With volatility continuing to reshape the textile and garment market and traditional forecasting methods becoming less reliable, the Vietnam National Textile and Garment Group (Vinatex) recognizes the need to fundamentally rethink how it develops and manages its 2027 business plan. Rather than setting targets based on mechanical growth formulas and past performance, Vinatex is adopting a scenario-based approach to management and planning. The focus is on identifying the true drivers of growth, assessing each member unit’s actual capabilities, and proactively developing action plans to respond to changing market conditions.
From mechanical target-setting to action-oriented planning
The period from 2020 to 2025 fundamentally changed the business environment. The pandemic, supply chain disruptions, geopolitical conflicts, inflation, weakening demand, and rapid shifts in trade policy repeatedly disrupted conditions that had once been considered “normal.” For the textile and garment industry, which is highly open to international trade and deeply dependent on global markets, not only has volatility intensified, but the pace of change has also accelerated. As a result, forecasts have become less reliable over time, with both their accuracy and their useful lifespan increasingly limited.
These realities have compelled Vinatex to rework its management approach. Experience remains valuable, but it is no longer sufficient as the sole basis for decision-making. The ability to anticipate changes early, adapt quickly, and make timely decisions has become an increasingly important management capability across the Group.
Against this backdrop, business planning faces a new set of demands. Uncertainty does not diminish the importance of planning; on the contrary, the greater the uncertainty, the greater the need for a plan. However, a plan can no longer be merely a set of figures representing a “commitment to results” or a collection of KPIs used to evaluate performance at year-end. Instead, it must serve as a guiding tool throughout the management and operational process.
Vietnam is entering a phase of high growth, with an annual growth target in the double digits. This ambition is necessary to generate momentum, drive innovation, and unlock the country’s development potential. For businesses, however, setting an ambitious target is only the starting point. The real value of a plan lies in its ability to chart a path toward that target and define how to adjust course as actual conditions change.
In this context, conventional planning methods — based on applying a growth rate to the previous year’s estimated results — have revealed their limitations. They implicitly assume that the previous year’s performance can be replicated. In reality, annual results may be influenced by temporary favorable or unfavorable factors, while growth potential varies significantly across industries. Therefore, before setting targets for 2027, it is essential to review 2026 performance to identify what has genuinely driven growth and which drivers can be sustained into the following year.
What drove growth in the first nine months of 2026: Market conditions or core capabilities?
Vinatex’s business results for the first nine months of 2026 showed consolidated revenue of VND 15.5 trillion, up 6.8% year on year, while profit before tax reached VND 1.47 trillion, an increase of nearly 41%. This represented 106.5% of the full-year target. The profit-before-tax margin reached 9.5%, significantly higher than the 7.2% recorded in the same period of 2025. These results substantially exceeded expectations when the 2026 production and business plan was developed. However, behind the overall performance were two markedly different trends in the Group’s two core manufacturing sectors: the Spinning sector delivered exceptional growth, while the Garment sector began to show limits to its ability to sustain growth.
In the Spinning sector, profit for the first nine months reached VND 382 billion, up 168% year on year. The improvement was not confined to a handful of companies; all 12 spinning units recorded better results. Among them, six units that had reported losses in 2025 contributed an additional VND 175.5 billion in profit, equivalent to 73% of the sector’s total profit increase. Most units had already achieved their full-year targets, with some exceeding their targets several times over.
An analysis of the factors behind the Spinning sector’s profit growth shows that, of the approximately VND 292 billion in additional profit generated in the first eight months of the year, VND 273 billion—equivalent to 93%—came from the spread between selling prices and raw-material costs. Improvements in production management also delivered positive results through higher productivity and output, as well as a more favorable product mix. Meanwhile, stronger forecasting capabilities and better production planning enabled enterprises to capitalize on market opportunities. Nevertheless, the key driver behind the Spinning sector’s sharp profit increase in 2026 remained the selling-price-to-raw-material-cost spread, a variable heavily influenced by market conditions.
The Garment sector presents the opposite picture. Revenue for the first nine months reached VND 5.853 trillion, up 2.7%, but profit fell 1.6% to VND 679 billion. The profit margin declined from 14.8% in the 3rd quarter of 2025 to 11.6% in the 3rd quarter of 2026. Among the five largest contributors to the sector’s consolidated profit, three reported declines in profit, while the other two recorded only modest growth. In addition, several units had achieved only around 50% of their annual profit targets, indicating a clear divergence in their capacity to sustain high growth.
The challenge for the Garment sector is not just generating revenue but ensuring that revenue translates into profit. Rising costs, particularly labor costs, have put significant pressure on profit margins. Revenue and profit growth have failed to keep pace with increases in employee income, reducing the return on each unit of labor expenditure by approximately 5%. For a labor-intensive industry, this represents a structural pressure: wages must continue to rise to remain competitive and retain workers, while the scope for increasing unit prices is becoming limited and the potential for further productivity gains through individual labor improvements is gradually reaching its limits.
Vinatex’s results for the first nine months of 2026 show that market variables are having an increasingly significant and direct impact on production and business performance. Although enterprises can forecast and respond to these factors, they cannot control them. When raw-material prices, selling prices, order volumes, exchange rates, and trade policies can change substantially even within a single planning period, a set of targets built around a single market scenario can quickly lose its relevance.
