ON THE EVE OF DEPUTY PRIME MINISTER DZUNG'S VISIT: VINATEX HAS HIGH HOPES FOR THE U.S. MARKET

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 UNCLASSIFIED PAGE 02 HO CHI 01345 291026Z 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 UNCLASSIFIED PAGE 03 HO CHI 01345 291026Z 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 UNCLASSIFIED PAGE 04 HO CHI 01345 291026Z - 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