export marketing guidelines for vietnam
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Hanoi, February 2006
Prepared by Vietnam Textile and Apparel Association (Vitas) with assistance from the
Trade Promotion Agency (the Ministry of Trade), Trade Promotion Project VIE/61/94
(funded by the Governments of Switzerland and Sweden and implemented by
International Trade Centre), and MCG Management Consulting
Vietnam Textile and Apparel Association (Vitas)
Export Marketing Guidelines for Vietnams GarmentManufacturers to EU Market
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Contents
Contents ............................................................................................1
1 Introduction .................................................................................... 2
2 Requirements for Garment Export to EU ....................................... 32.1 Legislation Requirements ..................................................................................3
2.2 Market Requirements ........................................................................................3
2.3 Other Requirements ...........................................................................................6
3 Internal Assessment ........................................................................ 83.1 Determination of Export Practice .....................................................................8
3.2 SWOT your company ......................................................................................10
4 Marketing tools ............................................................................ 124.1 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
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1 Introduction
This export marketing guidelines, along with the garment export strategy, is a part of ProjectVie/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 .
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2 Requirements for Garment Export to EU
Vietnams garment export to EU must meet two types of requirement, legislationrequirements and market requirements.
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 Quality Management Requirement
To be certain that garment suppliers are capable to provide garment at a certain quality, EU
buyers normally require garment suppliers to achieve certain types of quality certificate. The
most widely used quality management system is ISO 9001:2000.
The standards of ISO 9001:2000 provide a framework for standardising procedures and
working methods, not only with regard to quality control but to the entire organisation: from
purchasing to processing, quality control, sales and administration. ISO 900:2000 requires
that you describe exactly your processes (or activities), and develop procedures according to
which the processes or activities should be performed, and then follow these procedures in
daily business activities. This process guarantees that you always do things the same way
and produce stable quality products. There are numerous benefits associated with a certified
ISO 900:2000 management system:
Improved product, process and service quality;
Increased customer satisfaction levels;
Improved productivity, less waste; and
An expectation from buyers.
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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 Packaging, Size Marking and Labelling
Packaging
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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 figuresize 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
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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 Other Requirements
2.3.1 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 Material Sourcing Requirement
Different from export to US market, export to EU to a large extent requires Vietnams
garment manufacturers to source materials. Therefore, garment enterprises want to export to
EU market should build relations with material suppliers in advance.
2.3.3 Response and Delivery Requirement
Response requirement
In many cases, EU buyers require Vietnamese garment enterprises to source materials and
provide price quotation in short time, approximately from 1 to 2 days, and counter-sample
within one week. To meet this requirement, garment enterprises should find out and build a
network of material providers. When a garment enterprise needs to seek required materials, it
can quickly contact these providers for the materials.
Delivery requirement
EU buyers normally require delivery time of 45 to 60 days, while the average delivery time
of Vietnams garment enterprises is longer, even between 60-90 days, meaning that delivery
time is a high barrier for Vietnams garment enterprises to export to EU. However, garment
enterprises can consider some options to shorten its lead time:
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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.
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3 Internal Assessment
3.1 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 CMT export practice
CMT (Cut - Make - Trim) refers to a production pratice where your buyers, buying agentsand buying offices in Asia, provide Vietnamese firms with all inputs of design, materials,
transportation and Vietnamese garment manufacturers only Cut, Make and Trim. CMT is the
simplest production practice for export and only requires manufacturing capacity and a little
designing capacity in making counter-samples. In order to export your products under CMT,
the following questions are important for you to consider:
Have you had experiences with exporting garment to EU (or other markets)?
How is your company perceived by domestic buyers and by foreign buyers? Good quality and
timely delivery?
Which kinds of garment are you company specialized in?
Do you have a list of buying agents and buying offices in Asian region?
Do you have any specific target customers?
Do you know how to contact buyers directly through internet?
Have you ever tried bidding online?
Do you have email and able to communicate with your clients effectively by email in English?
Are you experienced in participating trade fair domestically and internationally?
Have you got name card, company profile and catalogue of your garment?
Have you certified with ISO 9001:2000, SA 8000, or Oko-Tex?
Can you calculate price quotation within 24 hours for customers?
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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 export practices:
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
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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.
3.2 SWOT your company
SWOT (Strengths, Weaknesses, Opportunities, and Threats) is a simple analysis tool that any
enterprises can use to identify their business environment, opportunities and threats, and
their internal strengths and weaknesses.
Strengths are internal capacities of your enterprise to meet or exceed requirements of your
target customers.
