Small batch clothing manufacturing in Vietnam

Hi, my name is Chris and I can help you with small batch clothing manufacturing in Vietnam. It's not easy because most factories in Vietnam want higher MOQs. Let's consider some of the reasons why small batch clothing manufacturing in Vietnam is a challenge.
small batch clothing manufacturing vietnam consultant

Intro

My name is Chris and I have been working in Vietnam manufacturing since 2008. I can help you produce any product and do small batch clothing manufacturing in Vietnam because I work with a team that has experience with apparel, backpacks, shoes, furniture, plastics and electronics. If it’s being made in Vietnam we either know the factory or we will find the factory for you. My speciality is apparel so for simplicity’s sake I am going to use apparel to explain six Vietnam Insider tips to help you decide if Vietnam is the right solution for you.

One of my unique selling points is that I am not here to sell you Vietnam. I want to help you find the right manufacturing solution for your situation in Asia. Every country has its strength.

I am assuming you want to do small quantity, which, in Vietnam, is @ 1,000 pieces. I am also assuming that China is the only realistic alternative for you to produce overseas. If you’d like to talk about large quantity orders and or compare Vietnam to Bangladesh, Myanmar or Cambodia then message me on LinkedIn to schedule a Skype chat another day. Today we are focusing on small batch clothing manufacturing in Vietnam.
 

Tip #1

Make sure Vietnam makes business sense for you.

The main reason to produce in Vietnam is to get quality at a low price. The two main components of price are labor costs and fabric costs (aka raw materials.) Let’s look at labor costs. Vietnam’s minimum wage ranges from $125-$180 per month compared to China’s which ranges from $143-$348. Based on labor cost alone, Vietnam does make business sense. But, when it comes to fabric, it’s a different story. 50% of the fabric in Vietnam is purchased from China. Chinese sewing factories can buy the same fabric cheaper and faster. Based on fabric costs alone Vietnam doesn’t make business sense. In order to get cheap, quality fabric from China you must buy large quantities and negotiate sweetheart deals. Note that there are additional shipping costs to get the fabric from China to Vietnam. Keep that in mind if you want to do small batch clothing manufacturing in Vietnam.

So, if you are already established in China and doing small quantity, I recommend you stay in China. It doesn’t make business sense to pay double to maintain your China production and find new factories in Vietnam.

If you are not established in China then I recommend starting in Vietnam, knowing that, in the beginning your Vietnam price probably will be higher than the China price because of the fabric issue. (Raw Material Issue)

Here are 5 reasons why I recommend Vietnam:

Vietnam labor costs will always be lower than China
Vietnam is getting better at producing fabric locally
Vietnam has a western business friendly environment more so than other asian countries
It’s safe, easy and pleasant to travel in Vietnam
Finally, Vietnam is known for quality

In summary, when you can source your fabric in Vietnam then Vietnam makes business sense. For that matter, getting any raw materials made in Vietnam for any product category is one key to success here.

Allow me to make one additional point on this topic: To qualify for free trade agreement tax reductions, you also must source raw materials locally, you must meet the rules of origin, which means 90% of the raw materials must be made in Vietnam. If you need help understanding free trade agreements like the CPTPP FTA, the EU-Vn FTA or the Russia - Vn free trade agreement ask me, I can help you. When you can source your fabric in Vietnam then Vietnam makes business sense. My ideas here apply to small batch clothing manufacturing in Vietnam.
 

Tip #2

If your business plan is to produce less than 1,000 pieces per style then don’t produce in Vietnam. The main reason is, the Vietnamese factory will most likely lose money because the cost of developing a sample is more than the profit they will make. Let’s consider how much profit a factory makes on a 1,000 t-shirt order. Are you sure you want to do small batch clothing manufacturing in Vietnam.

Let’s assume the make price is $3.60. The profit per garment is $0.40 cents which is an 11% margin. So, the total net profit is $400. 1,000 times 40 cents

It will cost the factory more than $1,000 to develop your sample.
Here is why:

Buying the exact fabric, exact trims and exact accessories to make you one perfect sample for approval costs the factory $200. Just for the raw materials. The staff: merchandisers, pattern makers, fabric technicians, sample sewers, accountants and security guards.. they are all making around $4 an hour. So, collectively, let’s say they spend around 40 hours. That’s $160. Sending fabric, trims and accessories back and forth to suppliers costs $50. Getting print or embroidery samples cost $50. The owner’s time is worth $200 an hour and the owner will have to spend at least for hours on your order.

So the total cost is greater than $1,000

Often my clients suggest, “I’ll pay them more for small quantity like 100. I’ll pay them handsomely.” Let’s say you ask for 100 t-shirts and offer a 55% margin. The make price is $3.60. The factory profit per garment is $2,00 which is 55% Margin. Their net profit is $200. $100 x $2.00. It still costs the factory $1,000 to develop your sample. Their net profit is $200. They lose handsomely.

Allow me to explain why I include the owners time. How much is one hour of the owner’s time worth? This is almost never talked about. It’s my own personal observation and I think it’s important because I have seen my boss spend a lot of time on boarding new customers. Over time I’ve realized just how valuable her time is.

