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WTO ACCESSION FOR VIET TIEN GARMENT COMPANY

by Mr. Nguyen Dinh Truong,

General Director,

Viet Tien Garment Company

INTRODUCTION

The common trend of the world nowadays is regional economic integration, which has taken place for a long time in European countries, under the name as European Union (EU) with 15 member countries, then in North America with North American Free Trade Area (NAFTA) including 3 countries, and most recently in Southeast Asia with ASEAN Free Trade Area (AFTA) including 10 countries.

The above-said establishments of free trade areas were aimed at eliminating tariff and non-tariff barriers, enhancing exchange relations of goods and services among member countries and non-member countries. Products and services must be participated into a free competition, a positive factor of a market economy, without any protection from the government. In such economic context and environment, if an enterprise wants to enter foreign markets, its products and services must have reasonable prices, attractive designs and many features that meet demands and tastes of consumers. That enterprise must find to understand the import trend of a country, which rises or falls year by year, in order to forecast import evolutions in the long-term and in the short-term, that is, it must conduct careful studies on import markets before working out their production plans.

The process of international economic integration of Vietnam is now in a pressing phase. Commitments made by ASEAN countries under CEPT/AFTA on tariff reduction to 0-5% will be implemented since January 2003, and Vietnam will possibly join the WTO in 2004. Many of Vietnamese advantageous products will face a serious competition from regional countries. In such difficult but also favorable conditions, what will Vietnamese enterprises do to join the integration process and to be developed? This is the main topic that Viet Tien Garment Company was and is preparing for participating into the international economic process following the spirit of the Resolution of the IX National Party Congress and Resolution of the Political Bureau on international economic integration dated November 27, 2001: “to carry out, on a wide basis, activities to disseminate among Party and Government organizations, unions, enterprises and population strata so that they are fully aware of international economic integration and have unanimous and consistent actions, which must be considered the basic, immediate and long-term requirements of the Vietnamese economy, enhancing the confidence in the Vietnamese people’s ability and determination to actively participate into the international economic integration”.

Viet Tien Company are actively building and carrying out its international economic integration plan, with suitable schedules and specific action plans, promoting the activeness of the Company at all levels, strengthening the restructuring of products, creating stable markets for

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traditional competitive products and seek markets for new products, improving the quality of export products, increasing market shares in the traditional markets, accessing and expanding new markets and at the same time renovating the economic management mechanism, enhancing the competitiveness for the purpose of gaining high growth rate, reducing production costs, minimizing risks and maximizing efficiency.

Initiatives/ schedules the Company is now preparing for economic integration have all necessary and sufficient conditions to stand firmly in the “new air current” in the context of globalization, economization and trade liberalization.

It is not this time the Company “wait for the water to come and then start to run” but for 27 years, the Company’s trade relations with many countries have been strongly developed, which as a result enabled it to absorb the most advanced machines and equipment, right from its first products containers to be exported to Europe. This renovation process can be seen most clearly in its 2001-2005 five-year plan .

SITUATION OF DEVELOPMENT OF VIET TIEN GARMENT COMPANY

A. A brief on Viet Tien Company:

1. Name of Company: Viet Tien Garment Company

English name of the Company: VIETTIEN Garment Import-Export Company

Abbreviation name: VTEC

2. Address: No.7 Le Minh Xuan St., Ward 7, Tan Binh District, Hochiminh City

Tel.: 8640800 - 8654879 Fax: 8654867 - 8645085

E-mail: vtec@hcm.vnn.vn Fax: www.viettien.com.vn

3. Company holder: Director General: Nguyen Dinh Truong

4. Company’s Diagram of strategic management

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5. Strategic objectives:

a. Shifting to operate under the model of parent company - affiliate company

b. Diversifying products and branches of items

c. Enhancing the capacity of overall management by investing in human development and improving working conditions.

d. Providing in-depth investments, applying modern and advanced production technologies, improving productivity and enhancing internal competitiveness.

e. Reducing total expenditures and production costs to improve efficiency.

f. Having a strong and healthy financial situation, modern production scale

g. Developing the company’s trademark and product labels which must be strongly competitive in the context of world and regional economic integration.

6. Strategies in all production - business sectors

- Production of clothes of various kinds

- Direct imports, exports, commodity transportation and delivery

- Doing business in garment-related materials and supplies

- Doing business in garment-related machines and equipment

- Providing printing and photocopy machines, computers and other equipment.

- Providing telephones, fax machines and desktop telephone system

Business Environment Analysis

Defining functions, tasks and objectives

Analysis and choices of strategic measures

Carrying out strategies

Evaluation and supervision of implementation

Rev

ert R

elat

ions

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- Providing air-conditioners and supplies (for industries and civil use).

7. Major markets: America, West Europe, Asia and ASEAN countries

No. Countries and regions % by value

1 Japan 10.49

2 America 41.60

3 West Europe (EU) 16.18

4 ASEAN 7.73

5 Other countries 24.00

(Note: Data made by 2002)

8. Production capacity:

- Jackets, overcoats, sport suits : 2,200.000 products/ year

- Shirts, woman blouse : 6,000,000 products / year

- Trousers of various types : 6,600,000 products / year

- Pullovers of various types : 1,000,000 products / year

- Suits : 400,000 products / year

- Other items : 800,000 products / year

- Textile products : 10,000,000 products / year

9. Legal capital: 20 billion VND

Business capital: 129 billion VND

- Total land areas of factories: 55,706,32 m2

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- Equipment: 5,668 units

- Labour force: 8,069 persons (by April 30, 2003)

10. Process of establishment and development:

The predecessor of the Company is a private enterprise named as Pacific Enterprise, which was co-established by 8 shareholders under the directorship of Mr. Sam Bao Tai - a Chinese. The Enterprise had operated on a total area of 1,513 square meters with 65 household sewing machines and about 100 workers.

After the liberation of the South, the enterprise was received by the State, was nationalized and then belonged to the management of the Ministry of Light Industry (now the Ministry of Industry).

In May 1997, the enterprise was acknowledged by the Ministry of Industry a State-owned enterprise and was renamed as Viet Tien Garment Enterprise.

The Enterprise was totally destroyed by the serious fire on November 13, 1979. However, under the supports of other friend enterprises plus with the passion and determination of the entire management staffs and workers, the enterprise came into operation again and since then has been confirming its position in the market.

Thanks to these efforts, under the Decision No.103/CNN/TCLD, the Enterprise was accepted by the Ministry of Industry to become Viet Tien Garment Company. Then, the Company was allowed to engage in direct import-export activities by the Ministry of External Economic Relation under the official English name as Viet Tien Garment Import-Export Company, VTEC for short, following License No. 102570 dated February 8, 1991).

On March 24, 1993, the Company was given permission from the Ministry of Industry to become an Enterprise (License No. 214/CNN-TCLD).

Prior 1995, the Company was under the direct management of the Association of garment production - import-export. In response to requirements of enterprises and the Ministry of Industry, on April 29, 1995, the Vietnam Textile and Garment Corporation was established as a bridge to link enterprises together and, on a macro basis, to access to the world for getting market information, policies and laws...

