The growth in fast-fashion contracts struck between brands and Vietnam’s burgeoning outsourcing will boost demand for machinery and equipment in the Vietnamese textile sector as much as the new trade deals that have been struck by Hanoi, according to industry insiders. Demand for fast fashion is also growing within Vietnam itself, with Zara and H&M building sales and Japan’s Uniqlo planning to open its first Vietnam shop later this year (2019).
Following the implementation of the Comprehensive Partnership and Trans-Pacific Partnership (CPTPP) on December 30, ILLIES Vietnam – a member of the German ILLIES GROUP – and a leading distributor of industrial textiles machinery and equipment in the market – is looking to sharpen its ability to respond to Vietnam fast fashion markets.
Illies entered Vietnam in 1959, left the country during the war and has been back since 1991, when it opened two branch offices in Ho Chi Minh City and Hanoi.
The company, a local agent for Swiss short-staple fibre spinning system supplier Rieter, and Germany’s Karl Mayer, a leading supplier for textile machinery for warp knitting, technical textiles and warp preparation, is expanding a repair centre for mechanical and electrical parts in HCM as well as a service station in a spinning cluster in Thái Bình City in northern Vietnam.
The Rieter portfolio for short-staple fibre spinning of ILLIES Vietnam includes fibre preparation, spinning preparation, ring spinning, compact spinning, automatic and semi-automatic rotor spinning, and air-jet spinning.
“The market push for fast delivery is very significant for our projects, as today, garment manufacturers can only sell if they ship quickly,” says Christoph Peters, general director of ILLIES Vietnam.
He adds: “To ship quickly, the supply chain from yarn to garments must be vertically integrated in one country, in turn spurring local demand for textiles machinery and equipment.”
Peters went on to explain that an international brand’s garment order would typically require the Vietnamese factory to ship within 30 days, which could not easily be achieved if textile inputs had to be sourced from China or South Korea, given that shipping from there to Vietnam would take 10-14 days.
As a result, textile-related machinery is gaining more weight in the balance of its local product portfolio.
Initially, the textile market had been relatively small, being one among several target sectors, such as mining, power generation and flexible packaging. Meanwhile, in terms of customer category, state-owned companies have been losing significance versus foreign investors.
“Around 10 years ago, demand from the textile sector began outpacing the other sectors,” says Peters, fuelled by negotiations for the TPP (Trans-Pacific Partnership) – which was superseded by the CPTPP after the US pulled out of the TPP in 2017. The TPP’s planned “yarn-forward rule served as an additional accelerator for foreign textile investment,” adds Peters.
Another German-based investor increasing its foothold in the Vietnamese textile sector is the Amann Group, a producer of high-quality sewing and embroidery threads. Amann is currently constructing a new factory for sewing threads mainly for the manufacture of apparel and shoes at Tam Thăng Industrial Park in Quảng Nam Province, (a textile and clothing manufacturing centre for Vietnam), a site scheduled for completion in the middle of this year.
Meanwhile, Kraig Biocraft Laboratories, a US-based developer of spider silk-based yarn, is currently finalising renovation plans for a 46,000 sq ft production factory in Quảng Nam Province, which will also boost Vietnam’s fast-fashion backward linkages.
The firm plans to set up a centre for research and development (R&D) of silk, as well as grow about 2,500ha of mulberry to support spider silk production in the country.
“We have been working towards opening production operations in Vietnam for several years, so our recent announcement is the result of a breakthrough in those negotiations and not directly tied to the free trade agreements,” such as the CPTPP and the EU-Vietnam Free Trade Agreement trade, says Jon Rice, chief operations officer, Kraig Biocraft.
“Vietnam has a great history of sericulture, and it has the climate, infrastructure, and expertise to allow us to quickly expand our production,” he adds.
