Industry

In the apparel manufacturing industry, the models of OEM, ODM, and Private Label define how garments are produced and branded. Each model determines how much control a brand maintains over design, production, and quality. Understanding these terms allows businesses to select the right manufacturing strategy for efficiency, scalability, and consistent quality in today’s global fashion market.

What is OEM in apparel manufacturing?

The OEM (Original Equipment Manufacturer) model enables brands to collaborate with a factory that produces garments according to the brand’s own design, materials, and quality requirements.

In this garment manufacturing process, the manufacturer executes production exactly as specified by the client, allowing brands to focus on sales, distribution, and marketing. This model provides creative freedom while optimizing time and cost in large-scale manufacturing.

Advantages:

• Reduces cost when producing bulk orders.
• Provides complete control over garment design and specifications.
• Guarantees originality and product exclusivity.

Disadvantages:

• Requires significant investment and consistent customer demand.
• Best suited for companies managing large production volumes.

When OEM fits your product strategy

OEM is the right choice when your brand has clear product concepts, technical specifications, and long-term differentiation goals. It suits brands that want full control over design, materials, and quality standards, and are prepared to invest in development, sampling, and higher MOQs. OEM works best for scaling established collections and protecting intellectual property.

Definition of ODM in the garment industry

ODM (Original Design Manufacturer) refers to a model in which the factory designs and produces ready-made garments that retailers can brand as their own. These designs originate from the manufacturer’s research and development (R&D) process. ODM allows brands to enter the market quickly without investing in design or pattern creation.

Factories using this model often provide ready-to-sell designs that retailers can slightly modify to align with their brand. ODM is widely used by businesses seeking to expand product ranges efficiently.

Two major ODM approaches are Private Label and White Label production.

Advantages:

• Saves time and cost by avoiding design and R&D expenses.
• Enables faster production cycles and market entry.
• Ideal for businesses seeking efficient sourcing solutions.

Disadvantages:

• Limited product uniqueness.
• Less flexibility in modifying designs or switching suppliers

When ODM fits your product strategy

ODM fits brands that prioritize speed to market and lower development risk over full design ownership. It is ideal for startups or growing brands that lack in-house design teams but want customization based on proven factory designs. ODM enables faster product launches while leveraging the manufacturer’s technical expertise and material sourcing capabilities.

Private label clothing manufacturing

Private Label production involves working with a clothing manufacturer to produce garments that carry the retailer’s own brand name. The factory oversees production, while the retailer focuses on marketing, packaging, and sales. Private Label offers a balance between brand ownership and operational efficiency, functioning as a focused form of the OEM model.

Advantages:

• Complete authority over branding and quality.
• Higher profit margins due to direct ownership.
• Builds long-term customer loyalty through exclusive apparel lines.

Disadvantages:

• Requires more time for product design and setup.
• Effective only with bulk order quantities.
• Increased inventory management responsibility

When a private label fits your product strategy

Quick comparison table of OEM vs ODM vs Private Label 

Capital World Group – Your trusted OEM manufacturer

Capital World Group targets brands seeking a Vietnam apparel manufacturer with end‑to‑end supply‑chain control. The company maintains vertical management, rigorous QA and QC systems, and an integrated supply chain to ensure precision and consistency in every garment produced.

For dependable OEM solutions and scalable production solutions, contact us for a consultation with an experienced manufacturing partner.

In the apparel manufacturing industry, buyers usually place production orders using two main models: FOB (Free On Board) and CM (Cut and Make). Each system defines who controls materials, costs, and logistics within the garment manufacturing process. Understanding the differences between these two models helps businesses choose the most suitable structure for pricing, quality, and efficiency in global export and import operations.

What is FOB?

FOB (Free On Board) is the most common commercial term used in garment shipping and exporting. Under the FOB system, the manufacturer or supplier manages everything up to the port of loading, including sourcing of fabric, accessories, labor, production, finishing, and local transportation.

The buyer makes payment once the garments are ready for shipment, and responsibility transfers to the buyer when goods are loaded onto the ship or aircraft.

