a new production method to satisfy the quality standards of Japanese customers demand"
Tatsuya Yamakoshi / Manager, Sotoh
An economic adviser for the Vietnamese government says such tie-ups could become model cases.
"Japan has much more modernized higher level of textile industry than China. So, if Japanese company can put investment in textile industry in Vietnam, both Japan and Vietnamese company can benefit from that."
Pham Chi Lan / Former Vice President, Vietnam Chamber of Commerce and Industry
For now, people in Vietnam and Japan are keeping a close eye on the progress of the TPP talks. They know a deal could open up a whole new world of possibilities.
Kyoko Fujita is in our studio for more insight. Kyoko, business people in Vietnam and Japan seem to be building win-win relationships.
That's right. I met a lot of business people in Vietnam. They said they were eager to learn more from Japan to update their knowledge and improve productivity. Japanese business people also see Vietnam as an attractive place for investment with its growing economy. One research poll shows they see the country as the most important overseas production base for the future.
How are the TPP talks progressing?
Negotiators from the 12 member countries are planning to meet in Hawaii next month. They're hoping to reach a broad agreement in the next couple of months. Officials at the Vietnam Textile and Apparel Association say if the talks between Vietnam and the US conclude, the country's textile exports to the United States could increase by more than 10 percent a year. But analysts say unless economic giants Japan and the US reach a broad agreement in their TPP talks, it could be difficult for the12 nations to reach a conclusion. Company executives and managers are watching closely on the progress of the talks, as they could give a boost to their businesses.