Success factors influencing vietnams textile garment export capabilities to japan

SUCCESS FACTORS INFLUENCING VIETNAM’S
TEXTILE & GARMENT EXPORT CAPABILITIES TO JAPAN

In Partial Fulfillment of the Requirements of the Degree of

MASTER OF BUSINESS ADMINISTRATION

Majoring in International Business
by
Ms. Nguyen Thi Trong Nghia
ID: MBA06019

International University - Vietnam National University HCMC
August 2014


SUCCESS FACTORS INFLUENCING VIETNAM’S
TEXTILE & GARMENT EXPORT CAPABILITIES TO JAPAN

Approved by:

---------------------------------------------Advisor

---------------------------------------Chairman

----------------------------------------------

----------------------------------------

Committee member

---------------------------------------------Committee member

Committee member

---------------------------------------Committee member


Acknowledgment

First and foremost, I would like to express my deepest thanks to my advisor – Dr.
Ho Thi Bich Van for her valuable suggestions and dedicated instructions during the
time that I conducted the thesis. New knowledge and ideas gained from my advisor
play a crucial part in the thesis as well as in my future life. Especially in the final
stage, her tutorials and recommendations helped me a lot to solve difficulties in
statistical analysis. Without my advisor’s guidance and support, this thesis will not be
completed.
Secondly, I would like to send my sincere appreciation to all professors and
lecturers in Master course – International University for teaching and training me
during 2 years which provided to me a lot of precious knowledge.
I am indebted to my family for strong support during the last two years. Last but
not least, I also want to thank all people who were willing to participate in my survey.
I am grateful to their valuable suggestions that I can use in writing in this thesis.

i-


Plagiarism Statements

I would like to declare that, apart from the acknowledged references, this
thesis either does not use language, ideas, or other original material from anyone; or

has not been previously submitted to any other educational and research programs or
institutions. I fully understand that any writings in this thesis contradicted to the above
statement will automatically lead to the rejection from the MBA program at the
International University – Vietnam National University Ho Chi Minh City.

ii -


-

Copyright Statement
This copy of the thesis has been supplied on condition that anyone who
consults it is understood to recognize that its copyright rests with its author and that
no quotation from the thesis and no information derived from it may be published
without the author’s prior consent.
© Nguyen Thi Trong Nghia / MBA06019 / 2012-2014

- iii -


Table of content

Acknowledgment ............................................................................................................ i
Plagiarism statements..................................................................................................... ii
Copyright statement ......................................................................................................iii
List of tables ..................................................................................................................vi
List of figures ...............................................................................................................vii
Abstract .......................................................................................................................viii
Chapter one – Introduction .............................................................................................1
1.1. Background .............................................................................................................1

1.2 Rationale for the study ............................................................................................ 11
1.3 Research questions.................................................................................................. 11
1.4 Research objectives ................................................................................................ 12
1.5 Research scope........................................................................................................ 12
Chapter two - Overview of garment industry ............................................................... 13
2.1. Global textile and garment industry ...................................................................... 13
2.2. Overview of textile and garment sector in Vietnam .............................................. 14
2.3. Overview of Japan’s textile and garment market .................................................. 18
Chapter Three - Literature review ................................................................................ 22
3.1. Mercantilist theory ................................................................................................. 22
3.2. The comparative advantage theory ........................................................................ 23
3.3. Michel. Porter’s (1980) on Competitive Advantages ............................................ 23
3.4 The commercialization theory based on the "differentiated product" .................... 25
Chapter Four - Research Methodology......................................................................... 27
4.1. Previous studies ..................................................................................................... 27
4.2. Research model ...................................................................................................... 29
4.3. Research conceptual framework ............................................................................ 29
4.3.1. Pricing .............................................................................................................. 30
4.3.2. Product quality ................................................................................................. 31
4.3.3. Design capabilities ........................................................................................... 32
4.3.4. Time delivery and Material sources ................................................................. 34
4.3.5. C/O requirement............................................................................................... 35
4.3.6. Business partners ............................................................................................. 36
4.4. Research Design .................................................................................................... 37
4.4.1 Qualitative study ............................................................................................... 37
4.4.2 Quantitative study ............................................................................................. 38
4.4.3 Questionnaire design ......................................................................................... 38
4.4.4 Sampling Method .............................................................................................. 39
4.4.5 Pilot test ............................................................................................................ 39
4.4.6. Data collection ................................................................................................. 40