The FOB price breakdown generally includes: Fabric + Accessories + Labor + Overheads + Profit + Local transport. This system allows the buyer to focus on logistics, shipping schedules, and destination import costs after the cargo has left the supplier’s port.

The export process also compliance for regulations from both exporter and importer, check out this Guide to import garment from Vietnam to The US and Canada.

Benefits of FOB

• Better control of freight and cost: Buyers can negotiate directly with shipping agents to secure the best freight rates and delivery schedules. This often leads to better financial control and optimized logistics.
• More competitive pricing: Since the supplier manages end-to-end production and the buyer handles international transport, overall pricing becomes more transparent and cost-effective for larger orders.

Buyers’ responsibilities using FOB terms.

What is the CM order

CM (Cut and Make) is another production model used in the garment manufacturing process. In this arrangement, the buyer provides all raw materials and trims, such as fabrics, accessories, labels, packaging and the manufacturer is responsible only for cutting and sewing.

The CM price component covers labor, overheads, and profit, but not the materials. Because the garment factory only executes the cut and make stages, the buyer maintains full control over sourcing and fabric quality.  This model is preferred by companies that have reliable sourcing networks or want to manage production costs more directly.

Benefits of CM

• Flexible and cost-saving: Since the buyer supplies materials, this method allows for tighter cost management and flexibility in design and sourcing decisions.
• Control over material quality: Buyers can select and test all inputs before sending them to the factory, ensuring that the finished garments meet brand and quality expectations.

Quick comparison between FOB and CM

Check this comparison table to have a quick glance at differences between these two terms:

Choosing your trusted garment manufacturer

When selecting between FOB and CM in apparel manufacturing, the choice depends on your production scale, sourcing ability, and desired level of control. For many brands, Vietnam’s role has switched to be one of the most reliable destinations for apparel sourcing due to its skilled labor, efficient infrastructure, and competitive production costs.

Vietnam garment manufacturers like Capital World Group offer garment manufacturing processes with complete transparency and quality assurance. As a trusted apparel manufacturer providing end-to-end supply chain control, Capital World Group targets brands seeking Vietnam apparel manufacturer with end‑to‑end supply‑chain control

International trade in the fashion industry is complex. Ensuring garment quality, meeting strict customs regulations, and managing global shipping can be challenging, even for established brands. Sourcing apparel from Vietnam, one of the world’s top textile producers, adds layers of documentation and coordination.

However, with the right strategy, Vietnam offers huge opportunities for competitive pricing and skilled manufacturing. This article will guide you through the process of importing clothes from Vietnam into North America.

The Vietnamese garment market

The Vietnamese garment market continues to grow, with apparel export volumes up 9% year-on-year as of May 2025. In the first five months alone, exports reached US$17.58 billion, according to the Vietnam Textile and Apparel Association (VITAS).

The United States is the dominant buyer, taking 38–48% of exports. In Q1 2025, total shipments to the US across all goods surged to US$31.4 billion, up 22% from the prior year.  Japan takes about 10% of Vietnam’s textile exports, South Korea 7–10%, and the EU around 9–10%, with solid demand from the Netherlands, UK, and Germany. Vietnam also supplies to more than 130 countries worldwide alongside other clothing manufacturing countries.  ASEAN markets account for 6.6%, while Canada, China, the Middle East, and Africa represent 28%.

Source: Vietnam Customs.

With the current sustainable trend in garment manufacturing, many producers now work with eco-materials and hold certifications such as GOTS or OEKO/TEX along with digital adoption in automation and AI technology in up to 40% of facilities. Production is moving beyond cut-make-trim toward ODM (Original Design Manufacturing) and OBM (Original Brand Manufacturing) models that give manufacturers greater design and branding roles.

Reflecting these shifts, Kiara Garments Factory of Capital World Group provides sustainable garment manufacturing for brands with ISO 9001, amfori BSCI, and Higg FEM certifications, ensuring the highest quality and sustainability standards.

Ensuring alignment with Vietnam export regulations

When exporting clothing from Vietnam, the exporter and importer must prepare mandatory documents to satisfy local laws and smooth customs clearance.

