Made in Vietnam

To take a stroll in the vicinity of the Rex Hotel in Ho Chi Minh City is to walk through the startling meshwork of incongruities that now define the city once known as Saigon. When I did so recently, on a hot and humid evening in early November, I passed a huge socialist realist poster of a soldier saluting International Workers Day; half a block farther on, an equally large billboard showed a sultry model advertising an upscale brand of perfume. Down the street, an old woman, grossly disfigured by Agent Orange, was begging for pennies on the sidewalk outside a new shopping mall called Times Square Saigon. Back inside the hotel, I decided to make my way up to its rooftop bar, where reporters used to congregate during the Vietnam War to pour scorn on each day’s military briefing, which they dubbed “the Five O’Clock Follies.” First, however, I had to navigate a gleaming marble labyrinth of designer boutiques: Rolex and Chanel, Burberry and Cartier, Givenchy and Balenciaga—all of which are leasing prime retail space from the 80-year-old, five-star hotel’s owner: the Communist Party of Vietnam. The beer set me back $14.

This strange new hybrid nation wasn’t built overnight, of course. Changes to Vietnam’s centrally planned economy began creeping in during the late 1980s, more than a decade after the end of the war. The policy of Doi Moi, or “Renovation,” was implemented at that time to create what the government described as a socialist-oriented market economy. Then, in 1995, diplomatic relations with the United States were normalized, and in 2007 Vietnam became the 150th member of the World Trade Organization. These days, whatever the Vietnamese economy may be called officially, unofficially—and internationally—it can be summed up in a single word: “booming.” And much of the boom has been driven by the stunning growth of a single industry sector: apparel.

In 2013, exports of Vietnamese-made apparel topped $20 billion for the first time. More than 40 percent of those exports, $8 billion worth, went to the United States; by 2020, the figure is projected to rise to more than $20 billion. Vietnam also overtook Bangladesh as America’s second-largest supplier in 2013, putting it behind only China. Now, with Vietnam hoping to join the Trans-Pacific Partnership—a proposed consortium of 12 countries that could represent the largest free-trade agreement in history—the nation has arrived at an intoxicating but dangerous threshold.

Why dangerous? Because this is the moment when economic logic dictates the vertical integration of Vietnam’s flourishing apparel industry. It no longer makes sense for the country to import 98 percent of the raw cotton that gets cut and sewn in its roughly 6,000 garment factories; what does make sense is to begin building the textile mills and dyeing and finishing facilities that will allow Vietnam to compete at nearly every stage of clothing production, not merely the cutting-and-sewing stage. This is also the moment when the environmental and social risks that attach to the manufacture of apparel grow exponentially.

Much of the Vietnamese economic boom has been driven by the stunning growth of a single industry sector: apparel.

For proof, Vietnam need look no further than the company it keeps at the very top of the clothing heap. The dyeing and finishing stages of apparel production require vast amounts of not only water but also toxic chemicals, which are often discharged, untreated, into local waterways. In China—where a drive for double-digit economic growth has typically meant manufacturing as much, as quickly, and as cheaply as possible—rivers near factories run black and blue with effluent. In Bangladesh, where waterways have also been grossly fouled, the absence of effective laws and regulations has led to disasters like the 2013 building collapse in Rana Plaza, which killed more than 1,100 garment workers. Any apparel-manufacturing country is prey to these risks, but Vietnam’s geography and topography make its rivers especially vulnerable. It’s a long, skinny snake of a country, 1,000 miles from north to south but as little as 30 miles wide at its waist. As a result, its waterways are hostage to the abusive practices of countries farther upstream. The mighty Mekong flows through five other nations before it reaches Vietnam, and its delta—the country’s rice bowl, but now slated for increased industrial development—occupies only the last 5 percent of the river’s vast 307,000-square-mile drainage.

So today, as Vietnam stands poised to launch its apparel industry into overdrive—which is to say, as it stands in the same spot that China and Bangladesh did not too long ago—many environmentalists, economists, business leaders, and consumers are asking the same question. Could Vietnam be the one to get this thing right, where those other countries seem to have gotten it so egregiously wrong?