4.4.7 Data analysis ..................................................................................................... 41
- iv -


Chapter Five - Data Analysis ........................................................................................ 42
5.1. Frequencies Analysis ............................................................................................. 42
5.2 Descriptive Statistics .............................................................................................. 45
5.3 Reliability Test........................................................................................................ 46
5.4 Factor Analysis ....................................................................................................... 52
5.5 Correlation Testing ................................................................................................. 56
5.6 Regression Analysis................................................................................................ 57
5.7 Revision of Hypotheses and Model ........................................................................ 60
5.8. One-way ANOVA ................................................................................................. 61
Chapter six - Conclusions and Recommendations ....................................................... 64
6.1. Discussions ............................................................................................................ 64
6.2. Recommendations.................................................................................................. 65
6.2.1. For Government ............................................................................................... 65
6.2.2 For Vietnam textile and Apparel Association (VITAS) ................................... 72
6.2.3. For enterprise ................................................................................................... 73
6.3. Limitation and recommendation for further research ............................................ 76
6.4. Conclusion ............................................................................................................. 77
REFERENCES ............................................................................................................. 78
APPENDIX A............................................................................................................... 81
APPENDIX B ............................................................................................................... 85
APPENDIX C ............................................................................................................... 89

-v-


List of Tables

Table 5.1 : Company type ...........................................................................................35
Table 5.2 : Company size ............................................................................................36
Table 5.3 : Export market ............................................................................................36
Table 5.4 : Working department ..................................................................................37
Table 5.5: Descriptive Statistics ..................................................................................38
Table 5.6 : Pricing reliability .......................................................................................39
Table 5.7 : Quality reliability ......................................................................................40
Table 5.8 : Design reliability 1 ....................................................................................41
Table 5.9 : Design reliability 2 ....................................................................................41
Table 5.10 : Delivery and material reliability .............................................................42
Table 5.11 : CO reliability ...........................................................................................42
Table 5.12 : Business partner reliability ......................................................................43
Table 5.13 : Export capacity reliability.........................................................................44
Table 5.14: Independent variables ................................................................................45
Table 5.15: Dependent variables...................................................................................48
Table 5.16 : Correlation testing ...................................................................................49
Table 5.17: Regression Analysis ..................................................................................50
Table 5.18: Results of hypotheses testing ...................................................................52
Table 5.19: One-way ANOVA .....................................................................................54

- vi -


List of Figures

Figure 2.1: Vietnamese Textile and Garment Export Revenue during 2008-2013 ......8
Figure 3.1: Three Generic Strategies ..........................................................................18
Figure 4.1: Research Model ........................................................................................23
Figure 5.1: Final model result of the research ............................................................ 54

-7-


-

Abstract

There have been a large number of studies on Vietnamese textile and garment
industry due to the fact that this is one of the largest export industries of the economy.
However, only few studies have been found on the topic of exporting to Japanese market
as Japan has been just the third largest export market for Vietnam’s textile and garment.
Therefore, this thesis is an attempt to determine factors which can affect export
capabilities in order to recommend solutions to improve the competitiveness of
Vietnamese textile and garment export to Japan.
Firstly, based on the literature review, the research identifies 6 dimensions which
can effects on export capabilities. Next, the hypotheses are developed to test
quantitatively. The primary data if this study is collected by the survey using a
questionnaire developed based on literature review and verified by pilot test with experts’
comments and recommendations. The survey is conducted with the sample size of 319 and
analyzed by using SPSS software with frequency analysis, descriptive statistic, reliability
test, factor analysis, correlation testing, regression analysis and
one-way ANOVA.
Based on the findings, products quality is the most important factor whereas
pricing is the least important. This can be explained by the unique characteristics of
Japanese market. Relevant recommendations for Vietnamese textile and garment
companies to maintain sustainable exports to Japanese market are made in the final
chapter.
-8-

