Vietnamese consumer market is growing, and stiff competition could motivate domestic firms to change their production methods and business practices in order to stay in business.Since the early 2000s, a series of world famous fashion houses targeting the middle-income group has entered Vietnam, including Spain’s Mango, UK’s Oasis and US’s GAP. Sweden’s Hennes & Mauritz (H&M) and Spain’s fashion giant Zara are among the latest entrants in the last few months.

The competitive pressure exerted on domestic fashion firms by the increasing presence of world renowned brands is unavoidable, but it could have positive impacts in the long run, according to experts. Going by anticipation and crowds that these brands have generated in their opening days, it is evident that they are meeting a demand, and domestic firms have no choice but to deal with strong competition.

Dang PhÆ°Æ¡ng Dung, Vice Chairwoman, Secretary General at Vietnam Textile and Apparel Association (VITAS), said that the emergence of more international brands would compel domestic companies to diversify their products in all market segments.

The foreign brands are meeting a real demand, according to Samir Dixit, Managing Director, Brand Finance Asia Pacific.

The foreign brands’ taking over the domestic market is simply inescapable due to the ever increasing gap between consumers’ demand and producers’ supply in terms of volume, quality and aesthetics.

As the foreign brands enter Vietnam, local businesses must be more aware of their own product quality and appropriately change their investment orientations.

Most domestic garment producers have focused mainly on exports, chiefly taking on outsourced production. They have not been interested in the huge potential of the domestic market; therefore, despite being one of the top textile and garment exporters in the world, the country has yet to gain much added value.

With textile and garment firms tending to specialize in production but not in design, branding and distribution, they will have to adapt fast to be able to compete with the newcomers.

The success of grand openings by H&M and Zara can be attributed to good marketing and advertising, but it is undeniable that “fast fashion” (where a new trend or design is quickly produced at relatively cheap prices) is now an established customer favourite in Vietnam.

Vietnam with its young population and rapid improvement in living standards has become an attractive and fertile territory for international fashion brands.

These firms produce wide ranges of clothing for different market segments and sell them at an average price due to diminishing production costs that result from mass production.

In the fashion industry, foreign companies tower over their domestic counterparts in terms of capital, professionalism, marketing and customer service, and most importantly, online selling.

H&M brand has spent two years researching the Vietnamese market, identifying key growth factors like a fast-paced economy, an exponential number of fashion-conscious consumers with distinctive tastes, and a surging density of shopping malls.

Domestic enterprises have begun placing more emphasis on designing and offering more diverse products of higher quality, and it is even said that Vietnamese enterprises may enjoy some home turf advantage, which enables a cultural understanding of customer habits.