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(EN) FORBES VIETNAM 2024 | SCAVI GROUP TRANSFORMS VIETNAM INTO A PREMIUM LINGERIE SUPPLIER ON A GLOBAL SCALE

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Welcome Spring of the Year of the Dragon 2024, Scavi Group is honored to be featured in Forbes Vietnam magazine, in the special issue ‘New Opportunities, New Dynamics,’ with the headline “Sell Small, Earn Big” Scavi continues to pioneer, transforming Vietnam into one of the leading hubs for premium lingerie products worldwide. Below is the detailed content of the interview conducted by a Forbes Vietnam reporter at Scavi’s headquarters in Bien Hoa, Vietnam.

At the end of 2022, the American lingerie brand Victoria’s Secret announced a $400 million acquisition of the Adore Me brand, founded in 2012 and headquartered in New York. This transaction between two U.S. companies across the Pacific Ocean opened up significant opportunities for garment factories in Vietnam, located 14,000 kilometers away, to enter the supply chain for a renowned global lingerie brand. Over a decade ago, these factories provided the entire spectrum of creative services from design to port delivery for Adore Me, a lingerie retailer emphasizing user personality through online channels. The company behind this is Scavi, part of the French Group – Financière B’Lao (formerly known as Corèle International).

Scavi is leading a ‘Revolution’ in the domestic textile industry by pioneering the provision of emission measurement tools for each product to brands. Until now, we have never subcontracted, instead, we collaborate with them to provide value-added services from collection development to sourcing raw materials, organizing production, and delivery.

– shared by Mr. Chi Thanh NGUYEN, CEO of Scavi Group

In recent years, the Vietnamese textile industry has established a significant global position. Now, outstanding names in the industry like Scavi continue to strengthen their depth, meeting green production standards and adapting to the requirements of new-generation trade agreements.

About Scavi Group

Scavi Group was founded by Mr. Van Phu TRAN, a French-Vietnamese, in 1988. Out of the group’s 10 factories worldwide, 7 are located in Vietnam, with the remainder in France, Laos, and China. Each year, the company produces around 150 million lingerie, swimwear, and sportswear items for numerous major brands such as Armani, Versace, DIM, Decathlon, Hanesbrands, Adore Me, and Vanity Fair. With a workforce of 20,000 employees, this enterprise has maintained an average annual growth rate of 20% over the past 36 years, surpassing the Vietnamese textile industry’s average. Accounting for 40% of its revenue, the United States stands as Scavi’s second-largest export market, following the EU (approximately 50%), with the remaining portion coming from Asia. With an estimated export turnover of $40.3 billion in 2023, Vietnam ranks among the top three exporting countries in the global textile industry, following China and Bangladesh.

The past year has been challenging for the Vietnamese textile industry, with orders declining significantly, leading to a 9.2% reduction in export turnover. The shadow of inflation and economic downturn has caused consumers in developed countries to tighten their belts. Many Vietnamese garment manufacturers have had to lay off workers and scale down operations. Despite this, Scavi’s revenue in 2023 reached over 4,000 billion dong, and the company has managed to maintain stable employment.

Towards the end of 2023, the company was occupied developing our Summer 2025 collection for clients, with delivery scheduled from September 2024 to March 2025. The value-added service model allows Scavi to anticipate market demands, from design trends to resource preparation, 18-24 months in advance. On average, Financière B’Lao allocates $10-15 million USD annually for research and development investment. The group’s financial situation is robust, with no bank debts and reserves available for continued development, even in the middle of potential ongoing market difficulties. This year, the Group will invest in two more EDGE-certified green buildings in Hue and Quang Tri to meet the increasingly stringent sustainability criteria of importing markets.

After 30 years, Vietnam remains an ideal investment destination…

Mr. Duc Giang VU, Chairman of the Vietnam Textile and Apparel Association (VITAS), noted that FDI enterprises account for only 35% of the total number but contribute nearly 60% of the export value. The international textile value chain consists of five main stages: Design – Technical development – Raw material production – Manufacturing – Distribution and Marketing. Among these stages, the ones with the highest value-added components such as design, technical development, distribution, and marketing are predominantly held by companies in developed countries. Conversely, stages with lower value-added components, such as manufacturing (production), are mainly located in Asia, in developing countries. Scavi Group is among the few FDI enterprises participating in the global value chain, not only meeting production standards like the majority of its industry peers. Instead of only relying on the advantage of labor cost for outsourcing, Scavi pursues a direct collaboration path with design-oriented brand customers, from collection development and technical advancement to raw material sourcing, production organization, and delivery. Starting from the target selling price for end customers, they formulate pricing strategies for each link in the value chain, ensuring all aspects meet the goals of both quality and profitability. With around 3,000 service providers in design, market research, and product development, Scavi aims for a profit margin of 25%, higher than the industry average, achieved through establishing a networking club with both customers (brands) and partners (material suppliers, manufacturers).