11. Form of cooperation:

At present, the Enterprise has 21 production units. Besides, it has 5 domestic joint-ventures, including the following garment production units:

- Dong Tien garment company : 2171 persons

- Tay Do garment company : 1157 persons

- Tien Tien garment company : 1220 persons

- Viet Hong garment company : 465 persons

- Viet Tan garment company : 350 persons

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The total turnover of these domestic joint-ventures is about 250 billion VND per annum, and that of foreign joint-venture is about 65 billion VND per annum.

The Enterprise also has 5 jointventures with foreign partners for producing garment-related supplies, such as:

- Viet Thuan company, which produces buttons, has 48 employees, and is a joint venture with a Hongkong partner.

- Viet Phat, which produces mex(?) of various kinds, has 58 employees and is a joint venture with a Taiwanese partner.

- Golden-VTEC (with 52 employees) and EVC-Hanoi (with 50 employees) that produce PE of various kinds with a Hongkong partner.

- VTEC-TUNGSHING (with 451 employees) that provides garment-related machines, equipment and supplies, and is a joint venture with a Hongkong partner.

- MS&VTEC (25 employees) that provides sea-transportation and air-transportation services, a joint venture with a British partner.

12. On investments for development for 5 years from 1998 to 2002

Unit: billion VND

1998 1999 2000 2001 2002

Investments: 28.550 25.970 50.900 61.100 46.139

1. Machines, equipment 16.950 16.880 17.900 11.400 43.204

2. Workshop building 11.600 9.090 28.900 46.700

3. Others 4.100 3.000 2.935

13. On investments for human resource development (training expenditures)

The Company has been fully aware that human is the decisive factor to its long-term growth, so it has applied various regulations and policies for human development, created favorable conditions for the company's staffs to improve their knowledge and qualifications/ skills, and cooperated with universities and colleges for having a contingent of qualified employees at the present time and for the future.

Investments given to universities were as follows:

- Polytechnics University : 60 million VND

- College for technical teachers : 40 million VND

- Fine-art College : 20 million VND

- Technical economic college : 30 million VND

Unit: million VND

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1998 1999 2000 2001 8 months of 2002

Training expenditures 86.7 340.6 287.9 336.6 667.6

B/ STRATEGY BUILDING

1/ Process of strategy building

Related subjects:

a. Customers:

- The company holds annual customers conferences to catch their major requirements, that is, in general, product quality, quantity of small product items, delivery time, and market-based price evolutions.

- On average, the number of customers having transactions with the Company is about 40 to 60 partners, among whom 15 to 20 are major partners. The majority of these partners are Asian.

b. The company's staffs:

On the basis of the annual labour agreement made by the company leaders with employees, at the annual conference of the company, the employees set requirements for the employers to create jobs, favorable working conditions, policy-based working time and other requirements concerning the implementation of State current laws and policies (for example, 8 hours of working per day...).

c. Trends of export markets:

- Situation and development trends of the garment industry:

+ Situation of the garment industry in the world:

++) The US market: This has been always the largest market for garments with a total import turnover of over 70 billion USD per year in the recent years. The total import turnover of the US market was 72,846 billion USD in 2000 and over 71 billion USD in 2001 (despite of impacts of the September 11 event and economic slowdown). In the coming year, the imports of garments by the US market tends to increase thanks to the gradual economic recovery and increasing confidence in the US consumers. However, one of the obstacles the Vietnamese garment exporters and the US importers are facing now is quota restriction since mid 2003. The high economic growth of Vietnam in the recent years, with more than 20 items of garments exceeding 1% of the US total import share, made the US Government have negotiations with and sign Garment Agreement with Vietnam.

++) EU market: EU is the second largest market, after the US. In fact, Vietnam's garments exported to the EU in the last years recorded a slowdown. The total turnover of Vietnam's garment exports to the EU market in 2002 was only 550 million USD, as compared with 660 million USD of the year 2001. In particular, the export of Vietnam's jackets to the EU market went down by 3 million products, to nearly 17 million products only.

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++) Japanese market: The high level of liberalization of the Japanese market made the competition fiercer. Japan is a country that annually imports a high value of garments: 2034 billion Yen in 2000 (about 17 billion USD); 2,218 billion Yen in 2001 (about 18.5 billion USD). Having advantages in terms of geographical conditions and prices, Chinese garments are highly competitive and now flooding the Japanese market. For many consecutive years, China became the largest garment exporter to Japan with a market share of nearly 90% of the total value of garments imported by Japan, while that of Vietnam was only 3% (in 2001).

Vietnam's garments were assessed to be products of good and stable quality and have gained certain position in the Japanese market, ranking No.4 after China, Italy and Korea. However, they are now in a fierce competition with Chinese ones. In 2002, the total export turnover of Vietnam's garments to Japan amounted to 540 million USD, down by 20% as compared with 2001.

++) China: Chinese garment industry has used a total labour force of 13 million persons, created 11.4% of the total industrial production value and 22.1% of the total export value. The total export turnover of China was 43 billion USD in 1999 and 56 billion USD in 2000. China is now building a ten-year plan (2001-2010) the objective of which is to double its GDP in which the garment industry still plays a key role in the taking advantages of WTO accession and has an annual growth rate of 6%.

++) Australia: Australian garment industry plays an important role in the economy, one priority of which is to attract foreign investments into the garment industry. Australia is one of the most open market in the world, with a population of over 19 million persons and diverse cultures. The trade relations between Vietnam and Australia have strongly developed. Many economic, trade, investment and tariff agreements have been signed by the two Governments. The total two-way turnover of exports between Vietnam and Australia in 2001 was over 2 billion USD. This is a potential export market and also a large supplier of cotton to Vietnam. However, up to present, the Vietnamese garment industry has not well exploited this market. In 2002, the total value Vietnamese garments exported to Australia amounted to only 25 million USD.

++) Asian market: in a context of strong economic integration in the region, Asia is quite a promising place for exporters, including Vietnam. Vietnam's exports to the Asian market often accounted for 30% of its turnover of export. With the establishment of the ASEAN free trade area (AFTA), the Vietnamese enterprises have opportunities to access to a very large market with a value of over 580 million USD and population of 460 million person, and a tariff range of 0-5%. The total turnover of Vietnam’s garment exports to ASEAN countries amounted to only 84.5 million USD in 2001, and 81 million USD in 2002. In the coming years, further efforts should be made by Vietnamese enterprises to enter this potential market.

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Evolutions of the company’s garments by annual season can be seen in the following table (%):

Year Q1 Q2 Q3 Q4

2002 15.78 22.56 29.10 32.56

2001 21.78 25.74 25.80 26.68

2000 20.40 24.30 28.19 27.11

1999 16.60 23.87 29.52 30.01

1988 19.61 24.07 27.30 29.02

1997 18.91 25.40 27.29 28.40

1996 19.60 23.15 27.94 29.31

1995 19.48 23.10 27.84 29.58

1994 17.45 24.42 27.91 30.22

- The garment industry tends to shift to China, as the latter has cheap labour and material sources. Powerful exporters of garments are more advantageous (than Vietnam) because most of them are WTO member countries.