Custom declaration form

Each customs declaration form must specify details about the shipment. This includes the consignor and consignee information, the country of origin of the goods, and the Harmonized System (HS code) classification for the apparel.

It also lists the shipping details (mode of transport, port of loading, and destination), a clear description of the goods (e.g., “100% cotton women’s blouses”), the labeling and packaging information, the total value of goods, and the purpose of the shipment (for export as a commercial sale, samples, etc.).

Bill of Lading

The carrier issues this document to confirm receipt of the goods for transport. It records the goods loaded on the ship (or plane/truck) and serves as a contract of carriage. The B/L includes details like the vessel name, departure and destination ports, a list of the shipped items, and the consignee to whom the goods will be delivered.

Commercial contract

The exporter and importer must finalize a commercial contract that sets out legal, financial, and quality details before shipment. This agreement assures product specifications and standards, confirming that all exported goods meet benchmarks such as ISO or third-party quality checks.

• Contract Number, Date, and Parties: States the reference number, signing date, and full legal details of the Seller (exporter) and Buyer (importer).
• Product Commodity Details: It lists the clothing type, material, style, HS codes for customs, and origin (e.g., “Made in Vietnam”).
• Quality: Defines standards via samples, ISO/ASTM criteria, or third-party checks like SGS; may note warranties.
• Quantity: Specifies total goods ordered, unit of measure, and acceptable tolerance (e.g., ±5%).
• Price: Outlines unit price, total value, and currency under an Incoterm (e.g., FOB Haiphong or CIF Los Angeles).
• Shipment Terms: Sets Incoterms 2020 rules, delivery point, mode (sea/air), and final destination.
• Payment Terms: States total payable, method (L/C or transfer), responsibility for charges, and timing tied to the Bill of Lading.
• Packing and Marking: Details packaging, labels, and marks to ensure compliance for export and warehouse use.
• Penalties: Establishes fines for late shipment or defective goods, ensuring contract discipline.
• Insurance: Assigns who covers cargo insurance and specifies coverage under the chosen Incoterm.
• Force Majeure: Lists extraordinary events (war, disasters, bans) excusing performance without liability.

Learn more about FOB term and how it is differentiated from CM (Cut-Make).

Commercial invoice

This is the bill for the goods prepared by the seller. It specifies the amount the buyer must pay for the shipment, the agreed currency and payment method, and typically the seller’s bank account details for the transfer. This invoice is used by customs in the importing country to assess the shipment’s value for duty calculation. It should match the contract and L/C terms. If the shipment is not a typical sale – e.g., samples or gifts – sometimes a pro forma invoice is used instead, but a commercial invoice is standard for normal apparel orders.

Packing list

It details what goods are packed in each box or container, including item descriptions, quantities per carton, carton numbers, dimensions, and weight (net weight of goods and gross weight including packaging).

The packing list mirrors the products and quantities on the invoice but omits any pricing or value information. Its purpose is purely logistical: freight forwarders and customs officers use it to plan storage, arrange handling equipment, and verify the shipment’s contents during inspections.

Export taxes and VAT

Vietnam generally exempts apparel goods from export taxes. This means that most clothing goods are tax-exempt when exported depending on the country, keeping clothes from Vietnam competitively priced for international buyers.

Applying Incoterms in a commercial contract

Incoterms define how shipping, insurance, and customs duties are allocated between parties. In Vietnamese export contracts, the chosen term clarifies who pays for freight, insurance, and duties, and where risk transfers from seller to buyer.

Incoterms 2020 include:

• CIP (Carriage and Insurance Paid To)
• CFR (Cost and Freight)
• CIF (Cost, Insurance, and Freight)
• CPT (Carriage Paid To)
• EXW (Ex Works)
• FCA (Free Carrier)
• DPU (Delivered At Place Unloaded)
• DAP (Delivered At Place)
• FAS (Free Alongside Ship)
• FOB (Free On Board)
• DDP (Delivered Duty Paid)

Choosing logistics strategies

Most brands work with freight forwarders to manage shipping, since these experts can consolidate shipments and handle paperwork to reduce delays. The primary freight options are ocean (sea) and air freight.