Chapter One – Introduction

1.1. Background
Textile and garment is one of the most key industries in Vietnam. There is widely
regarded as the key manufacturing sector with strong growth potential. In the recent years,
Vietnam's apparel exports develop with impressive speed, and now are ranked the fifth
position of the world textile and garment exports.
Currently, the textile and garment industry is holding an important role in national
economy with nearly 6000 companies, attracted nearly 2.5 million workers. Total export
turnover of textile fibers and garment in 2013 reached USD 20.096 billion, up 18%
compared with 2012, revenue reach to USD 20 billion, accounting for 15% of GDP and
become the leading sector of exports, accounting for over 18% of total exports, bringing
Vietnam into the top 5 largest textile exporter in the world. Until now, export textile and
garment products of Vietnam was in 180 countries and territories around the world,
conquered the difficult markets like the U.S., Europe, Japan, South Korea. In which the
best difficult import market is Japanese market.
Japan is a developing economy country, and the third largest export markets of
Vietnam about textiles and garment. However, in recent years, Japan is a saturated market
and the relative complexity about textile and garment products. The difficulties of
economy has led to Japanese consumers are increasingly more careful with their spending.
However, this market continues further development although influenced by the global
financial crisis. Japanese consumers and customers are very high conscious and demand
for the design and quality issue. They are interested in every detail of the product. The

-9-


textile and garment products which produced in developing countries have attracted the
attention of Japanese consumers, especially Vietnam.
In addition, our country is in the process of integration into the powerful world

economy and has become an official member of the Association of South East Asian
Nations (ASEAN) since July 1995, Member of the Forum of Asia-Pacific Economic
Cooperation (APEC) from November 1998, a member of the World Trade Organization
(WTO) from November 2006. When joining organizations that forced us to make the
commitment to joining, particularly as we are implementing tariff reduction schedule
under the Common Effective Preferential Tariff Scheme (CEPT) of the Free Trade Area
AFTA. All of them create advantage condition for expanding export of Vietnam textile
and garment industry. Moreover, Japanese importers are interested in markets which
provide cheap price such as India, Bangladesh and Vietnam and reduced imports from
China. In this competition, Vietnam has certain advantages because the identified
relationship between Japan and Vietnam, that is strategic partnership relationship, that
creates multifaceted cooperation environment between the two countries, including
cooperation in the textile and garment industry and benefit from the agreement : ASEANJapan Comprehensive Economic Partnership Agreement (AJCEP) in December 2008 and
Vietnam-Japan Economic Partnership Agreements (VJEPA) in January 2009 for textile
and garment products originating from Vietnam and ASEAN into Japan. And especially,
TPP agreement - Trans Pacific Partnership, commercial agreement of 21st century (end of
2014) with joining of 12 member countries that bring many big opportunities for textile
and garment industry of Vietnam when exporting into big markets, especially into
potential market like Japan. Winning Japanese market in this moment and next period, that
is an unsolved problem.
- 10 -


For garment enterprises in specific and Vietnam garment industry in general. To
continue strengthen exporting and occupy a large slice of the market share in Japan,
Vietnam garment enterprises and Vietnam garment industry need to identify success
factors influencing Vietnam garment exports to Japan. That is also the topic author choose
for author’s research. This topic is significantly important to both theory and practice in
the field of author’s work.

