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Characteristics of Vietnamese Garment Enterprises with Research Sampling


previous product. Specifically, the manufacturing cost items in the product cost are estimated as follows:







Main material cost





direct


11%



Direct material costs

8%




45%

next

Direct labor costs





next

26%




Financial costs and expenses



10%


depreciation fee





Other costs


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Characteristics of Vietnamese Garment Enterprises with Research Sampling

Table 1.1: Cost structure in garment product price in Turkey [66, p3] (Source: Ender Bulgun & Arzu Vuruskan (2005), Development of a Software about Caculating the Production Parameters in Knitted Garment Plants )

For direct material costs: This cost item is estimated based on the direct material consumption rate (including main materials such as fabric and auxiliary materials: thread, buttons, zippers, labels, etc.) built based on the parameters of a sample product unit. In addition, this cost item also includes the loss rate in the estimated rate when using raw materials in reality. Depending on the characteristics of each type of main material and auxiliary material, the loss rate in the rate during use ranges from 2% - 3%. This rate is completely consistent with the reality in the use of raw materials in the global Garment Industry.

For direct labor costs: The complexity of the sample product is the basis for determining the number of details, sub-products or stages of product production, from which the standard for direct labor costs to be paid to workers is established. Direct labor costs for a product unit are determined by totaling the unit price of processing for each stage from cutting, sewing, etc. until the product is completed.

For general costs: Direct or indirect general production costs (electricity, water, fixed asset depreciation costs, outsourced services used for production, product quality control costs, financial costs, etc.) are estimated to be allocated.


allocated according to different criteria chosen by the enterprise (such as machine hours, order revenue, or estimated as a certain percentage compared to direct costs that the enterprise has experience determining in advance). For example, the financial cost allocated to a product unit is determined at a rate of about 3% compared to the total cost of raw materials and direct labor for a product unit, while the cost of product quality control is determined at a rate of about 7%.

After determining the cost items in the product cost, Turkish garment enterprises estimate the profit level for a product unit according to the value determined by the ratio of about 15% to 25% of the product cost. The advantage in estimating in particular and controlling production costs in general at large enterprises of the Turkish Garment Industry is the use of specialized software based on PDM (Product Data Management) production data management designed by Gerber Garment Technology, Lectra, Assyst,.. This software allows enterprises to quickly estimate production costs and product prices before production, and at the same time monitor, collect and automatically calculate the actual cost of each order accurately and reliably. Moreover, this information is used and automatically connected to the analysis and evaluation of production costs and product prices so that managers know the detailed production efficiency for each order and within the overall scope of the entire enterprise.

From the analysis of experience in organizing internal control systems of enterprises in the Garment Industry in China, the US, and Türkiye, it shows that:

Firstly, the elements of the internal control system of enterprises in the global Garment Industry are strongly influenced by external factors. These factors are not simply the regulations and legal institutions of the host country, but also represent the binding relationships and mutual influences between the parties in the triangular production model of the global Garment Industry. These relationships are placed in the interest of the world community including consumers and associations related to the issue of corporate social responsibility. Therefore, in addition to traditional goals, the internal control system of enterprises


Industry professionals need to aim to comply with legal regimes and practice ethical values.

Second, the way the elements of the internal control system are organized and expressed depends on the internal factors of the enterprise. The larger the scale of the enterprise and the more complex its operations, the more complete the presence of elements that make up the internal control system. For example, in large-scale enterprises in China or Nike in the US, in addition to the Control Committee, there is also the presence of the Internal Audit Department in the control environment.

Third, in an increasingly competitive environment, the internal control system is considered an effective strategy in business management. This is proven by the experience of controlling production costs well to achieve profit targets of large-scale garment enterprises in Turkey. In the near future, when the competitive advantage of cheap labor gradually disappears, applying this lesson will be of great significance to the existence and development of Vietnamese garment enterprises.


Chapter 1 Conclusion

In this Chapter, the Author has systematized and specified the basic theoretical issues on the role of control - an indispensable function in the management process and from there presented the types of control classified according to different criteria. On that basis, the Thesis delves into and clarifies different viewpoints on internal control and the internal control system. The components of the system are also analyzed, synthesized and generalized to clarify the nature of the internal control system as an effective management strategy for realizing the goals of the enterprise.

The new point of the Thesis is that based on updating the innovations in the perception of internal control and internal control system, the Thesis has presented the basic characteristics of the global Garment Industry, while emphasizing the characteristics of garment processing export enterprises that set requirements for the internal control system. The Thesis also points out the differences in the internal control system between garment processing enterprises and normal manufacturing enterprises. In addition to


To ensure traditional goals, the internal control system needs to aim at implementing the ethical values ​​of the enterprise related to social responsibility, especially responsibility towards employees. In addition, the author also mentions the internal control system of enterprises in some countries that have made important contributions to the development of the global Garment Industry, thereby analyzing the advantages and disadvantages of the elements that make up the internal control system in order to draw lessons to perfect this system in Vietnamese garment enterprises.

The control environment, information system, and control procedures in an enterprise are influenced by many different factors both inside and outside the unit. The development and concretization of theories on internal control systems and the experiences of countries around the world are the premise for analyzing and evaluating the elements that make up the internal control system in Vietnamese garment enterprises.