- The largest challenge for Vietnam’s garment industry is the increasingly fiercer competition both inside and outside the country. In Vietnam at the present period, there are 1244 units (of which 187 are State-owned enterprises, 870 are limited companies, 187 are joint ventures with foreign partners, and a labour force of 1.6 million persons) engaging in textile & garment exports.

d. The Company’s demands for and capacity of human resource:

In terms of labour force:

- Management staffs : 113 persons

- The total labour force : 8,034 persons (495 of whom work in various administrative departments/ sections).

- Employees with university/ college education upward: 276 persons.

- Age average:

+ From 20-25 years of age : 3,216 persons, accounting 40.03%

+ From 25-30 : 2411 persons, accounting for 31.01%

+ Over 30 years of age : 2,407 persons, accounting for 29.96%

- Direct labour force: 7005 persons, accounting for 87.19%

- High skilled labour: 560 persons, accounting for 7.99% (of whom: level 6 - 25 persons; level 5 - 148 persons; level 4 - 387 persons (according to data by May 2003)

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- Average occupational age: 5 years

The Company is now in a serious shortage of:

- High skilled labour

- Capable fashion designers

- Officially trained management personnel

e. Operational capacity of the Company

Human resource:

No. Unit Labour

force

Machines &

equipment of various

kinds

LINE total land

areas Goods items

1. GARMENT 1 354 299 06 1.900 M2 Shirt 2. SIG-VTEC 322 298 04 1.900 M2 Jacket, ski suit... 3. GARMENT 2 431 321 06 3.336 M2 Shirt 4. GARMENT 4 352 293 04 3.032 M2 Jacket, ski suit... 5. GARMENT 6 287 270 04 1.900 M2 Jacket, ski suit... 6. GARMENT 8 444 334 06 3.336 M2 Shirt

7. VIET TAI 386 330 05 2.501 M2 Veston Jacket, ski suit...

8. VIET HAI 515 366 09 2.839 M2 Shirt 9. DUONG LONG 459 512 08 2.133 M2 Trousers...

10. VIET THINH 402 345 05 2.583 M2 Trouser , jacket, ski suit...

11 VIET LONG 1 308 268 05 816 M2 Trouser , jacket, ski suit...

12. VIET LONG 2 321 562 05 816 M2 Trouser , jacket, ski suit...

13. THANH VIET 364 253 12 900 M2 Knitting wear.

14. DONG TIEN 357 310 05 2.501 M2 Trousers, jacket, ski suit...

15. TAN TIEN 403 331 06 2.583 M2 Trousers Jacket, ski suit...

16. VINH TIEN 464 323 06 9.060 M2 Trousers, Jacket, ski suit...

17. VIET HA 463 418 07 4.000 M2 Jacket, ski suit... 18. LONG TIEN 461 385 07 2.583 M2 Trousers

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19. EMBROIDERY 30 05 248 M2 Automatic embroidery20. SIG-B 409 371 7 2.501 M2 Jacket, ski suit.

21. WOVEN LABEL

7 2 - 150 M2 Woven label

22 DEPARTMENT/ SECTIONS

495

TOTAL 8034 6,596 117 51.314 M2 2. Opportunities, challenges:

2.1. For the part of Vietnamese garment industry

On April 23, 2001, the Prime Minister of Vietnam signed to approve the Strategy for the development of Vietnam’s garment industry by 2010, with open policies and mechanisms.

The Vietnam - US Trade Agreement (BTA), which was signed on July 13, 2003 and was ratified by the two Congresses and came into effect since December 10, 2001, is a golden opportunity for Vietnam’s garment industry. This effective BTA and the expanded markets will help Vietnam’s garments exported to the US market enjoy MFN or NT conditions, and possibly enjoy GSP given by the US with a tariff range of 0-5%. This is a prerequisite condition for Vietnamese garments to be exported to the US markets without any restrictions such as quotas or import licenses which are applied by the US Government toward garments of other countries. However, this advantage will last for only 1 year since the coming into effect of the Trade Agreement. If the Vietnamese garment enterprises know how to take advantage of this opportunity, they can promote their garment exports to the US market.

The advantages of the Vietnamese garment industry, especially those of export-oriented ones should be fully exploited. As compared with ASEAN countries, Vietnam has got a labour force which is relatively well-trained, capable of receiving modern and advanced technologies. In addition, Vietnam has the cheapest labour cost in Asia, about 0.16-0.35 USD / working hour as compared with 0.32 USD in Indonesia, 0.37 USD in Pakistan, 0.58 USD in India, 0.70 USD in China, 1.13 USD in Malaysia, 1.18 USD in Thailand and 3.16 USD in Singapore. All these show that the Vietnamese garment enterprises are capable of creating competitive factors for their products.

Another valuable opportunity for Vietnamese garments to enter the US market is that since the September 11 event, many of the US large garment orders from Islamic countries have been shifting to countries of political stability such as China and Vietnam. Large US group such as JC Penny, NIKE have established official relations with Vietnamese enterprises for making sport suits for the US market. At the same time, foreign investors have been carrying out garment production projects in Vietnam. It can be said that these are good signs for the garment industry of Vietnam.

However, along with opportunities, the Vietnamese garment industry will have to face numerous challenges which need special attention, such as:

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- The competitiveness of the Vietnamese garment and textile is still poor in the process of integration in the region and the world. One of the causes leading to this situation is that most of the costs for 1 production unit are always 15-20% higher, so the Vietnamese textile and garment products could not compete with those of China, Bangladesh and Pakistan. The labour productivity of the Vietnamese textile and garment industry is in general about two thirds of the average labour productivity of ASEAN countries, which is due to the uneven skills of the labour force. Other input costs are also high because of the backward technologies with high loss, poorly-managed input supply mechanisms, high intermediary costs... leading to high production costs and reducing the competitiveness of the Vietnamese garment products.

- Following the CEPT-based tariff reduction schedule under AFTA, many of the goods items which are now protected by high tariff rate such as fiber (20%), cloth (40%), garments (50%) will be subjects to constant and fast tariff reduction, to 6% by 2006. The largest challenge and also the biggest concern of the Government and Vietnamese garment enterprises as well is the competition among garment enterprises not only in their exports to ASEAN countries but also in the domestic market, especially when all the import quantity restrictions are eliminated since 2003, and non-tariff protective barriers be eliminated since June 1, 2006.

- According to an Agreement on textile & garments (ATC), developed industrial countries such as the US, EU and Canada will gradually remove import quotas on textile and garments from countries which are members of the WTO under the set schedules: in the 2002-2004 period, the 3rd phase: 18% (the 1st phase: 16%, the 2nd phase: 17%) of the total quotas will be eliminated as compared with 1990, and by December 31, 2004 the rest restrictions will be removed and if so, many of the potential competitors with Vietnam’s garments, such as China accessing to the WTO, will be more advantageous than Vietnam.

- According to Vietnam - EU textile and garment Agreement for three years from 2000 to 2002, EU agreed to increase quotas by 30% for Vietnamese textile and garments exported to the EU market. In return, Vietnam had to open its market and reduce import tariffs for textile and garment products from EU countries to fill in, and to provide EU enterprises with preferences similar to those given to the US enterprises under the Vietnam - US Trade Agreement. In addition, Vietnam was not regarded by EU as the poor countries (out of 48 countries) so that it can enjoy tariff preferences and quota restrictions, which are big disadvantages for the export of garments.