Sanjeev Bahl believes it could. The energetic, 51-year-old, Indian-born owner of a Vietnam-based apparel company called Sai-Tex assures me that the locals have been paying close attention to their competitors on the way up. “They’ve seen all this; they’ve learned from it,” he says when we meet in New York City, where his wife and children live permanently while he commutes to Vietnam.

But even more significant, Bahl says, is that many of the biggest international clothing brands are now focused on minimizing their environmental footprints in a way they’ve never been before. Some, such as Patagonia, were visionaries from the start. Others may be trying to repair reputations that have suffered through a connection to well-publicized accidents or abuses. Benetton, for example, was badly embarrassed in 2013 when its labels and order forms were found in the ruins of Rana Plaza. In August 2011, a dozen industry giants—including Adidas, Ralph Lauren, H&M, and Calvin Klein—were named and shamed in a Greenpeace report, singled out for working with suppliers who were using dangerous, hormone-disrupting chemicals known as nonylphenol ethoxylates. Nongovernmental organizations like Greenpeace and NRDC (which publishes onEarth) are now sharply attuned to such issues, which were no more than a blip on these groups’ radar screens in decades past, when the apparel industries of China and Bangladesh were taking off.

Finally, Bahl says, new and emerging technologies have the potential to radically reduce the environmental impact of various facets of the industry—even some of its dirtiest ones, such as the way we make denim. As far as manufacturing processes go, few are more environmentally ruinous than those involved in the production and treatment of this most common and popular of clothing fabrics. From a business standpoint, Bahl tells me, denim is like a gilt-edged security—everyone wears it, and demand is perennial. Each year the industry turns out five billion meters of it. The United States alone purchases more than 450 million pairs of blue jeans annually. For a designer, the material is full of enticing possibilities. You can darken it, bleach it, fray it, grind it, sandblast it, distress it, embroider it, and pattern it using laser beams. You can dress it up or dress it down; there are $9 jeans and $900 jeans. But from the standpoint of sustainability, denim represents the ultimate challenge. Its production uses almost 17 billion gallons of water and up to 225,000 tons of chemicals annually. If we can clean up the way we make our blue jeans, many people believe, then we can clean up pretty much any other aspect of the industry.

This is a topic that interests Bahl greatly—because blue jeans happen to be his stock-in-trade. After earning a master’s degree in business management in Pune, India, Bahl moved to Bangalore, where he met his wife. There he spent the 1990s trying to make a go of it in the apparel industry (starting with branded sportswear­ for badminton, which he had played professionally). His experience, however, was one of frustration, which he ascribes primarily to the deficiencies of the Indian legal system. “It can take 25 or 35 years to get anything done, to get things straightened out in court,” he says. “So a parallel system has evolved. You have to be connected—to some good people and to some not-so-good people. And that’s where a lot of corruption and bureaucracy comes in.”

In 2000, Bahl decided to try his luck in Hong Kong, where he fared much better. Soon he was sourcing product from factories in a slew of countries—from India and China to Mauritius and Madagascar—and selling clothes to the likes of JC Penney and Liz Claiborne. Two years later, his ongoing search for new suppliers took him to Vietnam. “It had something special to offer,” he recalls. “The energy was different.” He decided to stay, and in 2005 the production lines at his new denim-processing facility, Sai-Tex, were up and running.

Sai-Tex thrived, yet Bahl felt a gnawing discontent. “I wasn’t waking up well,” he says. “It just didn’t make sense to me.” He found himself questioning the ethical ramifications, not to mention the spiritual rewards, of his particular line of work. (The “Sai” in Sai-Tex, I was surprised to discover, stands not for Saigon but for Shirdi Sai Baba, a celebrated Indian guru from the early 20th century whom Bahl considers to be a personal spiritual inspiration.) He also began to read about industrial pollution. When he learned that roughly 780 million people around the world have no access to clean drinking water, the fact struck a particular nerve. Three years after launching Sai-Tex, Bahl says, he had the sudden realization that “my actions were directly and indirectly responsible” for a variety of environmental problems, and that by adhering to conventional techniques and practices, “I was not being gentle to the earth and my fellow planetarians.” So Bahl tore down the old factory and built a new one. Sai-Tex 2.0, he promised, would be one of the cleanest and most sustainable denim-processing facilities on the planet.