Five Key Priorities for Innovation in 2027 Planning
Based on these observations, the 2027 plan needs to be developed using a new approach, rather than simply taking the results of 2026 as a baseline and applying an additional growth rate. It must clearly identify the underlying business fundamentals, the drivers of growth, and the conditions required to achieve the targets. Ambitious growth targets should still be set to drive innovation, but the figures must be grounded in a clear understanding of each enterprise’s current position, its remaining growth potential, and the additional resources needed to meet the targets. At the same time, as business performance becomes increasingly exposed to unpredictable market variables, planning can no longer rely on a single assumption. It must account for different possible scenarios and prepare adjustment measures in advance. A good plan must therefore answer two questions: how will the growth targets be achieved, and what will the enterprise do if the assumed conditions do not materialize in practice? With this mindset, the approach to developing the 2027 plan should focus on five interrelated priorities.
First, identify the drivers of growth. The 2026 results need to be analyzed to determine which components of growth stem from the enterprise’s underlying capabilities and can be sustained, and which are attributable to favorable market conditions or temporary factors. On this basis, the 2027 plan must clearly identify new sources of growth, whether through higher output, improved productivity, selling prices, changes in product – customer mix, cost reductions, new investments, or management initiatives. In other words, every increment of growth targeted for 2027 must have a clearly identified source and evidence for believing that it can become reality.
Second, growth targets must be based on an accurate assessment of existing capabilities. Each unit needs to review its production capacity, workforce, customers, markets, financial resources, and the bottlenecks currently constraining growth. The purpose is not to limit targets to existing capabilities, but to quantify the gap between current capacity and the desired targets. When the targets assigned by the Group exceed those proposed by individual units through bottom-up planning, this gap must be clearly identified and translated into specific tasks and solutions to build additional growth capacity, rather than simply adjusting the planned figures to make them align.
Third, the plan must clearly define the key assumptions for 2027. In addition to factors that enterprises can proactively manage, they need to identify several variables that have a material impact on business performance but are difficult to control, such as market demand, selling prices, raw-material prices, exchange rates, labor costs, and trade policies. The key is not to forecast these variables with absolute accuracy, but to determine the extent to which the plan depends on them, so that the impact on results can be assessed if the underlying assumptions no longer hold.
Fourth, key assumptions must be translated into planning scenarios. The base-case plan remains the primary basis for execution. However, for highly uncertain variables, enterprises need to quantify additional advantages and disadvantage scenarios and assess how each would affect key production and business performance indicators. The objective is to anticipate the potential range of variation in key assumptions, assess the sensitivity of business results to these factors, and establish the plan’s safety margins. This will help enterprises understand how much change they can absorb and prepare response measures proactively.
Finally, established a mechanism to monitor and adjust the plan as assumptions change. For key variables, warning thresholds should be defined to identify when actual developments have deviated significantly from the initial assumptions and the plan needs to be reviewed. In such cases, enterprises should update their forecasts, reassess the impact, and select measures suited to actual conditions. In this way, the plan becomes a management tool, enabling enterprises to detect changes early and make proactive adjustments before those changes have a significant impact on business performance.
To implement this approach to 2027 planning, individual units need to focus on preparing several key foundations in the 4th quarter of 2026. First, they must conduct an in-depth analysis of their 2026 results to clarify the sources of profit and growth, distinguish genuine improvements in business performance from temporary favorable factors, and assess which growth drivers can continue to deliver results in 2027. At the same time, the Spinning and Garment Business Divisions must complete their assessments of the units’ existing capabilities and identify bottlenecks constraining growth in areas such as markets, customers, equipment, labor, production management, finance, and investment. This will help determine both the remaining growth potential and the additional resources required to achieve the 2027 targets. Based on updated market information, each unit should identify the assumptions most likely to have a significant impact on its 2027 results and quantify their effects on key production and business performance indicators, rather than attempting to forecast too many variables. More importantly, each unit needs to develop an integrated plan covering markets – production – human resources – investment – finance, all built on a consistent set of assumptions and aligned objectives. In addition, the management dashboard system needs to be further developed to ensure that units have tools to monitor performance, detect critical warning signals early, and make timely adjustments.
Planning to Manage Volatility and Stay in Control
The year 2027 will undoubtedly bring many variables that cannot be fully anticipated when the plan is developed. The challenge, therefore, is not to predict the future with absolute accuracy, but to build a plan that is sufficiently grounded to guide operations and flexible enough to adapt when initial conditions change.
Ambitious growth targets remain necessary to drive innovation, encourage enterprises to fully leverage their existing potential, and identify new sources of growth. However, setting a sufficiently high target only defines the destination. The quality of a plan lies in its ability to establish a clear basis for achieving that target, quantify the gap between the target and existing capabilities, and identify the factors that could alter results during implementation.
Reforming the 2027 planning process is not about making plans more complex, but about making them better grounded and more useful for management and operations. Rather than setting a set of targets at the beginning of the year and waiting until year-end to evaluate performance, the plan must become an active management tool that is continuously monitored, updated, and reviewed for adjustment when key assumptions no longer reflect actual conditions. This approach is intended not only to establish more appropriate and achievable targets, but also to bring about a shift in management thinking: from passively reacting to volatility to proactively preparing scenarios, and from managing solely through performance targets to managing based on actual capabilities and the ability to adapt to change. In doing so, it will strengthen the adaptability, resilience, and operational efficiency of the Group in 2027.
We cannot prepare solutions in advance for every eventuality in 2027, but we can have an “action scenario” ready to respond to change with confidence and initiative. That is the essence of “planning for volatility.”