1.2 Rationale for the study
With a large potential market and regulatory and economic environment more
increasingly favorable, Vietnamese enterprises can find export opportunities to the
Japanese market, contributing to a comprehensive economic cooperation between two
countries. However, the strict requirements about price, design and quality products and
increasingly fierce competition from other still and will be a big challenge for textile
enterprises Vietnam when exporting to this market.
Vietnam textile and garment exports grow rapidly, reaching to the top of the export
goods of our country. However, Vietnam textile and garment exports to Japan only
account a modest proportion of the imports total of Japan. Under that situation, the textile
and garment exports to the Japanese market need to promote. It's just a matter of urgent
and strategic issues because Japan is still the largest trade partner of Vietnam.

1.3 Research questions
To help Vietnamese enterprises strengthen the exports of textile and garment products to
Japan, answering the following questions below is necessary:
- 11 -


●

Why is the performance of Vietnam textile and garment exports to Japan not so
good as compared to the U.S and EU markets?

●

How can Vietnam’s enterprises improve export capabilities to Japan?

●

What are Japanese customer distinct requirements about garment products?

●

What are success factors influencing Vietnam textile and garment exports to
Japan?

1.4 Research objectives
To answer the above research questions, three research objectives are
developed as follows,
●

Describing current status of Vietnam textile and garment exports to Japan.

●

Identifying and measuring success factors for textile and garment export
enterprises to Japan.

●

Proposing solutions to expand sustainably textile and garment exports to Japan

1.5 Research scope
The research is based on analysis and evaluation of export situation of Vietnam
textile and garment into Japan from 2008 to 2013 and of requirements of Japanese market
about textile and garment products. The research focuses on garment enterprises in Ho
Chi Minh city, Dong Nai province, Binh Duong province.

- 12 -

Chapter two - Overview of garment industry

2.1. Global textile and garment industry
Apparel is one of the oldest and largest export industries in the world. It is also one
of the most global industries because most nations produce for the international textile and
apparel market. Apparel production is a springboard for national development, and often
is the typical starter industry for countries engaged in export oriented industrialization due
to its low fixed costs and emphasis on labor-intensive manufacturing (Adhikari &
Weeratunge, 2006; Gereffi, 1999).
Although the global apparel industry has been expanding at a rapid rate since the
early 1970s and providing employment to tens of millions of workers in some of the leastdeveloped countries in the world, the industry has experienced two major crises in the past
five years. The first crisis is regulatory. The Multi-Fiber Arrangement (MFA), which
established quotas and preferential tariffs on apparel and textile items imported by the
United States, Canada, and many European nations since the early 1970s, was phased out
by the World Trade Organization (WTO) between 1995 and 2005 via its Agreement on
Textiles and Clothing. The concern of many poor and small developing economies that
relied on apparel exports was that they would be pushed out of the global trading system
by much larger, low-cost rivals, such as China, India, and Bangladesh.
The second crisis is economic. The recent global recession, which was sparked by
the banking meltdown in the United States in 2008 and quickly spread to most of the
major industrialized and developing economies, brought the world to the brink of the most
severe economic crisis since the Great Depression of the 1930s. Plant closures and worker
- 13 -


layoffs in the industrialized nations led to slumping consumer demand, which resulted in
fewer orders and shrinking markets for export-oriented economies in the developing
world. The recession hit the apparel industry especially hard, leading to factory

shutdowns, sharp increases in unemployment, and growing concerns over social unrest as
displaced workers sought new jobs.
Consumption in the global apparel industry is highly concentrated in three main
regions: the United States, the European Union, and Japan. In 2008, the European Union
(EU-27, including intra-EU-27 trade) accounted for nearly half (47.3%) of total world
apparel imports of US$ 376 billion, while the United States accounted for 22%, Japan for
6.9%, and the Russian Federation for 5.7% (see Table 1). Together, the United States, the
EU-27, and Japan represented over three-quarters of world apparel imports in 2008, which
is down from the 82.4% they accounted for in 1995. Particularly notable is the steady
decline in the U.S. share of global apparel imports, which fell from a peak of 32.1% in
2000 to 22% in 2008, and Japan’s drop from 11.5% in 1995 to 6.9% in 2008.
At the onset of the current recession, global apparel imports increased by nearly
7% ($22.3 billion) between 2007 and 2008. U.S. imports declined during this period, but
those of 4 the EU-27, Japan, and the Russian Federation grew. Thus, the negative impact
of the economic recession was not yet apparent in the annual import statistics for 2008.