* * *

Knowing this, I was primed for a very different sort of factory tour when I visited Sai-Tex. The 150,000-square-foot facility is in a Thai-owned industrial park in Bien Hoa, a city of a million people that sits about 20 miles northeast of Ho Chi Minh City and is probably best remembered as the site of a key U.S. air base during the Vietnam War. A security guard in a crisp, immaculate uniform opened the gates and saluted us, and then we drove for a mile past several other small factories until we reached our destination. There I was greeted by the company’s CEO, Simon Barstow, an Englishman who has lived in Vietnam for 20 years. As we walked over to the sewing and assembly plant, Barstow pointed out some of the factory’s features along the way: pole lights powered by their own solar panels and miniature windmills; rain-permeable walkways, divided into checkerboards by strips of grass, that helped minimize stormwater runoff; a tree-planting project; a pool for harvesting rainwater; solar water heaters; and a new biomass boiler that will use pellets made of wood and rice husks instead of fuel oil.

I had been inside apparel factories in Bangladesh, but, true to Bahl’s vision, Sai-Tex was like something from another planet. The high-ceilinged, aircraft hangar–size room was filled with bright, natural light. It also was pleasantly cool, thanks to natural ventilation supplemented by an overhead cooling system that refrigerated the air with pre-chilled water and fans (more efficient than air-conditioning units). Hundreds of workers in brightly colored Sai-Tex polo shirts were busy at their sewing machines and cutting tables. They turned out about 340,000 pairs of jeans per month, Barstow told me.

Traditional denim laundries consume about 37 gallons of water for each pair of jeans. Sai-Tex has this down to just nine or ten gallons, with the corresponding reduction in chemical use.

Over at the laundry building, teams of men in hard hats were banging hammers and laying cement. “It’s a bit of a mess right now,” Barstow said apologetically. “But we’re just about there.” There, he explained, was LEED Platinum status: the highest level of green-building certification that a structure can earn. (“If we get it,” he said, “we’d probably be the only Platinum garment factory in the world.”)

Then Barstow showed me Sai-Tex’s giant washing machines: For any denim-processing plant, this is where the real environmental challenges begin. Traditional denim laundries consume about 37 gallons of water for each pair of jeans; by reducing the number of washes required to treat the garments, Sai-Tex has this volume down to just nine or ten gallons, with a corresponding reduction in the use of chemicals. About 95 percent of the water Sai-Tex uses to launder its jeans is subsequently recycled, after being cleaned not by traditional chemical agents but by a variety of cutting-edge technologies and biological processes—the technical details of which, I confess, went a little over my head. (There was talk of electrocoagulation, nanofiltration, and three stages of reverse osmosis.)

High above us, thousands of pairs of freshly washed blue jeans were moving slowly along conveyor belts—air-drying, simply and naturally. It was just common sense, Bahl had told me in New York; the idea had come to him when he remembered the way his family’s clothes would be laid out to dry in the sun. But the net effect of this perfectly commonsensical idea has been to help reduce overall energy use by almost half.

If Sai-Tex’s drying methods echo low-tech solutions that have been passed down over generations, others belong distinctly to our era—or even the next. Piled up in one corner of the laundry were swatches of denim marked by elaborate patterns of fading and “whiskers,” industry lingo for the faux wrinkles designed to draw the eye to the crotch area. Workers used to apply them through hand-scraping, Barstow said, but the method yielded a troubling amount of fine fiber dust. Now lasers do that job (and, in addition, create an infinite variety of the designs that consumers seem to want in high-end jeans). To achieve what Barstow calls the “white-out” that gives new jeans a well-worn look, workers must spray the fabric with potassium permanganate, an oxidizing agent that can be toxic if ingested. Sai-Tex is in the process of phasing out the chemical and replacing it with ozone; in the meantime, the company is exploring the potential of exploiting nonhuman labor. “We’re trialing robots, the kind used on cars,” Barstow said.

