Simon Caballero | Common Risks & Issues When Making Garments In Vietnam

In This Episode... Renaud interviews Simon Caballero, a Hanoi-based purchasing manager and expert on manufacturing in Vietnam, to discuss the manufacturing industry in Vietnam, common risks and issues you will face when manufacturing garments there, and the relationship between developing new products and manufacturing in Vietnam and China.  Simon has a background in logistics and over a decade of experience in sourcing all kinds of products in Asia, with particular expertise in China and Vietnam (a growing manufacturing hub and popular alternative to China). In recent years he has been focused on the garment industry (specifically workwear), hence he's the authority to speak with for this episode's topic.   Show Notes 00:00 - Introducing the episode 00:54 - Brief self-introduction by Simon about himself and his experience - Simon explains how he started in Logistics in Spain, but since 2009 his journey has taken him to Thailand, China, and now, Vietnam. 04:53 - What is workwear (a particular focus of Simon's), and how has this clothing trend changed? - workwear includes protective clothing, technical garments, uniforms, and more. This kind of clothing has evolved to be more fashionable and specific to certain tasks and professions. 05:58 - Most factories in Vietnam can be categorized into one of three types (Simon believes this is common in garments and most other product types, too). What are they? - understanding the type of factories available is an important factor when choosing a Vietnamese garment manufacturing partner, so here they are: (07:05) Foreign-owned companies - these are growing fast and are mainly Korean, Chinese, Taiwanese, and Japanese invested businesses. They are more professional than local companies and have a stronger focus on QC and implementing modern production facilities and processes. But they are also more expensive, so they are a better choice for more complex and higher-quality products. (08:58) Locally-owned factories - usually only invest in the basics, such as production line/equipment, and lack an understanding of QC and technical processes. Can often specialize in one process or another, such as sewing, but they may not be able to handle multiple processes and sourcing - you can buy FOB from them, but you will need to support them in finding materials and accessories, for example. You need to manage your expectations well when working with them, but this is a low-cost option that can work well for less technical products. (15:49) State-owned companies - these are large well-financed companies that offer a vertically integrated service (so for garments this is materials, dying, weaving, etc). They are focused on medium/large buyers, so are not suitable for smaller buyers. 17:13 - The impact of Tet/Chinese New Year on obtaining materials and containers in the period just after the holiday in 2021 - raw materials and logistics have suffered from rapid price increases of 5-10% in 2021 after CNY/Tet. Simon discusses the reasons behind the increases, such as increased demand and speculators who had bought up materials when prices were low.The lack of containers has also led to some delays in shipping from Vietnam, as well as logistics costs ballooning, too. 25:00 - The military coup in Myanmar has also affected garment production - unlike Vietnam, Myanmar was affected by COVID quite badly (with around 10 times as many deaths) and now the military coup there has also disrupted manufacturing. Simon got around this by quickly switching production from Myanmar to China. 26:01 - Are garments manufactured all around Vietnam as they are in China, or centralized in one area? - Vietnam has some industries that occur all around the country such as forestry product and chemical or mineral processing, but the country can be split into zones, each of which specializes in certain product types or materials: (27:02) The Far North (along the border with China & Laos) - more for natural resources and