2.2. Overview of textile and garment sector in Vietnam
Over the last many years, Vietnam textile and garment industry has witnessed
strong development. Products made in Vietnam have penetrated to the world market, thus
it was contributing to the economic development of the country. The export values
increased rapidly, and this sector is one of the industries that for many consecutive years
- 14 -


has ranked very high in terms of key export products. Over many years, the industry
continuously invested and changed equipment and technology to meet the market demand
and to improve its competitiveness.
In general there are two major factors which contribute to Vietnam’s remarkable
performance. The first is the transition of central planning to an open market system and
the second is the increasing integration between regions and countries by becoming a

member of ASEAN, CEPT, AFTA, WTO. These 2 factors are strongly related to each
other and help the Vietnamese textile and garment industry made significant
achievements.
The above mentioned factors and the political stability. The industry employs a
large labor force, with low labor cost. Thanks to the open door policy, the government of
Vietnam took bold reform measures to promote the economic development of the country,
attract foreign investment. Now, Vietnam has 5,982 enterprises in textile and garment
industry, with involvement of multiple economic sectors. Only 1% of companies are state
owned and they are in the process of equalization, the mother holding company of Vinatex
will also be equitized, about 60% of textile and garment export turnovers come from FDI
companies.
There are 30% companies located in Northern provinces, 8% in central and
highland provinces, and 62% in southern provinces, attracted nearly 2.5 million workers
in the country.
During the economic integration process, Vietnam actively participated in all
activities of the global economy and step by step integrated into the regional and global

- 15 -


value chains. That brings significant opportunities to the garment exporters to enter
markets of all countries, step by step gaining market share in the global market.
Textiles and garment products is one of the most important sectors for Vietnamese
export and outsourcing of production. Vietnam’s apparel exports are increase over many
years and get high performance in 2013.

Figure 2.1: Vietnamese Textile and Garment Export Revenue during 2008-2013
Key markets are still markets with high purchasing power such as United State,
EU, Japan, Korea, Canada, Australia and retail markets which play a role as shopping
centers in the region.

Besides the achievements, Vietnam has to cope with many difficulties: it is
currently less developed in terms of machinery and equipment, technology, and labor
- 16 -


skills. Another difficulty is the high inflation (2007: 16%) compared to economic growth
(2007: 8.5%). Besides this, labor costs are becoming more competitive. There are many
workers in this sector, so companies compete with each other to get the best workers. On
the other side, it could be possible that in future labor costs are getting less important
when there is more demand for technical skills.
In the future when participating in the TPP agreement, the Vietnam textile and
garment enterprises will be opened up opportunities for export growth especially two large
markets U.S. and Japanese, increase the added value of the product. However, there are
not simple poses new challenges for businesses. Now, the biggest challenge for Vietnam's
textile and garment enterprises is how to reach the market in the TPP countries while
producing raw material exports of Vietnam mainly imported from TPP abroad. In
addition, the companies will also face the risk of opening up the domestic market for the
TPP member countries will into Vietnam. Intrinsic Vietnam textile and garment industry
still limitations, is not really sustainable, not done their supply chain. This situation leads
to the weakness of the sector. It is the cumulative proportion of the industry is not high,
the major textile and garment companies to meet the demand for sewing (the stage of low
investment, easy to move). Currently, materials of industry only get localization rate of
about 50 %, remaining parts still dependent on foreign suppliers.
In general, textile and garment plays a very important role in the economy of
the country. To truly sustainable and development, the textile and garment enterprises
should form the complete supply chain from design - materials - sewing- distribution
and the link between the stages, commitment, responsible community for building the
competitiveness of the chain with the goal of creating an important boost for
- 17 -

Vietnam's textile and garment sustainable growth. Furthermore, businesses should
take advantage of opportunities for sustainable development, accumulation potential
in all aspects to build competitiveness, should not rest on winning.

