Manufacture Clothing in Vietnam

Imagine one factory with 15 sewing lines (20 sewers per line). Every time the factory has a new order, they need to “set up the line” because each style has different sewing operations. (A t-shirt has 18 operations whereas a mens blaze might have 27 operations. Underwear may only have 12 operations.)

Setting up the line is a non-productive time period because the factory must pay the workers full salary even though the machines are not running at maximum speed. After setting up the line has been completed, it takes 1 – 3 more days to reach maximum productivity. For most factories, the maximum productivity of one sewing line is 900 garments per day. Speed depends on the complexity of the garment style.

If you only order 500 pieces, the factory will finish the order before they are able to reach their maximum productivity. As the client, you will want to calculate labor costs based on maximum productivity, however, the factory will calculate labor costs based on minimum productivity; and therefore will need to charge a high labor cost. Because of this, the benefit to manufacture clothing in Vietnam is now compromised and your company would be better off producing locally. To manufacture clothing in Vietnam you need large quantities.

In contrast, a 20,000 piece order will take one sewing line 22 days to finish. The setup time is short enough that the average productivity per day is very close to the maximum productivity of the factory. The factory can offer labor costs at maximum productivity. When you are able to produce more than 1,000 pieces per style then you are ready to manufacture clothing in Vietnam.

Small MOQ is possible, but!

There are factories that will do small MOQ but beware of these factories because:
• They are usually mom and pop operations. Here today, gone tomorrow.
• They don’t have additional services like sourcing fabric, sourcing trims or sourcing accessories.
• The day they get a bigger and juicier order, all of a sudden your order will take a back seat.

If your MOQ is below 1,000 pieces, it makes more sense to manufacture your clothes locally. Manufacture clothing in Vietnam when your brand starts to take off, not before.

Are you able to produce more than 1,000 pieces per style?
Do you know your import duty costs and shipping fees?
Are you able to travel to Vietnam and see the factory with your own eyes?

Let’s discuss these last two points.

The second question you should ask yourself is: How much are the import duties and shipping costs for my garment(s)? In order to manufacture clothing in Vietnam and import into the USA you will have to pay an import duty. Every country has their own import duty rates and the amount you pay will depend on the garment style and fabric composition. To manufacture clothing in Vietnam you need to know about import duties.

Do I need to fly to Vietnam? My advice is, yes. It is important for you to meet the owner and walk through the factory before you spend time and money developing samples. I even recommend being there during the development and production phrase. It is risky to trust any factory in any foreign country. Having eyes on the ground increases your chance of success.

Let’s talk some numbers. Let’s say you are producing 5,000 garments and each garment has a cost of $4.5 USD (manufacturing, import duty and shipping cost.) You are looking at an investment of $22,500 to make your goods. Two trips to Vietnam will cost you $6,000 USD.

Your first visit will be for factory visit and development. Your second visit will be a month or two later for production. Are you prepared to spend 21% of your total manufacturing budget on travel? What is the opportunity cost of your time spent in Vietnam as opposed to spending that time at home doing marketing and sales? Ask someone who has been cheated by a factory. After hearing their story you will understand why I recommend you visit the factory. My opinion is that you will not find a trustworthy business partner in a foreign country via the Internet. It’s Russian roulette. When you are in Vietnam, you will need to have a translator and travel guide to interpret for you and get you from A to B without hassle. Ask me and I will recommend guides for you. They speak English well and have experience in the garment sector.

In conclusion: You are ready to manufacture clothing in Vietnam, when you can produce more than 2,000 pieces per style. You are ready to manufacture clothing in Vietnam when you know your import duty costs and shipping fees. You are ready to manufacture clothing in Vietnam when you have the money to travel to Vietnam and see the factory with your own eyes. Otherwise, I recommend producing locally first. If you need help sourcing a reliable sewing factory in the US then please ask me. I know one.