Why Australian brands are looking at Vietnam for fashion production

Sorry… the not so interesting topic of… import duties.   Bear with me, it will be short and sweet!  In Australia any parcel received with a declared value of over $1000 is subject to import duties. The year 2018 marked the 45th anniversary of the establishment of diplomatic relations between Vietnam and Australia and since then trade between the countries has grown steadily, exports of Vietnamese goods and services to Australia grew by 17.6 percent year-on-year in 2017, to US$4.9 billion, making Australia is Vietnam’s eighth largest trading partner. 

nuoc-uc-tu-xa-den-gan-1.jpg

 

Free trade agreements are the major drivers of trade and investment between the two nations. Australia will reduce all of its tariffs to zero percent by 2020, under the tariff schedule of the ASEAN-Australia-New Zealand Free Trade Area (AANZFTA). In addition, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will further strengthen bilateral trade ties.

Now, the part we particularly care about here at Source Studio -  garments in particular, will hugely benefit from CPTPP, with Vietnamese exports to Australia predicted to grow by double digits. Once the CPTPP comes into effect, Australia will reduce import duties to five percent. From the fourth year, it will be reduced to zero percent for almost all the products.

49948431_590166611408813_6200187352254513152_n.jpg

Vietnam is the ideal place for Australian brands to place their production focus. If they haven´t already.  But what about Australia´s emerging brands, the ones with lower volumes? Is there a place for them as well in Vietnam? Or are they left with an ever bigger chasm between producing in a cottage industry manner in Indonesia, (for many, Bali) and being able to move up the ladder to work with professional factories?

Vietnam has a growing mid to high end sector with volumes as low as 50 MOQ on womens and men´s fashion.  While the factories are few, here at Source Studio we have worked alongside these factories in the past 10 years and both witnessed and guided the growth of this niche market.  The garments are of high quality, shown at international Fashion Weeks and sold in reputable department stores such as the UK´s Selfridges or the iconic Browns, Moda Operandi and many other international retailers.  The notoriously strict quality Japanese retailers are also buying in Vietnam, one factory is producing jumpers retailing in Japan at $500+.