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Vinatec is a leading garment group in Vietnam. May Duc Giang, otherwise known as DUGARCO, is the representative for Vinatec in the north of the country. DUGARCO has recently been transformed from a national enterprise into a stock corporation with 55% of its outstanding shares traded publicly in the market. Duong Van Thao, Deputy General Director DUGARCO, believes that "quality and on-time delivery are the basis for business management," and that "trusting relationships with customers are important". JUKI asked Van Thao about the future of his company.
The company is located in Hanoi and 55% of the company's shares are publicly traded.
Ironing on the sleeve cuffs.
The latest sewing machine models are being introduced. The LBH-1790 Computer-controlled, high-speed, lockstitch buttonholing machine
"Quality and productivity are both high. An excellent machine"! Duong Van Thao recommends the MEB-3200 Computer-controlled, eyelet buttonholing machine with multi-cutting device.
The APW-196N Automatic pocket welting machine.
The group employs a workforce of 8,600.
May Duc Giang is one of Vietnam's major garment industries, owned in part by Vinatex (Vietnam National Textile & Garment Corporation). It operates in the north of Vietnam as a representative corporation for Vinatex and for Viettien in Ho Chi Minh (HCMC). "DUGARCO", the abbreviation for the company name, is used and recognized throughout the country.
The company was established in 1989. With 300 employees and 200 sewing machines, it began as only a small part of a group focused on textile business. Later, the company grew to become one of Vietnam's leading earners of foreign currency. Investment incentive plans offered by the government were a boon for DUGARCO's business.
Growth accelerated from 1993, culminating in 1997 with the construction of six factories. These are the production bases backing up the prosperity of the company today. The six sewing factories are located on a 4.5 ha site, together with a cleaning factory, an embroidery factory, and a carton box factory for export. On top of that, DUGARCO has four joint ventures:
- Established in 1996, Bac Ninh
- Established in 1997, Thai Nguyen
- Established in 1997, Thanh Hoa
- Established in 1999, Thai Binh
The company has grown to become a major group employing 8,600 people altogether, with 3,600 in the company and 5,000 in the joint venture companies.
Every factory strives to manufacture high-quality products. DUGARCO alone employs 250 university graduates with bachelor's and master's degrees. Machines are introduced from the USA, Germany, and Japan to meet the requirements of domestic and overseas customers.
DUGARCO was founded as a national enterprise and went partly public as a joint stock company in 2006.
- 45%...VINATEC group
Ninety percent of the products are exported to the USA and Europe.
Protection of quality, the working environment, and employees is important.
When the company was founded, a major product was blousons. As the factory expanded, it began producing other items such as men's shirts (from 1994), and slacks and cotton pants (from 2000). Now the factory produces a wide range of products, including jeans, work uniforms, overcoat, shorts, and skirts. Annual production is high:
- Blousons (men's and women's)
3.5 million pieces
- Shirts (men's)
6 million pieces
0.8 million pieces
Almost 100% of the products are exported―50% to the USA, 40% to Europe, and 10% to other countries. Only 2~3% are sold to the domestic market.
"One reason we sell so little to the domestic market is the government's policy to encourage export," explains Duong Van Thao, vice president of the company. "Another reason is the material supply. We import most of the material from China. The high cost of importing pushes our prices to prohibitive levels for the domestic market. That's a disadvantage for domestic business".
A trusting relationships with the customer is a decisive factor for growth.
"Immediate action when a problem arises".
Korea and the Middle East are included among export destinations. Exports to Japan, meanwhile, account for 2~3% of the annual production. Japanese buyers are extremely demanding about quality. DUGARCO obtained ISO9001 and ISO14000 certifications at an early stage, and it uses Japanese-made machines to ensure high-quality production. Now that the Japanese are convinced of the quality of its products, the company is strengthening business ties with Itochu in the hopes of increasing sales to the Japanese market. In the domestic market, DUGARCO is known for the high-grade of its products.
"As an exporter," says Van Thao, "we want to maintain balanced sales to multiple countries rather than focusing on one country. Japan is an important target in that respect. Each country has different requirements. Japanese buyers demand quality, while American and European buyers tend to check to details on safety, working environments, human rights, compensation to employees, etc. They want to be sure that we have ISO certification, that our wages aren't too low, that our employees are getting holidays, that our factories are well lit, and so on. And once we pass those fist hurdles, our customers want to know if we can keep the delivery dates we promise. All of these points are key for continuation of business. If there are any problems we have to take action immediately."
Recruit and train operators before starting the production line.
Shorter working hours help DUGARCO cope with recruiting difficulties.
Thanks to countermeasures of this type, some customers even help with our financing to construct new factories. With better and newer factories we are better able to fill the growing number of orders they place.
A plan is now underway to construct four factories on a 500 ha site in the suburbs of Hanoi, for the production of jackets, shirts, knitwear, and women's wear.
Two-thousand people will have to be recruited to work in the new factories. This will be a challenge, now that hiring is becoming so difficult in Hanoi.
"Operators will be recruited in October and trained through the next year", says Van Thao.
Though difficult to find people in Hanoi, many people from the countryside apply for jobs. DUGARCO is relatively popular in this area, so it can still recruit people. But they certainly have to take steps to keep the recruitment channels open for human resources.
As people become scarcer, salaries are rising. The average salary now is about 100 dollars per month. DUGARCO also must shorten the working hours as much as possible, to keep the employees happy.
"Employees can work a maximum of two hours of overtime per day. The piece rate seems appropriate for Vietnamese operators, since it allows them to work at their own pace", says Van Thao.
The adjustments of the workload among production lines makes this comfortable working pace possible. This may be a Vietnam style of factory management.