- The majority of materials and supplies for the export-oriented industry are imported ones, leading to low profits, incompatible with the potentials and unfavorable for the FOB-based production and business.

- The work of fashion designing is still poor, which has not been given proper attention. Though Vietnam has had a contingent of young and talented fashion designers, but their designs have not really come into the life, mainly for performance, while the every-day fashions were copied from foreign catalogues. In general, the work of fashion designing is still limited, with poor patterns and very few trade marks of typical characteristics and world-standard levels, and this is one of the reasons of the poor competitiveness of the Vietnamese textile and garments in the world market.

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- The majority of the Vietnamese garment and textile enterprises were inexperienced and passive in their marketing activities with no strong strategies for market expansion. Their trade promotion activities have not fully exploited the 4 tools: advertisement, sale promotion, on-line sale and dissemination.

2.2. As for the Company: Strengths and weaknesses:

- Environment and opportunities for the Company:

a. The State and Party’s open-door policies

That is the policies to diversify and multilateralize relations with countries in the world. Up to present, Vietnam has been a member of ASEAN and APEC, signed bilateral agreement with the US and on the process of WTO accession. The accession to these organizations will bring in not only opportunities but also challenges for Vietnamese enterprises. One challenge is the fierce competition with many strong rivals while an opportunity is tariff- and market-based preferences provided to Vietnam.

b. Economic factors:

The Vietnamese economy is now in the period of stable economic development, with low rate of inflation, constant GDP growth rates, decreased unemployment rate and reduced interest rates in the direction of demand stimulation by the State. All the above conditions are favorable ones for the development of the Company.

c. Scientific and technological factor

This is a foundation for the Company to carry out programs on modernization of machines and equipment. The Company will be gradually equipped with new and high productivity machines and equipment to create high-quality products that meet requirements of the new markets.

d. Social factors:

The improved living conditions of the population has led to increasing demands for high-quality clothes. Expenditures for clothes have been on the rise among the majority of the population. It is this force that will create a large market for the Company.

- Environment and risks

a. Heavier competition pressure:

Gradual elimination of trade barriers will make enterprises face with the acute competition from other enterprises from foreign countries, such as China, Indonesia and Korea...

b. Changing/ unstable policies and procedures

Due to the fact that Vietnam is in the process of development and renovation, its policies and procedures are subject to change, which have had numerous impacts on the development plans of the Company.

c. Development of technologies

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Technology can be a factor that make the Company’s products unable to catch up with the development of the world markets.

d. Negative impacts of the market:

The company’s products can be imitated, which in turn spoils the company’s reputation.

e. Human resource:

The mobility of certain skilled labour due to attraction of the labour market.

- Strengths of the Company:

a. The Company has a contingent of workers who have been trained and working for a long time, with high skills and productivity as compared with other company of the same industry.

b. The company is quite capable of implementing large-size order contracts.

c. The company’s products gained a reputation in the market.

d. The Company has a broad network of agents throughout the country: 100 (50 in Hochiminh city and 50 in other provinces); 02 shops and 01 representative branch in Hanoi and 02 agents in Hanoi. The Company has also established 2 other general agencies (01 in Nha Trang and 01 in Da Nang). On April 26, 2003, one high-quality products shop was open in TAX trade center (Hochiminh City).

e. Viet Tien is a member of Vietnam Textile and Garment Corporation, so it has received much support from the Corporation.

- Weaknesses:

a. Marketing policies remained poor: the Company’s marketing activities in the recent years were of low efficiency.

b. The Company’s price policies were inflexible. Attention has not been given to regular customers.

c. The majority of major materials serving garment production have to be imported from foreign countries.

d. The contingent of fashion designers are still young, and inexperienced. Product designs and patterns are in general not typically characterized.

- SWOT matrix:

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SWOT MATRIX - Opportunity (O) 1. Open-door, renovation policies 2. New technologies 3. Stable economic development 4. Increasing demands for beautiful clothes

- Threats (T)

1. Increasingly fiercer competition 2. Changing policies and procedures 3. Constantly changed technologies 4. Products are imitated

Strengths (S): 1. High skills 2. Large size 3. Prestigious products 4. Strong distribution system. 5. Supports from the Corporation

S/O taking advantages & opportunities

• S1,2 ! O1,3,4 • S3,4 ! O2

S/T using strengths to overcome threats

S1,3 ! T1,3 • S2,4,5 ! T2,4

- Weaknesses (W) 1. Weak marketing policies 2. Inflexible prices 3. Materials to be imported 4. Patterns and designs are not typically characterized

W/O overcoming weaknesses and taking opportunities

W1,2 ! O3,4

W3,4 ! O1,2

W/T overcoming weaknesses and avoiding threats W1, 3 ! T1

3. Strategic objectives:

Objectives:

Functions - Tasks Long-term objectives Short-term objectives

1. Supplying garment products.

2. Supplying garment-related materials, supplies and machines.

1. Strengthening management work. Maintaining and improving quality management system basing ISO 9002, SA 8000, WRAP.

2. Consolidating the training activities to enhance skills and qualifications of the labour force.

3. Seeking for new customers, expanding markets

4. Building a healthy finance, reducing production costs

1. Increasing revenues from processing contracts, increasing FOB-based ratio.

2. Improving labour productivity and product quality.

3. Diversifying product items.

4. Building technical and economic standards.

5. Investments for infrastructure building.

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reducing production costs, enhancing in-depth investments, building modern infrastructure.

6. Working out plans, allowing shops to self-adjust for competition and meeting customers’ demands.

7. Investments to develop a broad electronic information system

8. Reducing working hours, creating conditions for workers to improve their education and skills.

- Strategy of the Company from now to the year 2005:

- Continue to renovate production technologies. This is a factor of key significance. Thanks to new machines and equipment, the Company has been able to create products that meet new requirements of the markets, contributing to increasing foreign exchange revenues and upgrading the company’s infrastructure.

- Maintaining and developing the domestic market, which is the foundation for the strategy to infiltrate foreign markets by the company’s trade name. Further efforts should be made by the company to strengthen its relations with the old customers, expanding relations with new customers of various markets.

- Improve organizational mechanism, renovate business management, and train a human workforce that meet world standards, pay attention to improving marketing and negotiation skills for the company’s staffs.

- Improve product quality to meet world standards on system management under ISO 9002, social responsibilities SA 8000, business morals WRAP.

- Joint-venture/ cooperation: Establish cooperation relations with domestic and foreign partners in the production of garment-related materials and supplies - especially that of major materials - thus, the company will be supplied with stable material sources for domestic production and for exports.

- Apply measures to prevent fake or imitated products with the assistance of authorized organs. The Company has skillfully improved its products, buttons and trade marks to avoid imitation ones, publicly announce its brochures and list of official agents, provide guidelines for customers to define the true and false products.

C. Implementation of Strategy:

1. Building and carrying out the action plan:

a. Building an action plan (short-term and long-term plans)

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Long-term:

To strive to realize specific objectives (2001-2005 5 year plan).

