US embassy cable - 01HOCHIMINHCITY1345

UNCLAS HO CHI MINH CITY 001345 
 
SIPDIS 
 
STATE FOR EAP/BCLTV (THORIN/LANGLAND); PASS TO USTR FOR 
ELENA BRYAN AND CAROYL MILLER 
USDOC FOR 3132/OIO/EAP/KELLEHER 
USDOC FOR 1431/MAC/AP/HPPHO 
 
E.O. 12958: N/A 
TAGS: ETRD, KTEX, PREL, VM, BTA 
SUBJECT: ON THE EVE OF DEPUTY PRIME MINISTER DZUNG'S VISIT: VINATEX HAS HIGH HOPES FOR THE U.S. MARKET 
 
 
1.  SUMMARY:  THE VIETNAM TEXTILE INDUSTRY'S PUSH TO 
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ENTER THE U.S. MARKET HAS ALREADY BEGUN, ACCORDING TO 
MR. LE QUOC AN, HEAD OF VIETNAM'S STATE-OWNED TEXTILE 
ENTERPRISES (VINATEX), AND CHAIRMAN OF THE NATIONAL 
TEXTILE MANUFACTURERS' ASSOCIATION (VITAS).  AN WILL 
ACCOMPANY DEPUTY PRIME MINISTER DZUNG'S OFFICIAL 
DELEGATION TO THE U.S. NEXT MONTH.  DURING HIS TIME 
THERE, AN WILL FORMALLY OPEN A VINATEX OFFICE IN NEW 
YORK CITY, AS WELL AS SCOUT LOCATIONS FOR A VITAS 
REPRESENTATIVE OFFICE IN LOS ANGELES.  HE PLANS CALLS 
ON SEVERAL AMERICAN CLOTHING RETAILERS, AND SAID HIS 
"DREAM TRIP" WOULD BE ONE THAT RESULTED IN CONTRACTS 
FOR VINATEX.  END SUMMARY. 
 
2.  ON NOVEMBER 23, THE VIETNAM TEXTILE AND APPAREL 
ASSOCIATION (VITAS) AND ITS CHAIRMAN, MR. LE QUOC AN, 
HOSTED A DINNER TO INTRODUCE THE TEXTILE INDUSTRY, 
WHICH HAS HIGH EXPECTATIONS FOR THE U.S. MARKET.  AN 
ALSO HEADS VINATEX, A STATE-OWNED CORPORATION 
CONTROLLING 60 TEXTILE AND GARMENT COMPANIES IN WHICH 
THE GVN HOLDS A MAJORITY STAKE. 
 
3.  AN WILL TRAVEL TO THE U.S. AS PART OF THE OFFICIAL 
BUSINESS DELEGATION ACCOMPANYING DEPUTY PM DZUNG IN 
DECEMBER, FOR THE EXCHANGE OF LETTERS IMPLEMENTING THE 
BILATERAL TRADE AGREEMENT (BTA).  AN WANTS THE VISIT TO 
BE MUCH MORE THAN SYMBOLIC.  WHILE IN THE U.S., HE WILL 
OFFICIALLY OPEN A VINATEX REPRESENTATIVE OFFICE 
(ALREADY UP AND RUNNING) IN NEW YORK CITY'S GARMENT 
DISTRICT.  IN LOS ANGELES, HE WILL SCOUT LOCATIONS TO 
ESTABLISH A REPRESENTATIVE OFFICE FOR VITAS.  AN WILL 
ALSO MEET WITH U.S. CLOTHING RETAILERS -- INCLUDING THE 
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GAP, THE LIMITED, AND SEARS. THOUGH HE CHARACTERIZED 
THE CALLS AS INTRODUCTORY, HE HOPES VINATEX CAN WALK 
AWAY WITH CONTRACTS FROM THIS TRIP. 
AN SAID VINATEX EVENTUALLY WANTS TO COMPETE IN THE 
AMERICAN MARKET WITH HIGH-END PRODUCTS, FOR NOW THEY 
WILL FOCUS ON MID-RANGE, READY-TO-WEAR APPAREL. 
 
4.  VINATEX AND THE GVN EXPECT THE GARMENT INDUSTRY TO 
BENEFIT QUICKLY FROM THE BTA, WITH TARIFFS FALLING TO 
AS LOW AS 5 TO 6 PERCENT FROM THE CURRENT 45 TO 50 
PERCENT.  LOCAL NEWS REPORTS STATE THAT THE GVN EXPECTS 
GARMENT EXPORTS TO THE U.S. TO REACH US$200 MILLION IN 
2002.  THIS YEAR THEY SHOULD REACH US$50 MILLION, WITH 
US$17 MILLION COMING FROM VINATEX ALONE. 
 
5.  ALSO AT THE DINNER WAS POPULAR FASHION DESIGNER MS. 
MINH HANH, WHO STARTED WITH VINATEX, BUT NOW OPERATES 
HER OWN BOUTIQUE AND WORKSHOP. SHE JOKINGLY - BUT 
POINTEDLY - REMARKED THAT STATE ENTERPRISES DO "NOT PAY 
LIVING WAGES," WHICH WAS WHY SHE BRANCHED OUT INTO 
PRIVATE ENTERPRISE.  PLUS, SHE WANTED MORE QUALITY 
CONTROL OVER HER DESIGNS.  SHE STILL DOES SOME WORK FOR 
VINATEX, BUT KEEPS THE MORE SOPHISTICATED FASHIONS FOR 
HER OTHER CLIENTS.  MS. SAO KIM, DEPUTY EDITOR FOR 
"MOT" FASHION MAGAZINE, AGREED WITH MINH HANH'S 
CRITICISMS OF QUALITY CONTROL AND LOW SALARIES. 
 
6.  COMMENT:  VIETNAM'S TEXTILE INDUSTRY -- 
CONCENTRATED PRIMARILY IN THE SOUTH -- HAS MOVED 
AGGRESSIVELY TO PREPARE FOR BTA IMPLEMENTATION. VINATEX 
AND OTHER LOCAL COMPANIES ARE LOOKING FOR NEW BUSINESS 
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- AND FAST.  AN REPEATEDLY STRESSED THAT AS PART OF THE 
VIETNAMESE DELEGATION, HE WOULD "REPRESENT ALL 
GARMENT/TEXTILE MANUFACTURERS, NOT JUST THE STATE-OWNED 
ENTERPRISES."  IF - AND IT IS A BIG IF - THE VIETNAMESE 
GARMENT INDUSTRY CAN MEET THE QUALITY EXPECTATIONS OF 
AMERICAN BUYERS, THEN IT DOES APPEAR READY TO TAKE OFF 
UNDER THE BTA.  END COMMENT.   YAMAUCHI 
 
                       UNCLASSIFIED