Let’s say the factory produces 100,000 garments per month. The profit per garment is $0.40. That’s $40,000 net profit. The owner works 192 hours a month managing 300 workers. 40,000 / 192 is approximately $200. So one hour of the owner’s time is worth $200. How much time do you need to meet the owner and decide if you trust them with the production of your brand? How much time does the owner need to spend with you to decide if they want to produce for your brand? From the first meeting, through emails to price negotiation and the final payment, the owner will have spent at least four hours on your 1,000 t-shirt order. That’s four hours times $200 which equals $800. I feel that inexperienced buyers doing small quantity often don’t understand the value of factory owners time and think it’s their right to get, essentially, free consultations from an industry expert. Ask not, what can the factory owner do for you, but what can you do for the factory owner? This is applies to small batch clothing manufacturing in Vietnam.

This analysis assumes that everything goes smoothly and you don’t make any changes. What if there is a problem during development, sampling or production? What if you change your mind about some detail two weeks into working with the factory? How much do the factory’s costs increase? A lot. There is a very high chance factories will lose money if they accept small quantity orders. They will drop you like a rock as soon as they start to lose money.

My clients often come back to me and say:
“I don’t have the money to produce more than 1,000.”
“I don’t want to be stuck with unsold inventory.”
“I just want to test the market.”

My advice to them is to revisit their business plan and find a way to improve their marketing and sales strategy to have confidence they can produce 3,000 - 5,000 pieces per style and sell through at least 90% of their inventory otherwise invest their money somewhere else or produce small quantity locally.

In summary, if you are doing less than 1,000 pieces then produce locally first don’t produce in Vietnam, it’s too risky. Be careful when doing small batch clothing manufacturing in Vietnam.
 

Tip #3

Pay a design studio to help you choose the details of your design and create a tech pack for you if you want to do Small batch clothing manufacturing in Vietnam. If you show up to a factory with a complete design and perfect tech pack then you can avoid a lot of problems and establish your credibility.

Many of my clients “know what they want” but they need help figuring out the details. I recommend you hire a design studio to help you. Factories in Vietnam are not design studios. They don’t speak English well enough to brainstorm with you. Asian culture does not encourage independent thinking as Western culture does.

I also recommend you pay the design studio to create your tech packs. Tech packs communicate all the design details in writing. To do a tech pack correctly requires training. Tech packs are the holy grail in garment manufacturing. Factories need a complete and professional tech pack to quote you the right price and make the right sample quickly. Tech packs can cost between $250 to $2,000 dollars depending on the complexity of the garment. Factories produce things. Factories are not in the tech pack creation business. In other product categories like furniture, plastic injection moulding or electronics, tech packs are referred to as specification sheets.

Be aware that factories have to make their own tech packs but they are for internal use only. They will not give you their tech pack because they think that you will use it to get a counter quote from the factory next door.

So, hire a design studio to help you get all the details right and make your tech packs before you approach a factory. With complete tech packs in hand, all you have to say is, “Please quote me a price based on this tech pack.”

Here are design studios that I know personally and recommend. Contact one near you. They are all specialized in apparel.
 

Tip #4

Know what kind of factory you would like to work with and visit them to confirm they meet your expectations. I ask my clients, “Do you have any special factory requirements?” The typical answer I get is: I want a long term relationship, high quality, cheap price, on-time delivery and I want a factory that speaks English. These requirements are a given. To find the right factory fast for you, here are the questions I will ask:

Do you want to use a factory that has a catalog that you can choose from?
Do you need the factory to source the fabric and trims for you?
Do you require any social and environmental compliance certifications?
What is the maximum number of garments per style you want to produce?
What AQL standard will you ask the factory to use? AQL stands for acceptable quality level and tells them how many samples to check during quality control inspections.
Do you want the factory to be responsible for shipping to your warehouse?
What payment terms are you willing to accept? Telegraphic Transfer or Letter of Credit?

Once you know what kind of factory you want, then visit the factory, spend time with the management team and confirm they meet your requirements. Until you walk the factory floor and work with the owner in their office you can not know if what you have been told or what is shown in the company profile is true. Can you risk having your brand caught producing in a factory that burns down because there was no water connected to the fire hoses? Can you sleep at night wondering if the factory is using child labor? Trust no one. See the factory for yourself.

In summary know clearly what kind of factory you would like to work with and visit them to confirm they live up to your standard.
 

Tip #5

Managing production by email is not realistic. Someone should be in Vietnam to oversee development, sampling, production and shipping. Someone you can trust.

You are guaranteed to face problems in production. The fabric may be slightly underweight. The screen printing company may have used the wrong ink. The factory may have overbooked themselves and need to outsource your production even though they promised to all the sewing under their roof. The labels may be sewn in the wrong position which in fact is not a big deal. The third party final quality control inspection fails but by a very small margin. All these problems can be managed but decisions need to be made quickly by you and the factory.

