“While the first six months were busy, the situation turned differently in the last months of the year,” said Le Tien Truong, president of the Vietnam National Textile & Garment Group (Vinatex), about the business performance last year.

The biggest textile and garment manufacturer estimated that its consolidated turnover and profit in 2022 was higher by 15 percent and 14.6 percent, respectively, compared with 2021, but stressed that the result was contributed mostly by the production and exports in the first half.

“The number of orders soared in the first quarter. But the inventory surged by 50-60 percent by the end of June. The second half was bad and the prospects for the first months of 2023 are not really good,” he said.

Many textile and garment producers also saw the number of orders drop by 70-80 percent in the latter half. Truong said he had never in 25 years seen the situation become so different within a short period of time. 

Vu Duc Giang, chair of the Vietnam Textile and Apparel Association (Vitas), confirmed that production slowed down in the last three months of 2022, but the textile and garment industry still exported $44 billion worth of products, up by 10 percent over 2021, thanks to high growth rates in the first three quarters of the year.

The same situation has been reported for the seafood sector. Thuan Phuoc Seafood and Trade obtained seafood export turnover of $135 million in 2022, or 35 percent higher than 2021, but its president Tran Van Linh is worried about 2023.

According to Linh, the high growth rate in 2022 was mostly gained in the first six months when the company implemented contracts carried forward from 2021. 

The company met difficulties in the last quarter. Exports slowed down, while partners did not want to import products. As their currencies lost 20-25 percent against the dollar, purchasing power had dropped dramatically. 

Aecretary general of the Vietnam Association of Seafood Exporters and Producers (VASEP) Truong Dinh Hoe said seafood export turnover in 2022 reached a record high of $11 billion, but demand in markets is decreasing.

He predicted that the seafood export value in the first quarter of 2023 won’t be as high as the same period in 2022 because of weak demand. Orders have not been placed for the first quarter of the new year.

As for the woodwork industry, the owner of a HCM City-based wooden furniture manufacturing company said the company exports 400 containers of products each year with 40 percent of sales from the US, 40 percent from Europe and 20 percent from other markets. 

In January-June 2022, the business went well with a high number of orders.

However, the enterprise began receiving fewer orders in July and export turnover in July, August and September dropped by 30-40 percent over the same periods the year before.

Partners did not place new orders as inventories were still sufficient, and consumers spent less money on wooden furniture. The current situation is predicted to last until the end until at least the first quarter of 2023.

Nguyen Chanh Phuong, deputy chair of Hawa (the Handicraft and Wood Industry Association of HCM City), said many enterprises reported a sharp fall in the number of orders. Some companies cut some production workshops and suspended operations before Tet.

Vietnamese manufacturers mostly do outsource, so their sales heavily depend on market demand. Meanwhile, the US, a loyal market, has had lower demand.

In mid-2022, wooden furniture manufacturers hoped that the real estate market would be stable, but the real situation was different. As real estate products sold slowly, woodwork consumption also decreased.

Global growth 

EuroCham’s Q4 2022 Business Climate Index report found that 1,300 member companies are not very optimistic about business prospects.

Vietnam’s GDP growth rate was high in 2022, at 8.02 percent, but global economic growth declined, interest rates surged, inflation continued, and consumer confidence was low.

Only 27 percent of polled people think that the economy would be stable or see improvement in Q1 2023, according to EuroCham’s report.

Tran Khanh Hien from VNDirect Securities commented that Vietnam’s industry development tended to go more slowly in Q4 2022 with IIP growing by only 3 percent (the growth rate was 10.9 percent in Q3 2022). The IIP in December 2022 decreased by 1 percent compared with November 2022 and increased by only 0.2 percent compared with December 2021.

The number of new orders has been continuously decreasing over the last few months, which made Vietnam’s exports decrease significantly since November 2022. The export value in November-December 2022 dropped to $58.1 billion, down by 12.4 percent.

In Q4 2022, Vietnam’s export turnover was $88.8 billion, down by 6.8 percent. The decreases were reported for most key export items, including phones (- 21.9 percent), electronics and computers (- 3.3 percent), machines and equipment (-  4.6 percent).

Lan Anh