Logistics options

Sea Freight – Ideal for companies optimising logistics costs. Ocean transport is the most economical option for bulk orders, though transit to North America can take 3–5 weeks. Two common methods are:

• FCL (Full Container Load): Best for large shipments. It reduces handling and potential damage.
• LCL (Less than Container Load): Shares space with other shippers; cost-effective for small volumes but may face extra handling.

Air Freight – Used for smaller, lighter, or urgent shipments. Air cargo reaches the US or Canada within days, which is valuable for fast fashion or restocking. However, it costs far more per kilogram than sea freight and has size limits.

Delivery strategies

Choosing the right delivery model affects cost, risk, and responsibility once goods leave Vietnam. Providers usually offer three main service levels:

• Port-to-Port: The carrier moves cargo from a Vietnam port (e.g., Haiphong) to a North American port (e.g., Los Angeles). It’s the cheapest option but leaves the importer responsible for customs, duties, and inland transport. Best for those with in-house logistics or a customs broker.
• Port-to-Door: The forwarder handles transport from the Vietnam port through customs clearance and delivers directly to your warehouse. It balances cost and convenience, bundling inland delivery.
• Door-to-Door: The provider collects cartons at the origin factory, manages export clearance, international shipping, customs, and last-mile delivery. It simplifies coordination and saves time, but comes at a premium price.

Regardless of strategy, always secure cargo insurance (marine or air) to protect shipment value against loss or damage.

Import regulations and customs duties of the US and Canada

Compliance with customs regulations is essential to prevent border delays. Both the US and Canada have specific textile requirements, so brands should prepare in advance and work with reputable Vietnamese textile manufacturers. Key considerations include:

• Import quotas and restrictions: Most quotas ended in 2005, but check for embargoes or bans on certain goods (e.g., wildlife-based materials).
• Tariff classification: Use the correct HS code; errors can cause penalties or higher duties.
• Environmental regulation: Meet safety laws on dyes, chemicals, or fumigation for used apparel.
• Intellectual property: Avoid counterfeit logos; customs enforce strict IP rights.
• Product safety and labelling: Ensure origin, fiber content, and care labels meet US and Canadian rules.
• Import permits & licenses: Not usually required, but some items (fur, exotic skins) may need permits.

Staying ahead of these rules ensures smooth clearance and avoids costly delays.

Specific documents and other considerations

Import rules differ between the US and Canada, and apparel shipments must meet country-specific filing requirements to avoid delays at the border.

Importing to the US

U.S.-bound importers must file an Importer Security Filing (ISF) at least 24 hours before vessel departure and submit the ACE Import Manifest Documentation through the Automated Commercial Environment. These records verify shipment details, support customs checks, and help importers clear goods legally.

• Importer Security Filing (ISF): Advance electronic data on shipment details.
• ACE Import Manifest Documentation: Carrier’s electronic manifest for US Customs.

Importing to Canada

Canada’s process mirrors the US import rules but uses its own systems. Canadian customs regulations require full invoice disclosure and declarations. Shipments valued above CAD$2,500 need a Canada Customs Invoice (CCI/CI1) listing vendor, purchaser, origin, currency, and item details.

The importer or broker must also file an Import Declaration electronically (B3 form) to confirm tariff classification, duty, and GST. Conversely, carriers must submit an Advance Commercial Information (ACI) eManifest before arrival (Canada’s version of the US manifest). Accurate paperwork is vital as errors risk penalties or seizure.

First-time importers should obtain a Business Number from the Canada Revenue Agency for clearance. Many apparel goods qualify for reduced or zero tariffs under the CPTPP, provided a valid Declaration of Origin is issued.

Choose the right partner for streamlined sourcing

Many brands face rising costs, compliance hurdles, and tight deadlines when sourcing apparel from Vietnam. Capital World Group provides the solution through a vertically integrated supply chain with an end-to-end process of fabric sourcing, production, and logistics. Contact us today to secure dependable Vietnam-based production.

The fast lead time in the fashion industry reflects a broader shift in the time-to-market in fashion, where responsiveness determines a collection’s success. Managing lead time well allows brands to respond quickly to trends and limit waste. Some of the world’s largest garment exporters, such as those in Vietnam, have emerged as major hubs for supply chains built to meet these tighter timelines and shifting market pressures.

