Second Draft
Contents
Contents............................................................................................1 1 Introduction....................................................................................2 2 Requirements for Garment Export to EU.......................................3
2.1 Legislation Requirements..................................................................................3 2.2 Market Requirements........................................................................................3 2.3 Other Requirements...........................................................................................6
3 Internal Assessment........................................................................8
3.1 Determination of Export Practice.....................................................................8 3.2 SWOT your company......................................................................................10
4 Marketing tools............................................................................12
4.1 Trade fairs........................................................................................................12 4.2 Website............................................................................................................13 4.3 Direct contact with clients...............................................................................13 4.4 Remind your current clients............................................................................14 Appendix: An example of SWOT analysis..........................................................15
Vietnam Textile and Apparel Association (Vitas) Export Marketing Guidelines for Vietnams Garment Enterprises to EU Market Second Draft
Introduction
This export marketing guidelines, along with the garment export strategy, is a part of Project Vie/61/94 funded by the Governments of Switzerland and Sweden to Vietnam Trade Promotion Agency (the Ministry of Trade) and implemented by the International Trade Centre (ITC) to give Support to Trade Promotion and Export Development in Vietnam. The main beneficiaries of this export marketing guidelines are Vietnamese garment SMEs which have little or no experiences of exporting their garment products to EU. This guidelines is divided into three parts:
The first part presents requirements for exporting garment to EU market, including compulsory requirements set by law and additional requirements by individual buyer. The second part help garment enterprises to carry out an internal analysis to investigate if the enterprises are able to meet the requirements of EU market in the first part and how to meet them. The third part introduces the most important marketing tools for marketing garment export, including trade fair, internet, and direct contact with clients.
This export marketing guidelines should be used with the garment export strategy, in which explains why Vietnams garment enterprises should promote their exports of garment to EU market .
Vietnam Textile and Apparel Association (Vitas) Export Marketing Guidelines for Vietnams Garment Enterprises to EU Market Second Draft
2.1
Legislation Requirements
EU product legislation requirements are compulsory for all garment products exported to EU. These requirements include environmental, consumer health and safety standards. For instance, legal requirements on dangerous substances such as certain azo dyes splitting off carcinogenic amines.
2.2
Market Requirements
Besides legal requirements, producers are being confronted with additional requirements set by individual EU buyer, which do not make part of official legislation and not necessary to have legal basis. EU buyers want more information from producers, for example about the working conditions at production sites. Such market requirements can be related to quality of products and processes, environmental aspects, or social aspects of production, .
2.2.1
Vietnam Textile and Apparel Association (Vitas) Export Marketing Guidelines for Vietnams Garment Enterprises to EU Market Second Draft
A number of ISO certifiers in Vietnam sush as AFAQ- ASCERT of France, BVQI of UK, DNV of Noway, QMS of Australia,QUACERT of Vietnam, SGS of Switzerland, TV Rheinland and TV CERT of Germany.
2.2.2
Environmental Requirements
Besides legislative environmental requirements, individual garment buyer may require additional environmental requirements. The best-known and most widely used environmental standard in EU is the Oko-Tex 100 label (of the Oko-Tex Association) based on environmental, health and safety aspects. Oko-Tex 100 ensures customers that textiles used for producing garment do not contain harmful substances to human health and environment.
2.2.3
Social Accountability
One of the most important social accountability standards is SA 8000 developed by Social Accountability International (SAI), a US Non-Government Organization. Social Accountability 8000 (SA 8000) is an international workplace standard that strives to ensure ethical sourcing of goods and services. It considers key issues such as child labour, forced labour, health & safety, compensation, discrimination, working hours, freedom of association, the right to collective bargaining, and disciplinary practices. SA 8000 is based on international workplace norms of the ILO, International Labour Organisation, and on agreements and conventions of the United Nations (Human Rights, Rights of the Child). The support of such important organisations and the worldwide demand of customers and consumers for social standards have increased the importance of SA8000. Another important corporate social responsibility standard is AHSAS 18001. AHSAS 18001 is an assessment specification for Occupational Health and Safety Management Systems developed by BSI Management Systems, a UK company. It is noted that ISO 9001:2000 is more likely to be required than Oko-Tex 100 and SA 8000. Generally spoken, UK buyers tend to require social responsibility standards, while German buyers focus more on environmental standards. The Oeko Tex 100 Standard is also a positive buying argument for Central European buyers as this label in the meantime is widely known among the European consumers.
