While China still leads as the No.1 sourcing destination for the majority of fashion companies, Vietnam is the rising star. An FN Platform today focused on the reasons why the country is one to watch in sourcing.

Julie Hughes, president of the U.S. Fashion Industry Association led a discussion with speakers Steve DiBlasi, VP global sourcing at Lanier Clothes; Ron Klein, director retail & consumer management at PWC; Avedis Seferian, president & CEO of World Responsible Accredited Production; and Chris Walker, an apparel production advisor.

A reason for the country’s rapid growth in export manufacturing is based on its speed to market capabilities and focus on compliance.

Vietnam takes social compliance seriously, both on a factory and societal level, according to Seferian. “In terms of understanding good legal structure and law-enabling compliance, Vietnam is reliable and consistent,” he continued.

He also added that regardless of President Donald Trump’s Trans-Pacific Partnership (TPP) trade deal withdrawal, Vietnam will still remain a leading destination, and there’s money to be made.

Other factors adding to Vietnam’s appeal include its English-speaking management and machinery investments. The speakers also noted that because factories are moving from cities to rural areas, wages and employee turned are in turn being reduced.

The Nikkei Manufacturing Purchasing Managers’ Index (PMI) reported by IHS Markit fell to 51.7 in July from 52.5 in June. The result remains above the critical 50-point threshold that separates expansion from contraction, but signals a slowdown in the pace of expansion in the manufacturing sector.

Output growth eased in July as new orders increased at a slower rate. As a result, manufacturers’ purchasing activity rose at a more subdued pace. Nevertheless, backlogs of work picked up, recording the fastest rise in more than six years, and depleted stocks of finished goods as inventories were used to meet new orders. Consequently, firms continued to hire more workers in July, although the speed of job creation was relatively stable from the previous month. Moreover, input cost inflation moderated to the weakest rate in over a year, easing firms’ cost burdens and prompting them to reduce their output prices. Business sentiment rose as more than half of the survey respondents predicted an increase in output going forward owing to expected higher demand and planned expansions.

FocusEconomics Consensus Forecast panelists see investment rising 8.3% in 2017, which is unchanged from last month’s forecast. For 2018, the panel expects investment to grow 8.0%.

Source: FN Platform , FocusEconomics