In one room I visited, a dozen technicians were bent over computer screens filled with numbers, graphs, and bar charts. Barstow explained that they were using a proprietary analytics software, developed by a Spanish apparel company called Jeanología, that monitors the facility’s water, energy, and chemical use in real time as it simultaneously measures efficiency on the production line. “If you can’t measure it, you can’t control it,” Barstow told me. Once you can measure it, however, “then you can set your targets and get your managers to work toward them.”

As we left the laundry, I noticed a couple things that brought me back to what Sanjeev Bahl had told me about his burgeoning sense of responsibility to his fellow planetarians. The first was a vat mysteriously labeled “sludge thickener.” Sludge, an especially nasty by-product of the jeans industry, is made up of small particles of fiber, dust, and pumice stone. Through a licensed company, Sai-Tex is turning it into bricks, certified by the local Vietnamese government as nonhazardous, which are being given to developers of low-cost housing. Home construction using these bricks will start later this year.

Nearby, rows of bins contained thousands of pairs of sneakers bearing the Puma logo. The shoes’ uppers had been crafted from bits and pieces of Sai-Tex’s leftover denim waste as part of a new joint program called the Re-Cut Project. All profits from the first collection are going to a local orphanage. “We just got the first check from Puma, for $180,000,” Barstow said.

Before I said good-bye, I stopped for a moment in the reception area to admire a small statue cloaked in orange, a shrine erected by Bahl to the guru Sai Baba. But more arresting than this was the wall beside it. “The contractors just put down plain concrete,” Barstow explained, “and Sanjeev didn’t like it. So he asked some of the operators in the factory to do to the wall what they did to a pair of blue jeans: Scrape them and grind them.” Mounted on the rough-textured finish were four rows of military helmets, both Vietnamese and American. There had been fierce fighting near Bien Hoa during the Tet Offensive in 1968, and when Bahl first came to Vietnam, some of the local markets were still full of the detritus of war.

“Sanjeev’s idea,” Barstow said, “was to show respect for the country—coming out of the war, coming out of hardship, moving through to a development phase. This factory is meant to represent the new Vietnam.”

* * *

But could Sai-Tex also represent the new face of the global apparel industry? Right now, Bahl’s is a midsize company with turnover of around $100 million and a clearly delineated market niche: sustainably made, high-fashion blue jeans for affluent consumers. He volunteers a cross-industry analogy. “There are Kias, and there are Rolls-Royces, and there are Teslas.” Sai-Tex is, right now, the Tesla of trousers, he suggests.

For the moment, at least, Bahl is an outlier, and outliers tend to come in two varieties. Some remain just that: visionary mavericks on the fringes of their respective industries. But others go on to do what Bill Gates did for computers, or what Mark Zuckerberg did for social media. For Bahl to become that second type—the type that shatters old paradigms and creates entirely new ones—he will first have to cross the scalability threshold, transforming Sai-Tex from a niche manufacturer of luxury items into a mass-market producer with industry-wide name recognition. If he can manage to expand his business without sacrificing the sustainability principles at its foundation, proving to his colleagues and competitors that things like energy efficiency, water management, and chemical-free workplaces are actually compatible with the bottom line, then he might well prove to be a transforming figure.

Sai-Tex’s biggest and most important client—accounting for almost half its sales—is G-Star, a well-known brand of premium (i.e., expensive) jeans that takes sustainability seriously: In one of its more publicized initiatives, RAW for the Oceans, the company is working with its suppliers to create denim by combining cotton with polyester yarn culled from recycled ocean plastic. When I spoke with G-Star’s corporate responsibility manager, Frouke Bruinsma, she emphasized that the structure of the apparel industry means that no single actor, even one as large as G-Star, can ever hope to effect significant change all by itself. “To reduce the environmental footprint, each link in the supply chain needs to collaborate,” she said, “and to G-Star that means building long-term relationships with like-minded suppliers—such as Sai-Tex—to work together on continuous improvements.”

If Bahl can manage to expand his business without sacrificing the sustainability principles at its foundation, then he might well prove to be a transforming figure.

