Santa Clara University

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Company Specifics

Founded: 1986
Headquarters: 40/32 National Road No. 13, Hiep Binh Phuoc Ward, Thu Duc Dist, Ho Chi Minh City, Vietnam
Ownership Structure: 10% state-owned/ 90% employee-owned
Homepage: www.saigon3.com.vn
Employees: 2,800
Product/Service: Development, design, and manufacturing of apparel, primarily jeans and khakis.
Customers: Global retailers including DKNY, Levi’s, Polo Ralph Lauren, and Abercrombie. Of the export business - 40% goes to the US, 45% to Japan, 10% to Europe, and 5% to others.

 

Hosts

Mr. Xuan Hong Pham, Chairman of the Board of Management and General Director
Ms. Tuyet, Human Resources Department Manager

 

Key Takeaways

This was the first visit to a manufacturing facility for many of us. It was important for the Vietnam segment of our trip because in 2007 manufacturing and construction made up 42% of Vietnam's GDP. In the same year, textile and garment manufacturing made up 16.4% of the country’s exports. Vietnam's labor costs and quality levels are regarded as competitive with China's.

 

The business is 10% state- owned and 90% employee-owned
SaiGon3 was owned by the socialist state until about six years ago. The business is now a joint-stock company with 90% employee-ownership.  In light of Vietnam’s recent economic instability, we were interested in whether the 300 factory strikes nation-wide had affected this business. Mr. Pham suggested that the company has fewer problems with wage inflation and strikes since every employee is also an owner. He also noted that the 10% government stake is a competitive advantage, for example, in influencing necessary developments in infrastructure. We were surprised to find that the government allowed companies to transition towards an equity-based structure. To us, this was as indication of the increasing institutionalization of capitalism in Vietnam.

 

Infrastructure and machinery is in its early stages
On the way to the factory, we passed through a rural neighborhood with roads flooded by rain. The factory entrance was an unmarked dirt path, barely wide enough for our bus. It was surprising to see that a factory used by global businesses can operate in the midst of unpaved roads. All product moving in and out of the factory must utilize this one road. During the factory tour many of us were surprised to see sewing equipment resembling those that were used over 30 years ago. We speculated that the equipment was purchased used from developed countries. The host confirmed the age of the equipment but stated that the machinery continues to get the job done.

 

The business recognizes global standards
SaiGon3’s core clients are foreign brands, so we presumed that it recognized global expectations. The factory was generally clean and organized, from the rolls of raw material to the stacks of tagged jeans. In addition, assembly line workers all wore uniforms. Mr. Pham mentioned that there are compliance checks at all the company’s factories in the areas of quality, management, process, and fair practices. He cited employee training as important and noted that when product ‘leaks’ happen, the company’s policy is to purchase those goods off the street. It appears that adhering to global standards is or will be the expectation in this emerging economy.

 

Posted by: J. Weng

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SaiGon3's main headquarters provided the background for this group photo.

 

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Our hosts provided fresh fruit and popular Vietnamese beverages during the presentation.

 

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Occasionally glancing up at the group of visitors, the SaiGon3 manufacturing workers turned out garment after garment.
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