If the problems are significant and the factory’s margin is tight and the factory realizes they are going to lose money, then they will start cutting corners. If you are not there, then you will not find out soon enough. The factory will not tell you right away because nobody likes to be the messenger with bad news. Someone you can trust should be there to solve the problem - you don’t want to miss the boat.

Let’s be realistic, factories don’t care about your brand the way you do. Factories are just producing a commodity. They don’t feel your emotional pain when the goods arrive poorly made, late or not at all. Factories have no stake in your brand equity.

The question is, how do you motivate the factory to make your order a priority? How do you brainstorm innovative and cost effective solutions to solve production problems if you are not there? Someone has to be there to see the problem first hand, be a cheerleader, offer solutions, and apply pressure. Often the problem can easily be solved. They just need a decision from you on the spot.

I recommend to have someone in Vietnam during development, sampling and production or produce locally. Managing problems by email overseas is like putting socks on a rooster.

Many clients ask me, “Chris, can you manage everything?” Yes, I can but it probably won’t be cost effective for you.
 

Tip #6

Before you start learning about production, Before you spend money on getting tech packs made, Before you start talking to factories, make sure you have a solid business plan and your sales channels established. Get your first 1,000 true fans. There is no point in producing a widget if nobody buys it. From my point of view in Vietnam, it’s easy produce a widget but difficult to sell it.

Producing widgets is a scientific process. If you know what you want and have tech packs then factories in Vietnam can make it like pilots land airplanes. Manufacturing is like baking a cake. If you have Grandma’s tried and true recipe and you are able to buy the best ingredients then all you need is a good kitchen that can bake well. Vietnam has many great kitchens serving thousands of bowls of Phở everyday. With a Vietnam production insider like me, guiding you step by step then you will be fine as long as you follow my advice and work with the people I introduce to you and be prepared to roll with the punches.

Here is a check list of things to do before you focus on production. Do your market research; build up your Instagram following; then build your brand universe. A brand universe includes your brand name, logo, website, e-commerce platform, bricks and mortar store, distribution and return handling etc. Once you have these things figured out, then begin working on production.

Also don’t forget to have marketing campaigns ready to go. You need them to communicate your brand message and keep the sales going collection after collection. In summary, do all your business planning before you start your production planning.

My clients often come back with, “I am funding this all by myself so my budget is limited.” My follow up question is: “ok, so how much money do they have to invest in their “made in Vietnam” venture?” If they answer any number less than $100,000 dollars then I recommend pitching their plan to an investor. This serves two purposes.

If the investor thinks their plan is the winning horse then he will bet on them and they have $100,000 to do a proper start up business.
If the investor thinks their plan won’t work, if they are lucky, the investor will explain why. This let’s the start up know what they need to next.

Do what the investor recommend. Improve the plan and keep going back to the investor until the investor is satisfied or stop pouring money down the drain.

If you answer that you have $100,000 or more to execute your “made in Vietnam” venture, I will ask the following question, “For every dollar you spend on production, how many dollars with you spend on the rest of the business? Is the ratio, 1:1, 1:2, or 1:3 etc.” Your answer will tell us how much you have to spend on production which will tell us if you can meet the minimum order quantities Vietnam needs to ensure success. Now we can get serious and move forward.
 

Conclusion

  • Make sure Vietnam makes business sense for you.
  • If your business plan is to produce less than 1,000 I recommend you start locally.
  • Pay a design studio to help you choose the details of your design and create a tech pack for you.
  • Know what kind of factory you would like to work with and visit them to confirm they meet your requirements.
  • Managing production in Vietnam by email is not realistic. Someone should be in Vietnam to oversee development, sampling and production. Someone you trust.
  • Before you start learning about production, before you spend money on getting tech packs made, before you start talking to factories, make sure you have a solid business plan.

I am your go-to guy if you want to produce in Vietnam. Using my insider knowledge and connections gained over the last 10 years in Saigon, I can help you from first contact through to production. I love working with creative start-ups and established brands. My network is wide, I know who the good guys are and I can get you to the front of the line. Apparel is my specialty but I can also help you source manufacturing for backpack, shoes, headwear, furniture, plastics, CNC spare parts and electronics because I work with a multi-skilled team that is standing by to help you.

I would like to hear your story, understand your needs and suggest an action plan for you. Please fill out the questionnaire on the contact page to get started.

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TABLE OF CONTENTS

My Best Advice
Value of a Tech Pack
27 Decision Points
Cover Sheet
Bill of Materials
Technical Sketches
Call Outs
Construction
Colorways
Artwork
Labels
Hang Tags
Packaging
Folding
Sample Request
Measurements
Example Tech Packs
Tech Pack Software
Formatting Tips

Vietnamese factories need your tech packs to quote price and make samples.

I wrote this book for you to be able to make your tech packs and understand how hard it is. If you have well done tech packs than half the battle is done.

Best Advice

Start with Tech Packs
Engineer your MOQs
Choose your QC Levels
Look Up Import Tax
Calculate Shipping Costs

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1,000 True Fans
MOQ Engineering
Start-up Decisions
Garment Production Steps
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