2.2.4
Vietnam Textile and Apparel Association (Vitas) Export Marketing Guidelines for Vietnams Garment Enterprises to EU Market Second Draft
Besides its obvious objectives of protecting products from theft and damage during transportation, packaging must meet other requirements in terms of environmental protection set by the importers and import countries. Because there is no strict rules for packaging, if garment manufacturers are required to provide packaging, they should ask the importers in detail the exact requirements for packaging, including package material, size, address, contact person and order number. Size marking Four basic measurements of body are used to determine the fitting of the garments: body length, chest, waist and hip size. In EU, UK uses a different size making system from the rest. For example: Womens figure size 36 in Germany and The Netherlands is indicated in the UK as 8. In other EU countries, the same figure sizes are used, but they are not equal. For instance, womens figure size 36 in Germany and The Netherlands is indicated in France as 40 and in Italy as 42. In most cases, EU buyers will provide their size marking requirements. If not, garment enterprises should proactively ask them or make an covertable table of sizes. All attempts within the EU to harmonise the size marking have faled until now. Also, the sizes can be very different from buyer to buyer: each larger clothing manufacturer tends to have its own specific size tables. Labelling There are two kinds of labelling requirements in the EU: mandatory and voluntary. Mandatory requirements like size (discussed above), fibre content and carelabelling or washing instructions. With regard to fibre content: the indication 100% or pure can be used within a margin of 2 percent of the weight of the final product. Other fibres with a weight of less than 10 percent of the weight of the final products can be mentioned. In that case all (eventual) other fibres have to be mentioned. An international care-labelling programme, patterned after similar programmes, is in use in many countries including countries outside the EU. The programme makes use of five basic symbols that are colour-coded; the symbols relate to the properties of colourfastness, dimensional stability, effect of retained chlorine (bleach), maximum safe ironing temperatures and certain other properties (see: next page). Voluntary requirements like origin marking, brand or product name and other consumer information. There is an increasing awareness of the need to keep the consumer informed about his prospective and current purchases. Origin marking means that the name of the
Vietnam Textile and Apparel Association (Vitas) Export Marketing Guidelines for Vietnams Garment Enterprises to EU Market Second Draft
country of origin should be mentioned. It is not allowed to mention the name of a country other than the country of origin. The place of the label in garments varies (mostly neck or side-seam) and can be part of the importers requirements.
2.3
2.3.1
Other Requirements
Design and Quantity Requirements
In comparison to US buyers, EU buyers normally order garment of more complicated design and smaller volume. Some Vietnams garment manufacturers, which get used to orders from US buyers with simple design and large volume, find difficult to meet these requirements of EU buyers. Reasons given to explain this include fragmented markets of different countries with different characteristics and end-users more fashion-sensitive (most of the worlds fashion centres are in EU, including Paris, Milan, and London; while New York is the fashion centre in US). This means garment SMEs with its smaller production capacity would have a certain advantage over large garment enterprises in exporting to EU.
2.3.2
2.3.3
Vietnam Textile and Apparel Association (Vitas) Export Marketing Guidelines for Vietnams Garment Enterprises to EU Market Second Draft
Build relationship with and create a database of material providers. Using the database,
garment enterprises can find and negotiate with suitable provider for materials specified by buyers faster.
Create a partnership network with other garment enterprises to share big contracts that are difficult to meet individually.
Vietnam Textile and Apparel Association (Vitas) Export Marketing Guidelines for Vietnams Garment Enterprises to EU Market Second Draft
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3.1
Internal Assessment
Determination of Export Practice
Different export practices require different capacities in terms of finance, designing, marketing, logistics and risk taking. You must determine which practice you are capable or prefer to export your products to EU. Two export practices possible for Vietnams garment enterprises to export their garment products include CMT and FOB (FOB Type I, FOB Type II and FOB Type III). Section 3.1.1 and 3.1.2 will discuss these export types in details.
3.1.1
Vietnam Textile and Apparel Association (Vitas) Export Marketing Guidelines for Vietnams Garment Enterprises to EU Market Second Draft
Can you make counter-sample within 7 days? Are you experienced with contract negotiating with foreign buyers? Do you know which articles a contract should include? Have you developed partnership with other garment manufacturers to share big order?