2.3. Overview of Japan’s textile and garment market
The Japanese consumer market has remarkably high purchasing power for a
country of its size. With a population of 127.5 million, Japan is the world’s 10th
largest country. The Japanese economy, however, ranks as the world’s 3rd largest
(behind the U.S. and China). The corresponding high level of per capita income gives
consumers in Japan considerable purchasing power and offers an attractive market for
retail investment.
Currently Japanese is the third largest apparel market in the world after the
U.S., E.U, Japanese has consumption level of garments annually to USD 3.7 billion,
domestic production is only 5% of the remaining, 95% is imported. So, here is a
fertile market for textile and garment exporters into Japan.
Due to shortage of labor and high labor costs, many manufacturers of textile
and garments in Japan moved production in abroad. Thus, producing of the domestic
textile and garment goods in Japan has and will decrease, garment market mainly
import. Chinese goods are the dominant textile and garment market imported from
Japan, with a market share in 2013 was 71.08% market share. Most Japanese textile
and garments are imported from China by Japanese companies or Japanese-Chinese
joint ventures located in China and producing. Vietnam's textile and garment export to

- 18 -


Japan in 2013 accounted for 6.74% market share of total imports of the country
compare to Indonesia 3.43%, Korea 1.42%, 1.18% of the United States.
Now, Japan is importing a smaller percentage of clothing from China as

Japanese manufacturers shift more production to lower-cost countries in Southeast Asia.
Made-in-China products accounted for 75.6% of the total value of Japanese clothing
imports in 2013, down 2.6 percentage points from the previous year, according to trade
data released by the finance ministry. Shipments from members of the Association of
Southeast Asian Nations, meanwhile, rose 2.2 points to 14.7%. Japan imported 3.15
trillion yen ($30.5 billion) worth of clothing in 2013, up 21.3% from 2012. Imports from
Vietnam, Bangladesh and Myanmar posted especially sharp increases, spiking 37%, 42%
and 43.9%, respectively. The total value of clothing imports from ASEAN members
surged 42% to 462.4 billion yen, pushing up the region's share significantly.
Today, Japanese consumption goods market is developing follow two trend.
The first trend is consumers who looking for the not high price goods. Thus, Japan
producers must divert to the ASEAN countries, especially China and Southeast Asia
to processing with the low labor cost. The second trend is in the context of a series of
domestic garment factory closed, then the successful research and development of
high-value products such as shirts be worn immediately that should not iron after
washing and drying it is an outlet for Japanese manufacturers. Beside the core
interests of products, the Japanese consumer demanded new hobbies such as the suit
can add moisture to escape, not wrinkled, crumpled by special fabric sewing.
In terms of the quality of goods, Japan is one of the countries with the most
demanding in the world. Defects in other countries that is not a problem as a minor
- 19 -


wound, unbalanced contour on a product, then the Japanese were considered damaged
goods. Japanese consumer set out reliable and high quality goods standards for the
industry goods and create require that different products but same type must follow.
Different standards of color also exist in Japan, based on a combination of the
traditional standards and influence of western. Elderly people often choose light and
soothing colors fashion in the former, but now, everyone likes a different color groups
depending on their tastes that do not depend on age. For young women's fashion,

colors change depending on the seasons. Each sample of garments can have many
different colors. The exporter should choose suitable color depends on the body type
and personal tastes of the Japanese market.
Today consumers about garments in Japan quite difficult, especially about the
fashions. Businesses need to capture, predict fashion trends, must provide a timely
trendy fashion products, especially for younger buyers - the garment hobbyists are
changing fast. The Japanese suppliers usually do this better than foreign suppliers
because they capture and predict better fashion trends and because they have a "rapid
response" system to capture information from consumers through retailers. However,
the Japanese have more conservative in that still accept the standard stylized items
add details or new materials. For example, chum pants/skirt and vest/jacket are still
selling. Japanese consumers are often attention to the smallest details like sewing
stitch (even on the inside), stitching, buttons sewing way, folding way, etc.
When business with Japanese partners, garment oversea suppliers should avoid
mistakes as delivery no color standard, wrong size, not enough or slow delivery. The