CHAPTER 2

CURRENT STATE OF INTERNAL CONTROL SYSTEM IN VIETNAMESE GARMENT ENTERPRISES

2.1. Characteristics of Vietnamese garment enterprises with research sampling

2.1.1. Overview of the formation and development process of the Textile and Garment Industry in Vietnam

The Textile Industry has a long history of development in our country. Documents on Vietnamese history show that the Textile Industry was formed in the 12th century in the Red River Delta. Here, silkworm breeding and weaving areas were formed such as Hung Yen, Thai Binh, Nam Dinh. Until now, there are still many traditional craft villages in many regions of the country such as: Van Phuc Silk, Khan Phung Xa (Ha Tay), Meo Village Weaving (Thai Binh)... Cotton is also grown in the highlands of the Northern mountainous region of Vietnam and some southern provinces such as Ninh Thuan, Dong Nai. It was not until 1889, when the French established industrial-scale factories such as the Bac Ky Cotton Company, Bac Ky Silk Company (the predecessor of Nam Dinh Textile Company), that the Vietnamese Textile Industry was officially formed.

After World War II, the Vietnamese Textile and Garment Industry developed more strongly. In the South and Central regions, textile and garment factories were mainly concentrated in Saigon, Bien Hoa, Dong Nai, Long An, Tien Giang, Minh Hai, Quang Nam, Da Nang, etc. with machinery using European technology. In the North, textile and garment factories were mainly concentrated in Nam Dinh, Hanoi, Hai Phong, Phu Tho, etc. with technology from China, the Soviet Union and socialist countries. After the country was completely unified, the Textile and Garment Industry took over all factories and enterprises in the South and continued to invest in a number of large-scale factories such as Hanoi Yarn, Vinh Yarn, Hue Yarn, Nha Trang Yarn, Hoang Thi Loan Knitting, etc. During this period, the industry's products mainly served domestic demand and were exported in the form of blanket covers, pillowcases, protective clothing, medical gowns, etc. according to the Protocol with the Soviet Union and Eastern European countries. In 1990, the economic sector collapsed.


Eastern Europe has significantly affected the export market of Vietnam's Textile and Garment industry and forced the industry to seek new markets. The export turnover at the end of 1990 only reached over 200 million rubles and US dollars. However, the Textile and Garment Industry has gradually overcome difficulties and has developed rapidly in both quantity and quality thanks to the advantage of labor, investment incentive policies both domestic and foreign direct investment.

In 1995, Vietnam Textile and Garment Corporation (the predecessor of Vietnam Textile and Garment Group - Vinatex) was established, along with the birth of the Law on Foreign Investment in Vietnam, creating a strong driving force for the Textile and Garment Industry to develop in terms of scale, technology level and product design. In this year, the industry's export turnover reached 765.5 million USD.

During the development process, the Vietnamese Textile and Garment Industry has gradually integrated into the world economy. On January 11, 2007, Vietnam officially became the 150th member of the World Trade Organization (WTO), the quota system was also abolished, opening up great opportunities for the Industry to continue to develop. Over the past ten years, the Textile and Garment Industry has always held an important position in the national economy, creating jobs for many workers, and contributing a large amount of foreign currency to the country.

By the end of 2008 [ 44 ] , the entire Vietnamese Textile and Garment Industry had about 4,751 enterprises with a workforce of about 1 million people, accounting for nearly 5% of the national workforce and more than 33% of workers in the processing industry; of which the proportion of women accounted for nearly 80%. Before 2008, textile and garment exports always ranked second after crude oil exports, but in 2008, 2009, and 2010 this position was reversed. The value of textile and garment exports accounted for 13% to 16% of the total export turnover of the whole country. Because the Textile Industry has not yet developed, the textile products produced are mainly consumed in the domestic market, so in the total annual export turnover of the Textile and Garment, the export revenue of garment products is the main one ( Table 2.1 and Table 2.1). Because most Vietnamese garment enterprises manufacture products for export, revenue from processed export goods accounts for about 70% of total revenue. (Data up to 2010 according to the summary report of the Vietnam Textile and Apparel Association [20, p3]).


Table 2.1. Export turnover of Vietnam's textile and garment industry in the total export turnover of the whole country from 2000 to 2010

Unit: Million USD


Target

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Export

nationwide

14,483

15,029

16,706

20,149

26,504

32,233

39,826

48,561

62,700

56,600

72,192

Export

weaving, sewing

1,892

1,975

2,732

3,609

4,386

4,838

5,834

7,780

9,130

9.108

11,209

Proportion

13.06%

13.14%

16.35%

17.91%

16.55%

15.01%

14.65%

16.02%

14.56%

16.09%

15.52%

(Source: General Statistics Office, Vietnam Textile and Apparel Association)

The Textile and Garment Industry not only contributes significantly to the national economy but also plays a significant role in developing other supporting industries such as design, petrochemical, mechanical engineering, packaging, agriculture, etc. and is also a means of shifting the economic structure from agriculture to industry.

Unit: Million USD



11,209

12000

9,130 ​​9,108

7,780

10000

5,834

8000

4,836 4,838

Export

6000

3,609

2,732

1,892

1,975

1,747

4000

1,351

2000

0

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


Table 2.1. Vietnam's textile and garment export turnover from 1998 - 2010

(Source: General Statistics Office, Vietnam Textile and Apparel Association)

The main export markets of Vietnam's textile and garment products are the US, EU and Japan, in which the market share of Vietnam's textile and garment in the US and EU markets is second only to China. In these three markets, the export turnover of Vietnam's textile and garment is mainly contributed by the US market, followed by the EU and Japan. (Table

2.2. and Table 2.2.)


12000


10000

Export to NB Export to EU Export to US Total export turnover

8000

6000

4000


2000


1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

0


Table 2.2. Export turnover of Vietnamese textiles and garments to Japan, EU and US compared to total textiles and garment export turnover from 1998 to 2010.

(Source: General Statistics Office, Vietnam Textile and Apparel Association)


Table 2.2 Vietnam's textile and garment export turnover

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