3.1.2
FOB production practice is an upgrading of CMT. Under the "FOB" production modality, materials are purchased by Vietnamese firms. The term "FOB" in this context implies a form of garment production/distribution, and has practically no relationship with the one defined under Incoterm. The operations which Vietnamese firms call FOB vary significantly in the forms of the actual contractual relationships with foreign buyers, and they can be classified into the following three types. FOB Type I is where Vietnamese firms purchase input materials from suppliers that are designated by foreign buyers. This type of export requires garment enterprises to take additional responsibilities of financing for the purchase of materials and for transportation. To be able to export under FOB Type I, you should answer the following questions in addition to question for exporting under CMT: Are your logistic providers realiable? Do you know how to calculate your costs for exporting in FOB and CIF prices? Can you finance for the purchase of materials and for transportation? FOB Type II is where Vietnamese firms receive garment samples from foreign buyers. In this type of production, Vietnamese firms are provided with design and responsible for materials sourcing, production and transportation arrangement of materials and completed products to buyer ports. For this type of export, besides answering questions for CMT and FOB Type II, two more questions you should answer: From your experiences, is it easy for you to find a specific material you need? Are your material suppliers realiable? (quality, timely delivery, etc.)? FOB Type III is where the Vietnamese firms initiate production of garments based on their own design, with no prior commitment of any kind from foreign buyers. To be able successful with this type of production, Vietnamese garment enterprises must be capable in
Vietnam Textile and Apparel Association (Vitas) Export Marketing Guidelines for Vietnams Garment Enterprises to EU Market Second Draft
designing, marketing and logistics arrangement. In order to export under FOB Type III, you need to answer the following questions: Do you know how to research fashion trends and market preferences by using internet? Do you have an good design team? Have you ever developed your own design collections? If yes, how your customers assess the collection quality? Based on the above analysis of production practices, you can determine who should be your direct clients. If you can only manufacture your products under CMT and FOB Type I, your direct clients are mainly buying agents or buying offices in Hong Kong, Taiwan, South Korea or Thailand. If you can produce your product in FOB Type II, your clients can be both international buyers in EU, their buying offices or buying agents in Asia. In FOB Type III, your direct clients are mainly international buyers in EU.
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Vietnam Textile and Apparel Association (Vitas) Export Marketing Guidelines for Vietnams Garment Enterprises to EU Market Second Draft
Opportunities Strengths Utilize your strengths or invest to benefit from opportunities Invest to overcome your weaknesses to take advantage from opportunities
Weaknesses
Restructure your companies, avoid activities or markets that poise threats on your weaknesses.
For example, when you see an opportunity in EU market such as several EU buyers want to source silk shirt at large quantity from Vietnam, but your companys weakness is its low production capacities of silk shirt.. You can overcome your weakness by investing in producing silk shirt or partnering with other silk shirt producers. You can see an example of SWOT analysis in the appendix of this guidelines.
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Vietnam Textile and Apparel Association (Vitas) Export Marketing Guidelines for Vietnams Garment Enterprises to EU Market Second Draft
Marketing tools
There are a number of marketing tools for you to approach international buyers including participating in trade fair, e-commerce, visiting importer offices or sending offer by emails to them, and reminding your current clients for new business. However, successes only come from a sheer persistence.
4.1
Trade fairs
Participation in fashion trade fair is a traditional marketing tool to approach international buyers. In most cases, the suppliers of garment much over-number the buyers and the number of international buyers visit a trade fair is low compared to the number of sellers. Therefore, it is difficult for garment enterprises to attract attentions from international buyers. However, selective participation in trade fairs with good preparation would bring the enterprises on average some new contacts, but not necessarily orders. However, the most important aspect about trade fair participation in the meantime is the possibility to get more knowledge of fashion trends, buyer preferences and competitors. Participation in a trade fair can be divided into three periods: before, during and after the trade fair. Before trade fair: A successful trade fair participation requires through preparation. You shoul carry out carry out the following steps to prepare for a trade fair:
Investigate all necessary information on the trade fair, including products, fame, theme
and participants to see if the trade fair is suitable to you. You can ask Vitas, the organizers or use the internet.
Determine items that you want to display in the trade fair. Find out your booth position and size and prepare how to design the booth and display
your garment. You can also hire a professional booth designer. Also importantly, you should agree with other Vietnams garment enterprises participating in the trade fair on designs and themes of booths to achieve a synergic effects.
