Diversify supply sources
According to analysis from Vietnam Textile and Garment Group, while growth rate of sourcing costs has slowed, costs and financial pressures facing American fashion companies are still present. Specifically, as of December 2023, the US garment import price index remained virtually unchanged compared to January 2023.
However, there are two emerging trends worth watching. One is that the US apparel retail price index will decrease significantly from August 2023, meaning that US fashion companies may have to sacrifice profits to attract consumers to stores.
The second trend is rising shipping costs due to recent Red Sea shipping crisis. More worryingly, there is no sign that the Red Sea crisis will be resolved any time soon. Therefore, 2024 may pose another year of financial challenges for many American fashion companies as well as suppliers to the US.
Diversification remains a key trend in sourcing strategies of US fashion companies in 2023 and will continue in 2024 as many companies see this strategy as most effective for minimizing various market uncertainties.
American fashion companies continue trend of reducing orders with China. Many recent studies also show that it is becoming increasingly common for China to no longer be the largest source of apparel imports for many American fashion companies.
Vietnam Textile and Garment Group also cited research results that, instead of identifying suppliers like China, American fashion companies seem to take advantage of diversifying their product sources more - for example, using Vietnam as a base for sourcing outerwear, underwear and swimwear; India for dresses and Bangladesh for basic knitwear in bulk.
Related to this issue, another recent study shows that the top 5 Asian suppliers besides China, including Vietnam, Bangladesh, Indonesia, India and Cambodia, which can supply the product portfolio diversity is almost equivalent to products from China in the US market.
Signs for Vietnamese businesses?
In 2024, market developments still contain many potential variables, in order to be able to respond and adapt to upcoming unpredictable fluctuations and at the same time receive flow of orders from US importers, according to the Group. In Vietnam's textile and garment industry, enterprises need to proactively diversify their export products.
Diversifying products in textiles and garments will increase competitive advantage and gain market share in an uncertain economic context. In addition, product diversification will be a lever to explore many new potential markets.
Actively searching for new potential markets not only helps businesses stand firm in the market but also increases competitiveness, minimizes dependence on traditional markets, actively searches for niche markets, Be proactive in all situations when the business is facing difficulties.
Keeping abreast of market developments has been and will always be a prerequisite in developing trade between businesses and importers. Businesses need to closely monitor the prices of input materials, such as: Prices of cotton, fiber, and raw materials to choose the right time to help optimize costs.
Besides, make good use of free trade agreements and upgrade diplomatic relations to a high level, especially comprehensive strategic partnerships with major countries such as the US, Japan and Korea. To do this, Vietnamese textile and garment enterprises should focus on closely following requirements of customs of importing countries and buyers, actively transparency stages in production chain and consider green conversion, production according to actual market needs, making good use of free trade agreements to improve Vietnam's market share and competitiveness of enterprises.
Affirming that flow of orders shifting from China is increasingly clear, however, Mr. Pham Quang Anh - Director of Dony Garment Co., Ltd. also emphasized that Vietnam is just one of many destinations for importers. "Wherever conditions are good and suitable, it will attract partners", said Mr. Pham Quang Anh.
Director Dony also said that, besides product quality, competitive price, good after-sales service are also important factors. Enterprises that try to meet customer requirements within 1-2 years will retain long-term importers.

Source: Vitic/ congthuong.vn