FIVE-YEAR PLAN (2001-2005)

Ratio (%)

No Major criteria Unit

Realized

in

2001

Realized

in

2002

2003

Plan

2004

Plan

2005

Plan 05/ 01Aver

age

A B C 1 2 3 4 5 6 7

I

Value of industrial production (1994

fixed price)

billion

VND 142 191 242 290 339 2.38 0.24

II Total revenue (without VAT)

billion

VND 763 1,098 1,260 1,530 1,800 2.36 0.24

of which: Revenue of industrial

production

billion

VND 307 461 540 632 740 2.41 0.24

II Export turnover

- Value of contracts 1000 USD 22 29.59 34 40 45 1.54 0.20

- Realized value 1000 USD 88 92.80 108 118 129 1.47 0.10

IV Import turnover

Of which:- Imports of machines and

equipment 1000 USD 16.96 22.17 25 26 27 1,52 0,11

- materials for production 1000 USD 31.70 47.96 53 54 55 1,52 0,11

V Major products

- Garment products

1000

product 10 11.48 13 13 17 1,39 0,09

VII Total capital for basic construction

billion

VND 62 30 30 35 30 0,48

Of which :- building & assembling

billion

VND 12 1.4 7 8

- Equipment + others

billion

VND 51 44.74 23 27 30 0,59

VII

I Investment sources:

billion

VND 62 30 30 35 30 0,48

Commercial loans

billion

VND 29 18 15 10 10 0,34

Other sources of capital

billion

VND 33 12 15 25 20 0,61

VII

I Average labour force per year person 7,000 7,700 8,000 8,200 10,000 1.21 0.05

IX Average income /person /month thousand 1,596 1,657 1,650 1,750 2,000 1.10 0.02

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VND/

person/

month

X

Total remittances to State budgets

(realized)

billion

VND 50.50 47.94 44.5 37 55 1.11 0.03

(3 major taxes: VAT, enterprise

income tax, SDV)

billion

VND 8.44 8.30 8.50 8.24 9.00 1.01 0.002

- To conduct studies and develop new customers and markets.

- New product plan: suit-making chain imported from Britain will be further developed.

- To use efficiently the capital, create maximum profits

- To work out development plans

Medium term:

- Product sale plans: Improve the company’s distribution system in the entire country. Develop sale agencies in various provinces/ localities of the North, the Central, Mekong river delta and the Central Highlands), infiltrate high-ranking supermarkets in Hochiminh City and ASEAN-6 markets.

- Working out production plans and budget estimation

- Organizing/ overhauling of human resource to meet new management requirements.

- Analyzing operational plans.

Short-term:

- Work distribution (basing on provision 4.2 on the responsibilities and rights in system management under ISO 9002).

- Investments in technological renovation.

- Develop cooperation relations with the Vietnam Textile and Garment Association and fostering Websites for introducing and advertising the company’s products.

- Register product trade marks/ labels in consistent with world standards and conventions, introducing the company’s products as a monopoly trade mark in the market.

- Sign and realize orders and contracts, supervision.

b. Demands and plan on human resource:

Demands:

- To reduce to the maximum operational expenditures.

- To fulfill and over-fulfill FOB-based and direct sale objectives, gradually increasing the ratio in replacement of processing one.

- To enhance labour productivity by means of further in-depth investments and modern and advanced technologies.

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c. Measures:

- In-depth investments in specialized machines.

- Use of computers for the work of designing, making diagrams and studying to use the most efficiently and rapidly cutting tables.

- Diversify products, trade marks, packs, (mainly Viet Tien mark).

- To investigate and adjust contract-based expenditures of factories. Decrease production costs.

- To apply flexible prices, maintain and develop customers, markets and increase product quantity and types of domestic and FOB products.

- Make efforts to improve production organization, upgrade and enhance management efficiency.

- Apply production plan software (FAST REACT), measurement and supervision of production costs in the process of industrial garment production (GSD).

On markets:

For export markets:

To firmly maintain export markets by:

- applying flexible prices, meeting requirements of product quality and delivery time.

- Using efficiently quotas of various kinds.

- Conducting customer analyses and applying preferential policies on certain kinds of customers.

Developing new markets by:

- Strengthening marketing activities, participating into exhibitions and trade fairs, and seminars.

- Paying more attention on ASEAN market to take advantages when accessing to AISA.

- Continuing to expand the Japanese market and other free-quota markets.

- Gradually increasing the ratio of material production and product sale in replacement of processing one. By 2005, FOB production will account 70% of the total production revenue.

- Applying preferential policies for Viet Tien products to be sold in the world markets.

For the domestic market:

- To improve regulations concerning the system of distribution channels/ agencies of the Company in the entire country.

- To open more agencies in localities of potential economic development, such as provinces in the North, the Central, Mekong river delta and the Central Highlands, along with suitable policies for each region.

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- To build and improve the system of product parameters in consistent with characteristics of individual region.

- To organize and maintain customers conferences, participate into Vietnam high-quality products trade fairs, promote marketing and advertising activities, strengthening activities to provide customers with market information. Apply post-sale policies.

- To increase the ratio of domestic consumption from 30% to 35% of the total revenue.

2. Building implementation plans:

Project 1: Working out production strategies:

a. Competition factors in production:

Competition factors Definition Measures to be taken Production costs Minimize costs of each

product, including labour, material and management costs

- Re-design products - Apply new technologies - Enhance productivity - Reduce substandard products - Reduce in-stock products.

Delivery time Fast delivery - Large quantity of in-stock products - More rapid production - Faster delivery of products

On time delivery - Reliable promise - Good supervision of process of order/ contract-based implementation - Good information system

Quality Products

Services

Customers enjoy the perfect quality of products/ services

Improvements of products/ services in terms of: - appearance - ratio of substandard products - operational abilities and attached functions - post-sale services

Customer services and flexibility

Ability to rapidly meet special requirements of customers in terms of product attributes and quantity

- Changes in the production process - Enhancing production capacity

b. Locating production system:

- On designing of products, basing on traditional ones:

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+ Shirts, accounting for 22% of the total value

+ Jackets, vests and similar products... accounting for 25% of the total value

+ Trousers of various kinds, accounting for 25% of the total.

+ Others, accounting for 20% of the total

These proportions are subject to change depending on market demands in order to work out seasonal production strategies.

Attention will be given to selecting designs on the basis of customers’ orders of small quantity, meeting requirements of designs and delivery time, reproduction of products of large quantity, fast delivery time and reduced production costs.

- On production process or technological chains:

+ To gradually modernize and put investments in automatic production chains.

+ To shift from mechanic-electrical equipment to automatic one.

+ To pay attention on production process to respond to changes of the market and meet requirements of the customers with diversified products.

- Organization of production under two methods of inventories:

+ Inventory-based production: To make products that meet in advance market demands and tastes. The distribution/ sale of such products will be made at the right time (on such occasions as opening ceremonies, festivals...).

+ Order/ contract-based production: To make products when orders/ contracts are signed, mainly processing contracts.

c. Important points in the production process: To focus on the company’s strengths, that is to produce shirts, sport suits and trousers. To conduct market analyses for defining high-ranking products, products to meet various demands of the customers, from the population, youths, women and children...

d. Plans on products:

- Designing: The business department is responsible for product designs depending on seasons, and diversification...