More and more brand executives are beginning to think this way, although the hoped-for paradigm shift will ultimately depend on which players—not just how many of them—are willing to join the game. Sai-Tex’s deal with Puma, and the conversations the company is having right now with the likes of Tommy Hilfiger and Calvin Klein, are hints that things are moving in the right direction. Interestingly, the push for greater sustainability within the industry may be coming less from consumers, as one might expect, than from big wholesale buyers. (Shoppers are looking for the right mix of price and quality when they buy a pair of jeans, and sustainability tends to be a lower priority, especially in the United States.) This set of circumstances augurs well for Vietnam, since international brands and investors doing business there are entering the marketplace with fresh attitudes and expectations that didn’t exist when the apparel industry began to boom in China or Bangladesh.

Increasingly, these brands are joining forces, leveraging the strength of their combined voices to make a much louder noise. The most visible industry association is the San Francisco–based Sustainable Apparel Coalition (SAC), which is made up of more than 90 clothing companies (that together account for almost 30 percent of the global apparel market); 20 advocacy and education organizations, including Fairtrade International and NRDC; and representatives from the U.S. Environmental Protection Agency. The most tangible result of the coalition’s work so far is something called the Higg Index, a set of open-source tools that allows apparel companies to measure the sustainability of any product through its entire life cycle, from preproduction cradle to postconsumer grave.

Shortly after I met him in New York, Sanjeev Bahl flew to Copenhagen to appear on a panel chaired by the SAC’s CEO, Jason Kibbey. The panel was part of a larger event organized by the Global Green Growth Forum (3GF), which brings together governments, businesses, investors, and financial institutions to participate in a “race to the top” based on environmental sustainability and workers’ rights. One of Bahl’s fellow panelists was Tran Hong Ha, Vietnam’s vice minister of natural resources and environment. Bahl was delighted when Tran, the second-most powerful environmental official in Vietnam, publicly expressed his eagerness to have his country join 3GF. Furthermore, Bahl noted, Tran framed this commitment to sustainability not only in environmental terms but also as a way to bolster Vietnam’s competitive advantage.

A few days after my visit to the Sai-Tex factory, I joined the throng at the Tan Binh Convention Center in Ho Chi Minh City for the opening ceremony of the 14th annual Vietnam Textile and Garment Industry Exhibition. To a blast of music that suggested an Asian pop version of the Star Wars theme, a senior official from the Ministry of Industry and Trade stepped up to cut the ribbon. Vietnam’s apparel industry was thriving, he assured the crowd, reeling off statistics. Now it was up to the foreign exhibitors—and their prospective Vietnamese clients—to help it surge to the next level. Let the show begin.

Inside the cavernous hall, the hundred or more exhibitors seemed eager to oblige. All the physical arcana of the clothing industry were laid out on display: a mind-boggling array of machines, materials, and accessories. There were buttons from Thailand; zippers from Taiwan; buckles, rivets, and grommets from Hong Kong. There were cutting plotters and bobbin winders, pilling and snagging testers, swatches of coral fleece, jacquard, spandex, and clinquant flannelette.

I stopped to chat with a salesman from a Turkish company called Eksoy. He was sitting alone at a table, looking somewhat nervous, like a man waiting for an invitation to dance. On the wall behind him, he had put up pictures of his company’s offerings: nontoxic chemicals for organic cotton, wetting agents for denim that could reduce dyeing time and energy use. It was his first time in Vietnam, he told me. Everyone in Turkey knew about the boom here. Eksoy’s corporate owners wanted a piece of it.

At one booth after another, I heard countless variations of the same story: It’s our first time here; Vietnam represents a great new market opportunity for us; and, in a striking number of cases, we have a new, exciting, much more sustainable product to sell. The president of Ink Tec, a company based in Newton, North Carolina, was offering nontoxic inks for garment labels. A sales rep from Taiwan touted his company’s energy-efficient dyeing machines. A Chinese manufacturer was showcasing polyester yarn made from recycled plastic—virtually the same product, in fact, that G-Star was promoting in high-end stores all over Europe.

As I left the hall, I stopped to say good-bye to the man from Eksoy. But he was too busy to notice me. He was hunched over his laptop, sharing some item of clear relevance with a Vietnamese businessman in a dark suit. Then the two stood up and shook hands. It looked as if he might have found his first dance partner.