Actors in textile, garment and footwear supply chains potentially affected by due diligence requirements
Both the German SCDDA and the EU CSDDD require in-scope companies to conduct due diligence across their entire supply chains, covering both direct and indirect suppliers/business partners. In the context of Viet Nam’s textile, garment and footwear exports to the EU, this means that all Vietnamese business entities participating at any stage of production and export for EU/German partners subject to these regulations may be affected by the due diligence requirements.
A preliminary review of Viet Nam’s textile, garment and footwear export supply chains to the European market shows that Vietnamese suppliers participating in these chains (and thus potentially affected by EU supply chain due diligence regulations) can be categorized into different groups, with their respective compositions and roles as summarized in Table below.
Table: Vietnamese suppliers in textile, garment and footwear supply chains exporting to the EU
|
Stage in the supply chain |
Vietnamese suppliers in textile and garment supply chains exporting to the EU |
Vietnamese suppliers in footwear supply chains exporting to the EU |
| Supply of raw materials and material inputs |
- Enterprises, cooperatives and household businesses (collectively referred to as “enterprises”) producing and supplying raw materials (cotton, flax, hemp, wool, silk, polyester, nylon, etc.) - Enterprises producing materials and accessories (fabric, yarn, buttons, threads, zippers, etc.) |
- Enterprises producing and supplying materials (soles, fabric, leather, rubber, etc.) - Enterprises producing inputs (adhesives, zippers, fabric, buttons, threads, yarn, etc.)
|
|
Assessment Due to the fact that most input materials are imported, the number of Vietnamese enterprises in this group is relatively limited, particularly in footwear supply chains. |
||
|
Manufacturing and processing |
- Processing manufacturers (primarily under the CMT[1], with some OEM[2]) |
- Processing manufacturers primarily operating under the OEM model - Enterprises performing specific production stages (sole pressing, logo printing, product finishing, etc.) |
|
Assessment This group comprises a large number of enterprises, potentially including most export-oriented firms in the textile and footwear sectors (as very few enterprises work exclusively with EU partners; most receive orders from multiple sources, including EU partners). |
||
|
Logistics and export |
Freight forwarder, 3PL Assessment Vietnamese enterprises in this group mainly participate in domestic logistics activities up to the point goods are loaded onto ships. |
|
Source: Compiled by the TTWTO-VCCI Research Group
In practice, most Vietnamese suppliers in textile, garment and footwear supply chains exporting to Europe do not have direct contractual relationships with European partners. Instead, they typically enter into contracts with intermediaries that receive orders from European partners (often foreign trading companies). According to the definitions under the SCDDA and the CSDDD, these are considered indirect suppliers, whose responsibilities in the supply chain due diligence process may be more limited compared to direct suppliers that contract directly with in-scope European companies (particularly under the SCDDA).
Accordingly, the due diligence-related responsibilities of Vietnamese suppliers in textile, garment and footwear supply chains exporting to Europe will (primarily) be governed by the provisions applicable to indirect suppliers under the SCDDA and the CSDDD.
Source: Compiled by the TTWTO-VCCI Research Group
- Scope of Vietnamese suppliers potentially affected from the supply chain due diligence requirements of European markets
- Responsibility to comply with human rights and environmental standards of Vietnamese suppliers in the supply chain due diligence process
- Responsibility to implement certain measures of Vietnamese suppliers in the supply chain due diligence process
- Supply chain due diligence and textile and footwear supply chains in EU