- Implementation: The Planning Department is responsible for organizing the implementation of production plans. The production system must be highly flexible and rapidly meet constant changes of product patterns and designs...

- Introduction and advertisement of products by means of communication, and media, the marketing section is responsible for bringing products to markets and customers through a system of shops and sale agencies...

e. Technology and Production processes:

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- To improve and update machines, equipment and technologies engaging in the production process; to invest in automatic production chains... in response to product characteristics.

f. Distribution of resources:

Basing on the above-said resources, attention has been paid by the Company to meet production requirements, such as capital, production capacity, engineers, machines and materials...

g. Plans on machines and equipment, and factories:

- An advantage of the Company is the supplier of equipment, joint venture with VTEC-TUNGSHING.

- The system of workshops and factories has been improved: a high-storey building central zone was completed; Zone B is in the 2nd phase of development; and in July 2001, started building a modern office building.

- To use to the maximum workshops and factories, improve the working environment for the employees.

PROJECT 2: MAKING PLANS TO INFILTRATE THE WORLD MARKET

1. Marketing:

a. ASEAN market:

This is a very large intermediary market and convenient for making transactions, because nearly all trade barriers have been removed. This market is also very close to Vietnam so that Vietnam can strengthen trade exchanges and organize goods-for-goods contracts.

b. Japanese market:

Since May 26, 1999 the two countries have provided one another MFN conditions, and we have good relations with Japan. The company’s strategies are to reduce production costs, improve product quality, provide customers with good services, maintain old customers and at the same time seek for new ones.

c. EU market:

This is a large market for Vietnam’s textile and garment products. EU has provided Vietnam with textile and garment quotas worthy of millions of USD. However, EU is also a very demanding market which requires high product quality. Thus, special attention should be paid on product quality when exporting Vietnam’s products to this market. The company’s strategy is to find reliable partners for promoting direct exports.

d. America market:

The USA and Canada are very potential markets, with export prices often higher than in other markets. They are also very diverse and competitive markets, with high demands for cotton products. Materials for making products to be exported to the US must be of high quality and

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imported from foreign countries. US partners/ customers often prefer definitively selling and buying contracts and on-time and large volume deliveries. In addition, these markets also require Vietnam to meet certain requirements on working conditions of the labour force and business morals (under SA 8000 and WRAP...).

The signing of the Vietnam - US Trade Agreement in July 2000 has created new opportunities for Vietnam’s textile and garments. Yet, the implementation of quotas in the coming time (early July 2003) will possibly restrict Vietnam’s exports to the US market.

e. Russian market:

This is a large market for garment products, and not very demanding for product quality. However, the strategy is direct export with flexible payment methods.

2. Making strategies and development plans for export-oriented products:

Through intermediary partners in Asia, Viet Tien products have indirectly infiltrated into the world market, from the buying of PIERRE CARDIN production - business copyright, the Company has gradually confirmed its position. However, to infiltrate into the world market with Viet Tien trademark is still a problem which needs proper measures.

- To renovate garment-related technologies is a key factor, a strong point for having new garment products.

- Products will be sold in countries where the Company is now entering through third partners.

- Garment products will be located/ sold to various markets and people...

- Product patterns are designed by two sources: One is from the company’s designing section, or from ideas of the company’s staffs. The company will hold fashion designing competition so that all people working in the company can engage in. This will stimulate their creativity. Second is the external source: the company will hire professional fashion designers, or collect new samples from domestic and foreign fashion competitions, or from other rivals, yet with careful selection.

- To consider/ estimate revenues, expenditures and profits to be gained before selling products in the new markets...

- Product development should be done in experiment, with small volume and careful supervision of cloth quality to meet product patterns/ designs...

- To sell, on a pilot base, products in the market to work out proper marketing activities and have proper adjustments in product sizes...

- If the company receives positive signs from the market, it will soon bring into mass production with world standard quality.

- The application of ISO 9002, SA 8000 and WRAP has created a reputation for the company in the world market. This is a “red passport” for the company to enter foreign markets and establish a reliable selling and buying system on the basis of elimination of tariff barriers in international trade.

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- Changes in products to meet market changes.

Market features Changes in product designing

Income of customers, their expenditures for clothes

Changes in volume, quality and price (less durable and lower price products in low income markets)

Cultural characteristics, levels of technical development

Simplified ways of using and ironing

Climate changes Changes in product designing to respond to weather changes, thicker cloths, warmer clothes in cold weather markets.

Available materials Changes in structure of materials

Differences in standards concerning environment, health safety of individual country

Checking of product quality, fibre constituents, dyeing colors

Demographic features of every country and value system

Changes in size, quantity of every product items.

Changes in marketing activities, trade labels.

Living cycles of products, fashion season... To lengthen or shorten product life

Labour costs Automatization or labour intensive use in production

Other conditions Re-designing or creating new products

DEVELOPMENT OF DOMESTIC MARKET

Along with its export market objectives, the Company is also aimed at developing the domestic market by carrying out various plans:

1. Plan to invest in school children (to be implemented since April 24, 2002)

School uniforms making is quite a potential market for the Company, as the number of school children is on the rise year by year.

To promote investments in school uniform making is a correct direction and a good way to catch up the opportunity. Viet Tien Company has conducted surveys on 13 schools in Hochiminh city and got sample sizes of 1,500 school children for analysis and brought about "Viet Tien" standard sizes.

The objective is to keep market share to supply school uniforms in the entire country with high technical quality and unified designs.

Price strategy: relatively flexible

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Viet Tien Company's school uniforms have advantages in the following aspects:

- Products are of stable cloth quality and high cotton content to create comfort for users, especially school children.

- Meeting standards of technical quality (pattern and sewing skills).

- Reasonable prices, especially for people of average income.

The Company realizes that if it can sign contracts with schools, the selling of its products will become easier, as school children will have to buy uniforms supplied by their schools. Thus, the Company's business sections have promoted marketing activities with schools and made transactions with customers, extended relations with schools not only in Hochiminh city and Hanoi, but also the nearly provinces, Southern regions and localities of the Central. Though the Company is now unable to cover the entire country, one of its target in the future is to reach provinces of the North.

2. Investments in fashions for kids and office fashions:

Together with its investments in school uniforms, the Company has officially entered the market of fashions for men and women, and for kids, with nearly 50 new patterns. A special feature is that all the products are made by modern technological chains, which are as high quality as those for export.

PROCESS TO WTO ACCESSION

Principles of the WTO on national treatment (NT) require countries to apply same regulations without any discriminations between domestic enterprises with foreign ones; to consider removing all kinds of State preferences provided to domestic and SOE enterprises.

Accessing the WTO, Vietnam must commit to reduce import tariffs imposed on many of the garment products, to 5-10%; and to apply custom pricing system, basing on value of imported goods for tax calculation, according to WTO regulations...

Opportunities for Vietnam when accessing the WTO: Vietnam will be able to:

- enjoy MFN conditions

- benefit from considerably reduced import tariffs

- enjoy WTO-based dispute settlement mechanism, in case disputes occur.

