In 2024, Vietnam's textile and garment industry remains crucial to its economic development despite facing challenges and transformations. The sector is increasingly adopting advanced technologies to boost production efficiency and adhere to international sustainability standards. However, export figures indicate significant declines: a 27.1% drop in exports to the US, which makes up 44.21% of Vietnam's total garment exports, and reductions of 10.9% and 6.2% to Canada and the EU, respectively, in the first half of 2023.

Highlights of SaigonTex Vietnam 2024

Each year, SaigonTex is one of the most important exhibitions in Vietnam. OSHIMA, a globally smart garment machinery manufacturer, didn't miss it, showcasing its AI fabric inspection machine for the first time at the show. At the same time, we saw three main trends:

  • The sewing machine is still the mainstream. After all, it's the most used equipment in garment factories, and most of the sewing machine brands at the show are Jack, Juki, Brother, Zoje, and other niche brands.

  • This year's event also features the most recent innovations, such as a cloud-based automatic fabric spreading machine and AI fabric inspection machine. The digital fabric spreading machine not only datasets the information, which can reduce the copying and writing actions of the frontline staff and avoid data errors, but it also allows management to see the production capacity in real-time. As for AI fabric inspection machines help textile and garment factories standardize quality inspection. For example, each fabric inspector may identify different fabric defects based on subjective standards, and the latest fabric inspection machine can reduce the number of defects by AI computing, making the inspection efficiency faster and more accurate.

  • Korean investors are on the upswing, and during our talks, we discovered that many Korean investors purchased and transformed local textile or apparel enterprises during the pandemic. This highlights that there is still room for growth in Vietnam as a textile hub and that they are improving their equipment to become more competitive.

Three Challenges Affecting the Competitiveness of Vietnam's Apparel Industry

Vietnam's garment industries have seen a considerable reduction in exports over the last two years, with export income in the first half of 2023 down 17.6% from the same time the previous year. This decrease can be ascribed to three important factors:

  • Market demand and economic factors: The global economic slowdown, inflation, and political, and geopolitical issues have resulted in a loss in consumer demand in important exporting countries and a decrease in domestic demand, resulting in capacity shortages and industry layoffs.

  • Competition from Neighboring Countries: Countries such as Bangladesh and India are attracting investments with their lower labour costs. This competition is intensified by the challenging working conditions in the Vietnamese textile sector, which drive workers to seek better opportunities elsewhere.

  • Stringent regulations: Major importing countries like the United States, the European Union, Japan, and Korea have encouraged factories to adopt modern and greener manufacturing methods to meet sustainability standards. This alignment with environmental and consumer demands has led to an increase in operational capabilities in many factories. While this transition has required investment, resulting in higher operational costs for some, it has also opened up opportunities for others to innovate, streamline their processes, or transition ownership when necessary.

Digital Transformation is the Key to Increasing Competitiveness and Sustainability

Digital transformation is essential for boosting competitiveness and sustainability, yet 70% of companies encounter challenges in the second phase of their transformation journey. Establishing a clear objective, selecting the right team and suppliers, and committing to excellent execution and continuous follow-up are crucial for success.

The main goal of digital transformation is to outperform competitors and increase competitiveness. However, it is frequently reduced to a catchphrase or a gimmick, such as adopting cutting-edge equipment with no obvious purpose or even as a way to spend the annual budget. To prevent these pitfalls, top leaders need to maintain a clear vision. They should consider fundamental questions: Why is digital transformation necessary for us? What prerequisites must be met before embarking on this change? How will this transformation enhance our products or benefit our customers? What digital processes do we currently have in place?

When effectively implemented, digital transformation can significantly reduce labour costs, improve working conditions, and increase operational efficiency. It also promotes green manufacturing practices and enables real-time data-driven decision-making, particularly valuable for companies operating multiple factory locations. Adopting dashboard solutions in manufacturing facilities can improve production efficiency and better workflow management, ensuring a stable optimization of processes and more effective resource allocation.

Backing the Digital Transformation: Vendor Expertise, Timeliness and Reliability

When selecting providers for your textile and garment factory, it's crucial to consider several factors to ensure a balance between cost, innovation, and reliability:

  • Industry Expertise: When considering a hardware transition, choosing a professional equipment supplier is critical. A qualified supplier will provide recommendations and be thoroughly aware of the market dynamics. While many companies prioritize cost, which is understandable, the critical criterion should always be the supplier's experience and the quality of the machinery rather than the price. Indeed, choosing the most expensive alternative does not ensure the highest quality. To summarize, selecting a supplier entails prioritizing their industry knowledge, capacity to advise on unique production needs, and pricing.

  • Continuous Innovation: Brand strategies, developing technology, and changing market demands drive the industry's technological evolution. In recent years, software integration with machines has become more frequent. Hardware providers may lack insight into software integration, much as software specialists may not completely understand hardware complexities. However, in the era of Industry 4.0, software mastery is crucial. When selecting a supplier, ensure their services are consistent with current industry standards for production optimization to help companies retain competitiveness, productivity, and quality assurance. Two major industrial innovations are AI-powered automatic fabric inspection equipment and a digital fabric spreading machine.

  • After-Sales Service: Reliable after-sales service is paramount. Ideally, minimal after-sales issues would occur, but when they do, a supplier should be characterized by their capability for quick support and work with local distributors to minimize potential downtime and financial losses.

  • One-Stop Service: Garment and textile manufacturers often require a variety of machinery, which can lead to complex interactions with different vendors. Purchasing from one or a few vendors can significantly decrease overhead and eliminate common issues, streamline processes, and reduce the possibility of miscommunications, which eases the time pressures on the related departments.

  • Scalability and Future Prospects: Price is always a priority consideration during difficult times. Indeed, cost-cutting can immediately impact and improve a company's financial status. Still, in the long run, companies that prioritize upfront savings may pay more to regain their competitive advantage.

The digital transformation process is more than just getting new technologies. It requires a comprehensive approach that includes raising awareness among internal staff, setting clear strategic goals by management, and maintaining ongoing commitment through a dedicated team. Digital transformation demands high-quality internal technical expertise and help from outside suppliers. To achieve transformative success, internal teams must have a clear vision, communicate between departments, and choose wisely about external providers.

Conclusion

The digital transformation of Vietnam's textile industry is a must, with technological innovation and sustainability being the key to increasing the competitiveness of Vietnam's garment factories in the global market. Digital functions and AI capability are the next steps in this industry. Choosing a strategic partner is more responsible than just looking at price. A good supplier understands the industry's pain points and improves them with the latest technology to achieve lower labour costs for factories, consistent quality, and meet green manufacturing standards.

Vietnam garment factories have a difficult path ahead of them, but if factories are willing to invest in improvement, they can do better than their competitors. Please get in touch with us if you need any additional information on the sector.

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