- 20 -


Japanese importers will not accept these errors, so businesses suffer violations will
harm to the two sides.
Goods in the Japanese market must have the correct standards labels and
labeling must reflect the origin of goods so that consumers are not confused between
the Japanese products produced and products manufactured in overseas and they can
quickly determine the origin of goods or prohibited imports vague branded products,
counterfeit origin. Products are stamped JIS stamp (Japan Industry Standards - one of
the quality stamps is used widely in Japan) can easily penetrate the Japanese market.
Japan also have test law for household products containing toxic substances.
This law requires that all household products must comply with the standards for
permissible levels of hazardous substances to the skin. The garments have toxic levels

higher than allowed level will be banned from sale in the Japanese market.
One of the policies of Japanese market about garment, there is also Customs
Tax Law. This law prohibited importation of products which counterfeit labels violate
trademarks or patents.
Policies of Japan on importing of garments is relatively strict, especially for
developing countries because these countries less business based on their label, the
quality product is not high, the localized rate products is low. Therefore, importers need
to further strengthen the business on their own label, enhance the localization rate
products using efficiently domestic materials to adapt to the Japanese books and won
the competitors.

- 21 -


Chapter Three - Literature review
A number of theories are reviewed in this chapter in order to highlight the issues
of comparative and competitive advantages, which would help to find out the
competitive advantages of Vietnam’s textile and garment export enterprises to
Japanese market.

3.1. Mercantilist theory
Mercantilist theory was born in Europe, the most powerful in the UK, France
around the fifteenth century. According to mercantilist theory, the prosperity of the
country is reflected in the volume of money which it holds, it is considered national
assets. The only way to increase national wealth is to develop foreign trade and
stressed that excess of imports over exports is the most effective measures in foreign
trade activities. Trading profit is the result of no par value and fraud exchange.
Economic benefits that a country is obtained from the resources of other countries.
International trade is not only based on the potential of a country in which
government plays an important role through trade protectionist policies.

This theory has certain disadvantages because if Vietnam wants textile and
garment industry sustainable development is not only to increase the number of export
goods but also pay attention to the value of the textile and garment goods. Therefore,
if creative apply in the present context, the theory remains highly effective for
exporter enterprises in particular and textile and garment industry of Vietnam in
general.

- 22 -


3.2. The comparative advantage theory
David Ricardo (1772 - 1823) is famous British economists. According to him,
if each country specialized in producing and exporting their products which have
comparative advantage and import those products that do not have a comparative
advantage, all countries will benefit. However, comparative advantage here is based
on the level of development of production elements of each nation. Comparative
advantages depend on the time and level of development of each country or local.
Besides, Paul R. Krugman. “International Economics Theory & Policy”.
Pearson International Edition 8, pp.28-29. He was also defining about the comparative
advantage: “Trade between two countries can benefit both countries if each country
exports the goods in which it has a comparative advantage”.
Applying this theory, to improve exporting textile and garment of Vietnam, we
should take advantage of abundant labor, cheap cost in manufacturing textile and
garment products to export.

3.3. Michel. Porter’s (1980) on Competitive Advantages
Competitive advantage is at the heart of any strategy. A firm needs to make a
choice about the type of competitive advantage it seeks to attain and the scope within
which it will attain.
Competitive advantage occurs when an organization acquires attributes that

allows it to outperform its competitors. These attributes can include access to natural
resources, highly trained and skilled personnel human resources, new technologies
such as robotic sand information technology or as a competitive aid in the business
- 23 -