- enjoy GSP-based conditions, as Vietnam is a developing country.

- improve its trade and economic position. WTO is an organization of countries that occupy 90% of the total global trade volume.

Challenges: Vietnam must:

- open its market in many areas such as banking, insurance, telecommunication, consultancy...

- reduce import tariffs.

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- apply necessary policies concerning intellectual property rights.

- apply a mechanism of policies on the FDI sector

- continue to carry out reforms to meet WTO requirements.

- compete with strong economies right in the domestic market.

Along with the process of economic reforms to renovate the entire economy, an important task of which is overhauling of enterprises to enhance their efficiency and competitiveness in the context of international economic integration, especially in face of challenges created by the implementation of the Vietnam - US Trade Agreement for integration and for development, Viet Tien Company has been carrying out strategies to renovate its organizational structure and working mechanism aiming at the following objectives:

II. INVESTMENTS TO EXPAND PRODUCTION - BUSINESS:

The Company is promoting its speed of development investments, focusing on implementing key projects to enhance its production capacity to meet requirements of large-sized contracts and delivery time for exporting its products to the US market (SUPREMRE customer) and Japan (MITSUBISHI). The Company's current land areas at Zone A, Zone B and Zone C are unable to meet extremely large orders at the present time and in the future.

In such a situation, Viet Tien Company has made efforts to establish joint-ventures and cooperate with 10 other enterprises to develop a system of satellites so that it can meet production demands, mainly under the form of processing for such products as shirts, khaki trousers and pullovers of various types.

The Company has cooperated with Vinh Long province to build a new garment enterprise (Vinh Tien Garment) on a total area of 9000 square meters, with about 1000 workers, specializing in sport suits for the US markets. The turnover of this enterprise is expected to be 700,000 USD per year.

The Company has also cooperated, within 5 years, with Tien Thuan enterprise (in Ninh Thuan province) - a part of the restructuring program for national modernization and industrialization - so that it can take advantages of the enterprise's capacity (with 700 machines and equipment of various kinds, 1000 workers, specializing in making jackets, sport suits and other items depending on seasons, and a total turnover similar to that of Vinh Tien garment enterprise).

Investments to expand production through joint-ventures are as follows:

- Opening a garment workshop with 500 workers in Tien Tien Garment company, specializing in producing women clothes to be exported to Britain.

- Opening a garment workshop for making trousers of various kinds, jackets and shirts in Dong Tien Garment company, with 500 workers.

- The company is able to double the current capacity (over 2 million USD/ year) in Viet Hong Garment company (Ben Tre province) and Viet Tan Garment company (Cai Lay province).

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One of VINATEX's objectives is "to develop the garment industry to become one of the key export-oriented industries to meet increasing demands of the domestic market, create numerous jobs for society, enhancing the competitiveness and firmly integrate into the region and the world".

As a member of VINATEX, the Company has, together with VINATEX, invested 12 billion VND to build infrastructure for Binh An - An Duong textile and garment industrial zone - this is a development strategy of Vietnam's garment industry by 2010 in the direction of shifting garment production steps to provinces of comparative advantages, because of high labour costs, land shortage, expensive transportation costs... in the cities. In addition, urban workers are inclined to avoid working in the garment industry (production steps). In this textile and garment zone, the Company has had 4 ha of land area to focus its production activities in the following sectors for attracting domestic and foreign investments:

- A high-quality WASH workshop

- Shifting to Viet Phat mex-production workshop, further investments in machines and equipment for better treatment of input materials.

- Shifting to Viet Thuan button production workshop, upgrade machines and equipment to enhance production capacity and create designs to meet diverse demands of female fashions.

- Developing the production of PE.

- In cooperation with Italian and German companies to build a factory for electrical and power-saving equipment. Joint-venture with MEGAMAN (Britain - Germany) to produce high-quality electrical equipment for civil use (such as contacts, plugs...)

- Opening a garment workshop with over 1000 employees.

The company's investments in Binh An industrial zone is significant, aiming at saving capital for infrastructure development, solving the environment problems, strengthening specialization and cooperation among enterprises and overcoming the situation of inefficient and scattered investments. Our forefathers' saying, which is temporarily translated as "once you do business, you should have friends and join groups", is an important instruction for businessmen. Focusing investments in industrial zone is a way to attract attention of the customers, investors and at the same time to create a community-based business.

III. TRAINING ACTIVITIES FOR HUMAN RESOURCE DEVELOPMENT:

Along with investments for production investment, human resource training is a problem which needs attention of the managers. Why do we have to train? In its relation with personnel policy and, in a broader sense, with the company's business and development strategies, training is an essential factor and an important step in the process of human resource development for the company. Thus, training must be considered an required task, not an optional or for-fun task.

Basing on the company's demands for human resource development and competitiveness enhancement, the Company has paid constant attention on the work of human training, which is always based on the following formula:

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Training demand = Expected results - Current results

After defining training objectives, the Company has immediately worked out plans to hold training programs in the coming time, such as follows:

- To recruit about 60-70 persons with college-level qualifications for the Department of technology.

- To enhance the capacity of the staffs of the Business Department, concerning negotiation and contract-signing skills.

- Recruit persons of good marketing skills for the development of the distribution system and market expansion; increase the domestic market share to 15% of the total turnover.

- Promote the work of fashion designing, product pattern and styles by hiring foreign experts.

- Send experts and other staffs abroad for investigations and learning experiences, in such countries as Japan, Britain, the USA and Malaysia...

- Cooperate with customers having advanced technologies, for example MITSUBISHI, MARUBENI, SOUTH ISLAND..., and create conditions for the company's staffs to take part in technological transfer training courses.

- Maintaining college-level in-service training courses on economic management for 57 key persons of the Company.

- Have regular contacts with 3 colleges, namely Technical - Economic College, Thu Duc Teachers' Training College and Polytechnic University; Provide scholarships for attracting talented students into the Company.

- The Company's labour force is constantly changing because of the fierce competition, so the maintenance of training and re-training courses are very important to create a constant source of labour supply.

Along with activities to improve the qualifications and skills of the company's staffs, attention has also been paid to improve their cultural life, for a reason that to build a cultural environment is to contribute to the success of the movement: "all people are unite to build a cultural life" in our country at the present time. This is also an important task for the company to gain customers' confidence and respect.

IV. BUILDING AND PROTECTING THE COMPANY'S TRADEMARK

Building and protecting the Company's trademark is a "to be or not to be" problem of the Company, especially in the current context of strong economic integration.

The Company's trademark will continue to be Viet Tien, as it reflects all criteria such as development policy, human policy, enterprise culture, technology, quality and reliability, tradition, social relation which have been created and preserved by the Company for years.

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Building the Company's trademark does not only mean to advertise the company's products or the name of the company, but the Company has had a long-term comprehensive development strategy, a start of which is to have products that meet requirements of the customers. From this, favorable conditions have been created for the company to further develop.

Building the Company's name is like building a human character, creating a desire in customers to hope, listen, see, feel and believe in the name "Viet Tien", through its logo, trade labels and icon for gaining customers' best impressions.

