The wave of the 2008 financial crisis and the mass influx of Thai and Chinese brands, most recently Zara, H&M,… has crippled FOCI. Along with the gaps in business administration and human resources after a period of overheating, the FOCI owner Ho The Son had to sell his own brand, narrowly escaping to save his assets.
In a recent talk with TheLEADER, Ho The Son frankly gave lessons to himself and also the whole Vietnamese fashion industry: "FOCI used to have 100 stores, whose sales reached hundreds of billions VND".
At that time, some investment funds wanted to get involved, paying US$8 million. However, when a series of foreign brands, which followed the low-cost strategy, covered all segments from low, middle to high-end with a negligible gap in price, and the business location lease expense significantly surged, FOCI began to struggle even to pay for the lease.
Son emphasised the biggest difficulties were administration and human resources. He said, "Being a young company, we assigned all management work for each agent. They tightly manage the human resources, bringing good profits and enthusiastically join with me for decades.
Suddenly, they had to manage dozens of stores at the same time. The hard time began, employees started to steal money and leave. I had to hire other people; and the vicious circle began. The pain was real."
FOCI represents many Vietnamese enterprises which enjoy overheating without sufficient foundation, risk readiness and experience in any crises. Despite any efforts in hoarding and risk avoiding, the weakness in management for just one to two years will take all the accumulation in dozens of years.
Looking at the Vietnam fashion market, what do you think about the absence of brands for young people when the room is shrinking, the sales are declining and some brands even collapsed?
Ho The Son: The Vietnam fashion market, or more specifically the Vietnamese fashion brands, are currently plummeting. In the past decade, 50% of famous fashion brands have collapsed while the others are struggling to survive.
There are innumerable causes, but the main ones are as follows. First, it is the overall weakness of the local firms, partly in themselves, partly because of their unfavourable business environment, such as high cost of capital and insufficient support from the States.
Second, the main stages (such as raw materials and the ability to design) are going backwards compared to the world.
Third, the cost of business location in Vietnam is four times more than one of 15 years ago.
In your opinion, are the influx of the two brands Zara and H&M with competitive prices and various models, along with Chinese goods and cheap Thai goods, a dire threat to the majority of Vietnamese fashion brands?
Ho The Son: It is true that a number of brands will be the direct competitors of domestic brands, are they target at the same customers with the equal or slightly higher prices.
Anyway, they are international brands with a lot of strength to support. They even combat some long-standing competitors, so we cannot blame customers for having the right to choose.
Looking at the market, to your view, what brand can still stand? What is their strength?
Ho The Son: They are generally weak, so the possibility to encounter difficulties again is obvious. However, I still believe in Canifa. They have good management procedures and strong resources; they have learned the lessons from their senior to avoid the risks.
To welcome the wave of integration in our own country, what brands should do? What is the weakest point that business people should pay attention to?
Ho The Son: They should be reorganized. Although we have the ideas, the management capacity and the warm welcome to new fashion trends, opening one or two sole shops is OK, but operating a whole chain is quite difficult in this period.
Regarding the administration, lease expense for business locations, business methods,... are they big challenges of Vietnamese brands compared to the world brands?
Ho The Son: Lots of world brands have appeared in Vietnam; the strengths and weeknesses are clearly visible. Now, the Vietnamese brands should find an appropriate way to develop.
International and domestic brands in every country has its market share, so after a shock of integration, we should not give up. There are still many opportunities for Vietnamese brands.
So what niche market can we master in our country, and create a difference for high fashion and the fashion for individuals?
Ho The Son: The niche market is for explorers. I myself will wait for the opportunity and the favorable time.
Thank you!
