4.0 Revolution

Significant challenges

EVFTA (Eu-Vietnam Free Trade Area) is an opportunity for commodities, especially major exported goods such as garment, shoes, etc. EU is the second largest textile export market of Vietnam. Thanks to EVFTA, Vietnam can avoid 9.6% tax on this sector and will enjoy upcoming 7-year timeline to get to 0. Leaders of many enterprises are confident that EVFTA bring the best ever opportunities for the export sector of Vietnam to EU. Although we are still restricted about the origins of the raw materials for the production and finishing in Vietnam, overall, the future to conquer EU market is bright. Challenges for Vietnamese textile companies are huge. To make use of the opportunities and incentives from EVFTA, many companies have been positively changing themselves. On this topic, Vietnam – US Magazine has an interview with Mr. Nguyen Trong Phi, Chairman of Giovanni Group.

JRN.: Mr. Phi, with in-depth experience in the garment and leather industry, what do you think of the impacts of EVFTA on Vietnam fashion industry?
Mr. Nguyen Trong Phi: I believe EVFTA really hits the weakness of Vietnam garment industry since raw materials have never been our strength. If everything remains the same, EVFTA will benefit EU enterprises more than what Vietnamese companies can make use of such Agreement, although we have much cheaper labour cost advantages.

There is a flexibility term on the origin as follows: if Vietnam cannot supply enough garment raw materials, we can import from a third country with FTA with EU, which are Korea and Japan in this case. However, it threatens the activeness of local production, and the fabrics from these two countries are not cheap, causing lower competitiveness for Vietnam garments.

Nonetheless, in the high-end segment, Giovanni has knowledge and experience of the local market that is not easy for most of foreign brands. Garments from EU to Vietnam will face up with difficulties in the local market, for example, in terms of the fitness with the shape of the Vietnamese or the humid weather endurance for the leather, steel, glue, etc. R&D to overcome such difficulties takes time while that has been done for Giovanni for more than 10 years.

Giovanni Group has been active in the garment and shoes market for more than 13 years, what are the plans of Giovanni to make use of EVFTA?
Mr. Nguyen Trong Phi: Giovanni Group imports many raw materials from EU, especially from the Western Europe. We have to import fabrics, leather from Italy; cotton threads and glue from Germany at high price, but we have no choice since we have been aiming at the best high-end, comparable products to Vietnamese clients.

When EVFTA comes into effect, Giovanni will benefit from the tax exemptions with raw material imports from EU, most of which from Italy. Since then, the imports from EU will get more simple and convenient. With the import tax savings from fabric or leather imports, Giovanni can either reduce production cost to provide more affordable products to Vietnamese customers, or upgrade more superior quality garments.

For many other enterprises, EVFTA also creates opportunities for the business model transition, from OEM to ODM and OBM as most optimal. Giovanni has better comparative advantages: from the beginning, we planned to do OBM, so we will make use of EVFTA to export our products to EU.

According to you, what factors can ‘drive’ local brands to the global market?

Mr. Nguyen Trong Phi: After more than 30 years of innovation and changes, Vietnam garment industry has learnt much out of the OEM process for large global brands to accumulate good production base. However, most Vietnamese enterprises still follow the traditional pathway, which is how to make products fast and cheaply (2.0 industrialization), or how to reduce labour, optimize the expenses, and apply automation for mass production (3.0 industrialization). There are still restrictions on how to apply 4.0 achievements for high-end garment segment. Therefore, the technology revolution creates opportunities for Vietnam fashion industry to speed up and show up in the global map.

With 13 years of development, Giovanni till now has positioned its high-end brand a favored brand in Vietnam. With the active participation in the industry’s value chain, from creating, designing to accessory supplying, producing and distributing, Giovanni has confirmed its strength in designing and producing. All Giovanni products have touched the satisfaction of Vietnamese fashion lovers.

Currently, Giovanni has prestige brands, participates in global supply chain, specializes in product development and possessing with its own factory. At this moment, Giovanni has more than 50 stores in 15 cities and provinces all over the country. Giovanni has more than 60 product lines including products and accessories from medium, high to luxury segments, serving various customers. However, until now, we have not yet stepped in Milan, Paris and Tokyo markets. How to provide our products to global citizens? This question is still one of our concerns, how to bring Giovanni products abroad without a store. 

Addidas and Nike can make individual shoes to meet the needs of customers from anywhere. They develop 3D printing technology. Customers just need to enter a reseller, put their foot in a device and their footprint will be available, customers then access to the brand website, design their own shoes with their choice of colors and materials, they even can change some details on the masterpiece. On the basis of the technology, the data will be transferred to Addidas center in Germany before reaching the factory 4.0, producing personalized shoes for customers, the shoes then directly sent to customers in which the distribution system is not needed.

With the 4.0 story of Addidas and Nike, the Vietnamese leather and footwear also can do the same. Giovanni really wants a breakthrough which helps to build a digital platform for the whole enterprises and for the design sector and accessory management in particular. Through branding and advertising, Giovanni wants to promote its image, brands and products to foreign customers.

I wish that Giovanni can receive orders from all over the world and Giovanni can meet those demands on the digital platform.

By which mean, Mr. Phi?
Mr. Nguyen Trong Phi: Giovanni is always aware that, in tandem with the creation and manipulation to create high-end and luxury fashion products, the application of modern technology will be Giovanni’s main direction in the new era.

The meeting between the Giovanni brand and 5G technology platform is considered the starting combination for boldness, pioneering and new vision in the fast development of the era 4.0. In 2020, the manufacturing model of Giovanni Group will be upgraded to integrate the modern 4.0 technology. With the feature of the era 4.0 in which, people work in harmony with machines, the building of the factory 4.0 to produce high-end products will bring about the products which both preserve the traditional values of luxury fashion and merge the advantages of the 4.0 era.

The breakthrough of Giovanni can be counted at applying the modern technology of Industry 4.0 into building enterprise’s digital platform on 8th February 2020. Giovanni Group officially signed strategic cooperation agreement with CSE Singapore, a technology corporation with leading experiences and strengths on Blockchain. By signing with CSE, Giovanni Group is confident to be the first high-end fashion company in Vietnam changing from traditional business model into modern consumer model, concentrating on modern technology with high flexibility in personalizing customer needs.

In many Western countries, the Industry 4.0 appreciates high-tech application into products. High-end and luxury brands rapidly applying new technology into product development. At the simple stage, virtual reality technology which helps customers try new costumes without necessary to change clothes or tele-produce single product through scanners and 3D technology also brings fashion industry an outstanding step in retail business, especially in improving customer experience. 

Recently, Artificial Intelligence integrated in advertising screens helps fashion brands collect data, analyze to adapt digital contents with each customer to create the utmost personalizing level in marketing and communication of the fashion industry.

With the objective of becoming the high-end brand, leading in 4.0 fashion trend in Vietnam, in 2020, Giovanni Group continues applying modern technology achievements to introduce many products with modern technology, new materials and eco-friendliness. With the effort and dare to innovate, dare to put into our business models the values of high-level science and technology, Giovanni Group is the first fashion corporation in Vietnam aims at mastering the game in an increasingly competitive market. This Vietnamese high-end brand will go further in the domestic market and conquer global markets.

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