Weaknesses are internal shortcomings of your enterprise that makes it unable to meet
requirements of your customers.
Opportunities are external factors that your enterprise can take advantage of and benefit
from that. Opportunities can be divided into two types: (i) current opportunities that you can
utilize your strengths to benefit from, and (ii) future opportunities that need to invest to take
advantage of.
Threats are external factors that can affect your current business.
The table below presents recommended strategies in each situation:
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Opportunities Threats
Strengths Utilize your strengths orinvest to benefit from
opportunities
Diversify your activities andmarket to avert threats
Weaknesses Invest to overcome your
weaknesses to take
advantage from opportunities
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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4 Marketing tools
There are a number of marketing tools for you to approach international buyers includingparticipating 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 internationalbuyers. 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.
You should also have a soft version in CDs.
Print your name card if you have not had.
Make sure that there is at least one English speakers in your team to the trade fair.
Bring a digital camara and/or a video recorder with you.
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During trade fair:
Display your items according to prepared design.
Make sure that your booth is always manned by English speakers.
Make sure you exchanges business cards, introduce your items and discuss with potential
clients and give them your company profiles and product catalogues.
Visit and take photographs of competitors booths and items as you could learn from
your competitors.
Follow-up:
Send thank emails to visited potential clients and remind them of potential business
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 tradingwebsites you can find such as http://www.textileserver.com, http://www.alibaba.com,
http://www.apparelbids.com, orhttp://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 Direct contact with clients
Direct contact with clients is a good marketing tool. Direct contact can be contact by email
or face-to-face meeting with clients. There are a number of conditions for a successful direct
contact by email.
Firstly, you have to do a research on each target client from its sourcing practices (directly,
through buying agents or buying offices) to sourcing requirements (price, quality, design,
ISO, SA 8000, etc.). You can use internet to access to clients website, or contact Vitas.
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http://www.textileserver.com/http://www.alibaba.com/http://www.alibaba.com/http://www.importers.com/http://www.importers.com/http://www.vietrade.gov.vn/http://www.vietrade.gov.vn/http://www.vietnamtextile.org.vn/http://www.textileserver.com/http://www.alibaba.com/http://www.importers.com/http://www.vietrade.gov.vn/http://www.vietnamtextile.org.vn/ -
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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 Remind your current clients
Rather than passively waiting for a client to return, you should proactively contact your
current clients. You can find several good reasons to remind your clients such as your new
products, achievement of a certificate. You also could ask the clients if they are satisfied
with your products and services, what can you do to sastify them more and state that you
would like to do business more with them. You should build long-term relationships with
your clients and treat each client on a life-time basis, which means the total value you can
get from doing with one client.
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Appendix: An example of SWOT analysis
ABC is a garment enterprise specializing in childrens outerwear. The company employs 200employees, of which 180 are direct workers and 20 are indirect staff. The company has been
established for 3 years. All clients consider ABCs products high quality. ABC does not sell
garment directly to end-users but to wholesalers and retailers. ABCis also planning to export
to EU market and it has done a SWOT analysis for this market as below:
Strengths:
Design: It is the good designs of its products that ABC earns most reputation with clients.
The company is employing three creative designers who have worked with the company
from its establishment. One of those designers is also quite good at English and capable ofusing internet to track fashion trends.
Quality:Quality is an important factor that contributes to the success of ABC. All sewing
machines are new and of the same brand. Moreover, workers are trained for one month
before started working. Therefore, ABCs products are always of good and stable quality.
Productivity: Because of its good machines, well-trained labour forces and good
management, ABC has a quite good productivity of approximately 30 million VND value-
added/worker/year.
Working conditions: ABC has always tried to create a good working condition for its
workers. Workers are allowed to take 45 minutes of break in each shift. Workshops are well
aired and toilets cleaned frequently. Labour contracts are signed with all workers and
insurances paid by the company. Therefore, the labour relations between ABC and workers
are quite good; the company has a low labour turnover, reducing the costs for recruiting and
training new workers.
Internet: ABC has contracted an internet line to communicate with some remote buyers and
allow its designers to research current fashion designs.
Weaknesses:
Lack of export experience: The company has not had any experience with exporting. It does
not know much about how to approach international buyers, find out their preferences,
payment issues, etc.
Weak marketing skills: Its current sales in domestic market are based much on word of
mouth and relations. ABC has two salespersons whose main responsible are dealing with
buyers in terms of prices, transportation, quality assurance and claims resolvement. None of
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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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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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