Prepare a profile of your company and product catalogues in both soft and hard versions.
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Vietnam Textile and Apparel Association (Vitas) Export Marketing Guidelines for Vietnams Garment Enterprises to EU Market Second Draft
clients and give them your company profiles and product catalogues.
Visit and take photographs of competitors booths and items as you could learn from
relationships.
Discuss with other participants/organizers to collect and analyse lessons learnt from the
trade fair.
4.2
Website
E-commerce has become increasingly important in trading. Both clients and sellers find it convenient and cost-effective to use internet in business. There are several garment trading websites you can find such as http://www.textileserver.com, http://www.alibaba.com, http://www.apparelbids.com, or http://www.importers.com. Vietnams garment exporters are recommended to use websites as a tool to promote their exports of garment. You also can find a number of interesting Vietnamese website such as http://www.vietrade.gov.vn. Vitas is also building a trading portal for Vietnams textile and garment named http://www.vietnamtextile.org.vn. This portal is expected to become a virtual market for international buyers and Vietnamese garment exporters.
4.3
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Vietnam Textile and Apparel Association (Vitas) Export Marketing Guidelines for Vietnams Garment Enterprises to EU Market Second Draft
Secondly, your email to the client should be written and sent to the buyer. Your communications should be as professional as possible. An initial email should provide a summary of your company such as company history, products, quality certificates, production capacities, designing capacities, past clients and contact person. Pictures of some products may also be included in the email to attract the client. You should also prepare a standard qualification statement or brochure, including company profile and products, in advance and ask in the email if the potential client want to receive them. Face-to-face meeting with clients can be combined with participation in trade fairs. You must make an appointment with your potential clients in advance. Most necessary things to bring with you to the meeting are your business card, company profile, product catalogue, and samples. After the meeting, remember to send the client a thank letter.
4.4
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Vietnam Textile and Apparel Association (Vitas) Export Marketing Guidelines for Vietnams Garment Enterprises to EU Market Second Draft
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Vietnam Textile and Apparel Association (Vitas) Export Marketing Guidelines for Vietnams Garment Enterprises to EU Market Second Draft
the salespersons can communicate effectively in English. The company has not developed a company profile as well as product catalogue. The owner of ABC is quite good at English but rarely used. Lack of certificates: The company has not got ISO 9001:2000, SA 8000, or Oko-Tex 100, which it knows that the majority of EU buyers require. Production capacities: If EUcustomers place a large order of more than 20,000 items in one month, ABC could not meet this requirement. Opportunities: Removal of quota: The removal of garment quota to EU from Vietnam enables ABC to export to EU more conveniently. High import growth rate for childrens wear in EU market: The designer of ABC learn from internet that EU import of garment is growing well, of which import of childrens wear is increasing at highest growth rate. Of all markets, UK is the most potential for ABC to export because its largest market for childrens wear and is growing at 14% annually. Certificate application: ABC is applying ISO 9001:2000 and it would be an advantage for ABC to export to EU. Synergy between domestic market and EU market: The same designs the company done for domestic market can be used for EU market. If EU customers like the existing designs of ABC, it will recruit more workers and can lower its design and production costs on each item produced. Threats: Removal of quota for China to EU market: ABC does not know if it can compete with childrens wear from China. Vietnams competitors: Seeing the opportuties for exporting childrenss wear to EU market, other Vietnams garment enterprises could promote the export of this products to EU market. After doing the SWOT analysis, ABC would find that to export to EU market it needs to:
Achieve ISO 9001:2000 before exporting to EU. Achievement of ISO 9001:2000 would
make the company easier to approach to and get orders from EU buyers.
Professionalize the current marketing practices of ABC, including its communications.
Because it takes long time to retrain current salespersons, ABC is considering hiring a
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Vietnam Textile and Apparel Association (Vitas) Export Marketing Guidelines for Vietnams Garment Enterprises to EU Market Second Draft
marketing staff/manager who has experiences with exporting garment to EU market and has good English skills. It is also necessary develop a company profile, a product catalogue and business cards.
Because ABC does not know much about EU market, it thinks it is necessary to attend a
trade fair in target markets to find out (i) if EU buyers are interested of its products (ii) potential buyers (iii) and products of competitors. ABC contacts Vitas to find out if there is any suitable trade fair in the near future in EU market, especially in UK.
ABC also try to approach buyers directly by sending emails to potential buyers.
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