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The 10-year journey of localizing raw materials in Vietnam to optimize costs

There are three cost factors that determine the competitive capability of textile and garment enterprises: raw materials, production costs, and logistics. Scavi confidently optimizes all three. In terms of sourcing raw materials (fabrics, lace, elastic, etc.), they have the capability to negotiate bulk purchases with suppliers at prices lower than the initial estimate by up to 10%. After over 10 years of implementing the “Vietnamization” strategy, urging industry peers such as New Wide, Best Pacific, Carvico, etc., to invest in Vietnam, currently, 60% of Scavi’s raw materials are sourced domestically, aiming to reach 100% to achieve optimal costs and meet criteria for materials in free trade agreements.

The members of our Hub-club negotiate based on our shared goal of mutual success, moving together with large quantities and transparent pricing.

– said Mr. Chi Thanh NGUYEN, CEO of Scavi Group

In the lingerie manufacturing industry, primary materials are highly elastic, requiring specialized machinery and fine-tuning to ensure precise detailing down to every millimeter. The electrical team has devised a set of gauges to assist both seasoned and novice workers in sewing along the needle thread accurately. By modifying sewing machines and enlarging foot pedals to accommodate female workers’ feet, adjusting seats to suit each individual’s height, they have optimized production. Even the arrangement of workstations, whether in a U-shape, straight line, or classroom-style, has reduced production time per item. According to the CEO, labor productivity each year has increased by 20% compared to the previous year.

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The Vietnamese textile and garment industry has experienced robust development since the early 1990s, playing a crucial role in addressing labor issues and attracting foreign currency through exports. In recent years, the emergence of countries like Bangladesh and Cambodia has raised concerns about new competitive threats that may jeopardize Vietnam’s position. Some industry studies assess that Bangladesh’s textile industry is rapidly developing in terms of productivity and quality, but the production efficiency of Vietnamese workers remains 10-15% higher. According to a WTO report released in early 2022, this is a significant advantage for the Vietnamese textile industry, as the quality, production time, and sustainability of Vietnamese textile products surpass those of Bangladesh.

Furthermore, in terms of market consumption, Vietnam has comprehensive strategic partnerships with all Permanent Members of the United Nations Security Council and the world’s leading developed countries (G20). Free trade agreements are likened to a “global duty-free platform” (except for the United States), facilitating the export of goods from Vietnam.

Scavi Group operates systematically and holistically, covering all stages of the textile value chain, especially in design and actively sourcing raw materials…

– said Ms Hoai Lan Xuan NGUYEN, Co-founder of Coolmate Vietnam

The Co-founder of Coolmate Vietnam, a domestic market-oriented enterprise selling about three million lingerie products, commented on Scavi that this is the one that operates systematically, covering all stages of the textile value chain, especially in design and actively sourcing raw material.

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The global lingerie market scale is estimated to exceed $350 billion by 2023, according to Euromonitor. Among this, the EU market accounts for approximately 30%, the Asia-Pacific region 25%, and North America around 20%. The group of lingerie and swimwear products currently contributes about 70% of Scavi’s revenue, but in the future, the sportswear sector is expected to replace this position.

New-generation trade agreements, particularly the expansion of trade partnerships with many large economies, are expected to open up further opportunities for Scavi. The company’s development DNA is based on innovation to create added value. “We aspire to become a leading global corporation in our field, something no Vietnamese brand has achieved” Scavi’s CEO, Chi Thanh NGUYEN said regarding the 2028 revenue target of surpassing the $1 billion mark, which implies increasing the growth rate from 30-35% annually.

Regarding our CEO and his journey at Scavi Group

Chi Thanh NGUYEN was born in 1978 and studied finance and banking at the National Economics University before pursuing a Ph.D. in business management in France. He joined Scavi upon returning to Vietnam in 2008, gradually advancing through the ranks and being appointed as the company’s CEO in 2021. Currently, the entire executive board of the Group is not comprised of members from the founding family, illustrating the company’s culture of “unlimited advancement”: Individuals without familial ties can ascend to the highest management positions if they demonstrate competence and suitable value. At Scavi Group, employees who perform well have the opportunity to be selected for the core member list and receive stock options equivalent to three years of salary. Presently, about 1,400 core members hold approximately 7% of the company’s shares in the Group.


Chi Thanh Nguyen and the European Union Delegation visit Scavi's kindergarten (the third one from left to right)

According to Forbes Vietnam magazine (January, 2024)

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