In face with opportunities and challenges, the Company has promoted its investments for building and developing its trademark, which is considered a task or primary priority. To this end, the Company has registered its name in potential markets such as the USA, Canada. Through a Japanese trade promotion organization, the Company has built its name in 6 ASEAN countries, namely, Singapore, Thailand, the Philippines, Indonesia, Malaysia and Brunei. At the same time, the Company continued to register its name in European countries, work with consulting organizations for working out efficient/ feasible strategies and action plans; cooperate with Hanoi Lawyers Association to fight against imitation goods.

The Company has given further investments in the building of its trademark, consistently and unanimously, practicing the work of new label registration. A long-term vision of the Company's leaders is to develop its name in the context of s strong competition.

IV. REDUCTION OF COSTS:

Together with opportunities and advantages of a potential labour force, the implementation of AFTA will create a number of difficulties for the Company, the worthiest of which is product costs. In order to be able to compete in a trade liberalization environment, the Company has worked out/ taken a number of measures, reconsidered its operational process and items of expenditures with a view to reducing production costs for the purpose of competition in the world markets. One of the most efficient measures is to seek for sources of materials supply from ASEAN countries so that the Company can enjoy preferences, minimizing imports from non-regional countries. At the same time, the Company has had strict supervisions on items/ factors relating to product prices, such as materials and supplies, electricity and water..., applied advanced technologies, invested in modern machines and equipment and paid attention to improve workers' skills, increased by 10-15% of the labour productivity, enhanced management capacity by using computers with the most advanced management programs in the world, controlled risks in international payment...

VI. ORGANIZATION OF DISTRIBUTION CHANNELS

Besides foreign markets, the Company has also paid great attention to the domestic market, considered it a potential and profit-making market, and an opportunity for the Company. An important task is to promote investments and choose distribution channels so that the Company's products can reach domestic customers, meeting their demands and income, suitable with Vietnam's environment and climate.

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The Company has selected a series of distribution agencies in the whole country, with the following three channels:

- Independent shops

- System of agents (an increase of about 100 agents will be made within 5 years, 20 agents per year, on average).

- System of supermarkets and trade centers.

The Company has also paid attention to promote marketing activities and advertisements of its high-quality products in trade centers, fashion shows and trade fairs...

VII. ORGANIZATION OF WORKING APPARATUS

One of the measures for enhancing enterprise efficiency is to renovate the management work in the spirit of Decree 61/2002/ND-CP dated June 19, 2002 on the shifting of SOEs to joint-stock companies. For the purpose of corporate consolidation, the establishment of parent company - affiliate company is an inevitable task of Viet Tien Garment Company. First and foremost, equitization will be made in Zone B - the Company will hold 45% of the total dominant shares. In addition, the Company will enhance its investment capital in joint-ventures, increase its capital contribution ratio from 45% to 51% so that it can dominate production - business activities. Equitization will also be made right at the beginning of building integrated enterprises in various provinces.

As for the Company itself, reorganization of the Company's two central departments - Planning Department and Business Department - will be made when the Company gains FOB-based contracts that can use 50% of its total production capacity and 70% of its main production revenue. This is aimed at having a consistent management of the Company's production-business network.

Attention will also be paid by the Company to build an information system - a e-commerce corridor- first and foremost a modern information management system for the purpose of decision making. A computerized information center will be built for studying, analyzing information and data, applying modern and advanced software programs to meet requirements of international economic integration.

VIII. THE COMPANY'S STRATEGIES:

1. The current strategy:

- On market: orientations for developing the US, EU, Japanese and Taiwanese markets, and the domestic market.

- On products: specializing in producing high-quality products, such as trousers, shirts, pullovers, sport suits...

- On labour: use local labour, hire foreign experts for designing of products and labels.

- Strengthen cooperation with foreign companies in ASEAN countries.

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2. Competitive advantages of the Company:

- Trademark

- Technology

- Skills

- Price

3. Market development trends:

- Develop export-oriented products, remove intermediary steps.

- Develop high-quality products

- Apply modern and advanced technologies

4. Investment strategy:

- Factories that supply garment-related materials and supplies: threads, button, goon, mex, WASH workshop... to create favorable conditions for garment companies to enhance their productivity...

- Develop other industries concerning electrical equipment and tools serving the garment industry...

IX. MEASURES:

- Merge with other enterprises for having larger-sized ones following the model of parent company - affiliate company;

- Strengthen investments to renovate technologies

- Promote the work of labour training.

- Cooperate, create jointventures with other partners

- Promote marketing activities, advertisement

- Enhance access to information

- Make changes in product designs/ patterns for having characterized products, as compared with those of other competitors.

- Cooperate with the Lawyers Association and market management teams, Office of intellectual property protection, police and other authorized organs to fight against false and imitation goods.

X. RECOMMENDATIONS

For the part of the Government:

1. Actively and rapidly to participate into the process of liberalization of all business sectors.

2. Speed up the process of SOE equitization

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3. Enforce the implementation of the Competition Law

4. Invest in training and vocational training programs for improving labour skills.

5. Improve the quality of transport infrastructure.

6. Improve the quality of information and communication infrastructure.

7. Reduce telecommunication and internet charges

8. Promote the development of a financial market

9. Build a network of information supply and analysis to support enterprises.

10. Enhance the creditability of the power supply network

11. Improve the quality of the banking system

12. Promote financial supports to encourage cooperation between universities/ research institutions with enterprise sector.

13. Strengthen the enforcement of laws

14. Apply measures for anti-corruption and red tape practices

15. Apply open and flexible policies and measures concerning tax preferences and intellectual property rights.

For the part of donors, including the World Bank and World Bank Institute:

- Consolidate and reorganize banks to create a system of modern and healthy commercial banks in terms of capital, technologies and efficiency in their administration and management.

- Strengthen investigation and supervision work.

CONCLUSION

Today, in the market economy, to work out steady steps for the development of a company is a task of primary importance for the company leaders. Besides the processes I've said above, many other large policies and measures have been taken to help the Company achieve its objectives and enhance its efficiency.

For the purpose of economic development, not only are Vietnam and other countries preparing for participating into AFTA and for WTO accession but many enterprises are engaging into international trade as well. The competition has become fiercer among enterprises inside and outside the country. This is really a problem for Vietnamese enterprises. Our task is to create products of good quality, competitive price and to meet requirements of delivery time. This requires an enterprise to timely catch information, be able to make forecasts, have a good sense of feeling, and renovate the model of production management and technologies... in a systematic way with State policy supports...

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The building of schedules and strategies in any sector is a matter of setting out correct questions on the Company's objectives, on its products and services, on customers, situation and capacity of the company. For a success implementation of the set schedules and strategies, it is necessary for the Company to disseminate these schedules and strategies to its workers. Make sure that the company's plans will contribute and reflect its strategies and objectives the company is pursuing; these plans will be put under careful consideration and supervision; and the Company's organization structure must be consistent with these plans and programs.

The integration process requires us to make constant efforts to improve and achieve these objectives. Only by doing so, can we take advantage of the opportunities created by the integration process and at the same time overcome challenges, "create strengths and drives for national socio-economic development and bring our country to rapidly, strongly and firmly advance forward in the XXI century", as stressed by the Political Bureau's Resolution on international economic integration.