Nha Be Corporation is one of the leading garment producers in Viet Nam. Over the last 40 years the company has established a sterling reputation for producing high-quality products. It exports to many countries and territories. Viet Nam News speaks with Nguyen Ngoc Lan, general director of Nha Be Corporation, about the company’s business and the challenges that the Vietnamese garment sector faces following the US’s withdrawal from the Trans-Pacific Partnership (TPP).

How was the company’s performance this year and what do you attribute it to?

In the first quarter of this year Nha Be and other garment companies had faced difficulties caused by the tricky global political situation caused by Brexit and US presidential election.

From the second quarter, however, everything got better.

Our success was due to our strengths.

With the advantages we have as a giant garment producer that exports over 90 per cent of its products, we produce a diverse range of products. Furthermore, we have strong human resources including a professional sales team and skilful designers. We have kept investing in technology in our modern plants from the central region to the Cuu Long (Mekong) Delta.

Our traditional customers have helped us tide over difficulties. Nha Be has a bunch of traditional customers with whom we do business in many ways ranging from free on board (FOB) to original design manufacturer (ODM).

Furthermore, our company directly signs contracts with customers all over the world without using middlemen. Some 80 per cent of our contracts now are direct.

Thanks to that, we are able to cut costs to greatly improve our competitiveness.

What are the difficulties the Vietnamese garment sector faces because of the US’s refusal to sign the TPP and how can it overcome them?

After the US, a key market in the TPP, pulled out of the agreement, many tax benefits brought by it to Viet Nam will no longer exist. Due to that, the Vietnamese garment sector faces strong competitions from rivals like China, India and Pakistan. These nations are stronger than Viet Nam since they have a better supply chain that offers them more competitive costs.

To overcome the challenge, Vietnamese companies need to develop a complete supply chain so that they can cut costs. This is necessary because over 70 per cent of raw materials needed by the garment sector are imported from China. Besides, companies need to invest more in technology to optimise their production system and costs.

Training human resources is also a need. The training is required for people in many positions from workers to executives.

Nha Be Corporation changed its strategy immediately after being informed about the withdrawal of the US. We have restructured our export markets by increasing exports to the EU and Japan by 5-10 per cent.

We have opened an office in the UK to become an original design manufacturer (ODM) in that market.

The company also signed many long-term contracts with big groups in Japan including Itochu to expand the market.

In the domestic market, we have kept expanding by developing three brands, Decelso, Mattana and Novelty, with nearly 150 stores nation-wide.

How do you see the importance of investing in technology in Viet Nam especially as the world is going through industry 4.0? What is your company doing in this area?

Investing in technology will contribute much to the development of the sector thanks to modernisation and automation. This will greatly help companies cut costs and achieve consistent quality.

For many years now developing advanced technologies has been our strategy. To elaborate, we invest in design, sales and automation.

Nha Be Corporation has successfully developed a programme to computerise management by applying the enterprise resource planning (ERP) programme.

The programme has been developed since 2014 and has yielded fruitful results, with all information pertaining to all stages of planning, production, logistics being computerised. All the problems are reported in a timely manner for finding suitable solutions.

The company has acquired advanced technologies from Germany, Italy and Japan. We have also hired experts from foreign countries such as the US, UK, Hungary, and Sri Lanka. They work with Vietnamese experts for setting up a professional management system.

In addition, we have kept investing in our warehousing network in Binh Dinh, Gia Lai, Kontum, Binh Thuan and other provinces in the Cuu Long (Mekong) Delta. These warehouses have been developed based on the standards and requirements of major importers in the EU, the US and Japan.

Currently Nha Be is working with technology suppliers to study modern technologies like the Itello Cut programme. These technologies will help us greatly in saving materials and improving the working capacity.

The APEC summit has been discussing many aspects of the garment sector. Which of those discussions are you tracking?

We hope that big import markets like the US, Australia, Canada and Japan will further boost co-operation with Viet Nam. We also hope there will be closer bilateral relations between economies. That will create advantageous conditions for Vietnamese companies and its garment sector.

Can you tell us about the company’s future plans and how you plan to achieve them?

The Vietnamese garment sector will face many challenges in future. Besides the challenges posed by strong foreign competitors, companies will also face challenges related to labour.

In the next five years garment companies in big cities like HCM, Ha Noi and Da Nang will face a labour shortage. Because of that, moving manufacturing to provinces will be an unavoidable trend.

Realising the trend, our company has since 2002 built plants in provinces. Currently only 4,000 of our 36,000 labours work in HCM City. The others work in the central region and Mekong Delta.

In the next five years we will continue to boost our production in provinces. In HCM City, we will focus on producing suits for big companies like Hugo Boss, Versace, Armani, Suit Supply. We have signed a five-year contract with Suit Supply. The HCM City market will also be expanded.

In the domestic market, we hope to double our revenues in the next five years. —VNS