What is the lead time in the garment industry?

In apparel manufacturing process, lead time is the full span from the confirmed purchase order to the buyer receiving finished goods. This order-to-delivery time covers sourcing fabrics, developing and approving samples, bulk manufacturing, quality inspections, and shipment. For example, ordering 1,000 jackets might require 12 weeks from fabric procurement through production and delivery.

The lead time formula in the garment industry is most often calculated by subtracting the order request date from the delivery date. However, some brands track it from initial order placement to final shipping.

Tracking this metric allows brands to measure efficiency, forecast timelines, and adapt to changing fashion demands.

Why is lead time important?

Reducing lead time between order submissions and processing deliveries enables faster responses to emerging trends and ensures assortments remain relevant as demand peaks.

Shorter cycles also improve cash flow by moving inventory to market sooner, freeing capital for reinvestment.

According to McKinsey, faster turnaround supports higher full-price sell-through and limits markdown risk.

In a competitive, trend-driven market, mastering lead time helps brands stay agile, align production to demand, and protect margins through timely, efficient deliveries.

Key milestones affecting lead time in the garment supply chain

Each stage in the supply chain can compress or stretch the lead time in the garment industry, depending on efficiency, coordination, and external conditions.

• Fabric sourcing: If you can get fabrics and trims locally, things move quickly. But when you’re importing speciality textiles or big runs from overseas – especially if they need to be woven or dyed to order – it can add a lot of extra time.
• Design approval: Slow feedback, last-minute changes, or unclear specifications can quietly halt progress for days or weeks. Prompt, well-documented approvals prevent this bottleneck and keep production start dates intact.
• Lab dips (color matching): Matching fabric to the exact color standard is a technical but time-sensitive step. Producing a lab dip typically takes about 7 to 10 working days, and multiple rounds are common when precision is essential.

• Sampling: Development and fit samples ensure the design translates accurately into a finished garment. Every revision cycle adds days for sewing, shipping, and review.
• Vendor reliability and factory efficiency: Well-integrated operations or factories with lean processes can begin production sooner and maintain consistency. Conversely, overbooked lines, outdated equipment, or workforce disruptions slow progress and extend the garment industry’s lead time.
• Customs clearance: Export and import procedures can cause unpredictable hold-ups once garments are produced. Documentation errors, random inspections, or port congestion can add days or weeks.
• Local transport logistics: Moving finished goods from the factory to the port can even become a bottleneck if the infrastructure is poor or the distances are long.

Each of these checkpoints contributes to the cumulative total production cycle. The goal is to address delays at the source so that brands can streamline the lead times in the garment industry processes.

Reduce lead time with the vertical management model

A well-integrated supply chain can sharply reduce lead time in fashion industry operations compared to other types of sewing lines by consolidating multiple production stages under one coordinated system. A vertical management model removes many dependencies by managing sourcing, pattern making, sampling, sewing, finishing, and packaging within a single unified system. This structure allows for overlapping stages, such as beginning fabric preparation while final samples are still in review, without waiting for external suppliers to free up capacity.

It also strengthens quality control procedures by embedding inspections at every step, ensuring issues are resolved before they disrupt the schedule.

In practice, end-to-end coordinated production supports faster approvals, better inventory handling, and closer alignment between design and production teams. For example, in-house fabric teams can manage the sampling of their procurement precisely to avoid material shortages, while production lines stay ready to pivot quickly after sample approval.

Proximity to export hubs further shortens delivery windows. These efficiencies significantly compress the overall order-to-delivery cycle while maintaining the quality and compliance standards expected in modern apparel manufacturing.

At Capital World Group, we provide the solution thanks to this end-to-end supply chain control as well as having full ownership of our Kiara Garments factory. We offer competitive, high-quality women’s wear manufacturing tailored to premium market demands, a result of faster turnarounds, greater flexibility, and consistent quality at scale.

Check out how Capital World Group Vertical Management model can help you deliver on time and ahead of the competition.