Garment, textile industry gradually loses its advantages

Export target of US$40 billion of garment and textile industry this year is on the verge of failing to achieve due to several difficulties, such as a shortage of orders and high dependence on imported materials. 

Garment, textile industry gradually loses its advantages

Workers make suit jackets for export.


According to the Vietnam Textile and Apparel Association (Vitas), garment and textile industry has been facing several difficulties and challenges. Currently, competition for orders between domestic and foreign direct investment enterprises has become more and more cut-throat. Many enterprises have been dealing with scarcity of orders, some even had to close down and be under threat of bankruptcy. 

The reasons for this situation were that most orders were divided into small orders; clients were neglect in placing long-term orders; especially, clients lowered prices, causing enterprises to have low profits. Orders tend to move to countries with preferential tax treatment, such as Bangladesh and Cambodia, instead of moving to Vietnam like before.

Besides, the advantage of cheap labor no longer exists when many other countries have labor costs that are half of that of Vietnam’s garment and textile industry. In order to attract orders, those countries have applied various policies to support their garment and textile enterprises, including reducing duties, raising the risk of losing orders of Vietnamese enterprises higher and higher. In addition, garment and textile industry has been under pressure about supply when it has to spend higher expenses to buy fabric from China while the pressure to lower the price of export orders to increase competitiveness is also great.

Vietnam’s garment and textile industry has been gradually losing its advantage in labor cost compared to some countries. Moreover, investment and application of science and technology in garment and textile industry is still limited, weakening competitiveness, said economic expert Tran Minh Ngoc from the Ho Chi Minh City University of Industry.

Meanwhile, garment and textile products have not taken advantage of opportunities of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Until now, after becoming effective for ten months, issuance of the certification of origin of Vietnam is still depending on relevant authorities while member countries in the CPTPP have allowed enterprises to certify by themselves.

Besides, the yarn forward rule of origin, which means that all products in a garment from the yarn stage forward must be made in one of the countries that is party to the agreement, is a great challenge as garment and textile enterprises have been importing more than 60 percent of materials from countries outside the CPTPP. Garment and textile industry will hardly make use of opportunities and even face difficulties with the CPTPP as if it fails to ensure rules of origin, Vietnamese products will not receive preferential tariffs when exporting.

Many garment and textile enterprises considered the CPTPP and the EU-Vietnam Free Trade Agreement as opportunities to promote export, expand market and receive preferential tariffs. However, in order to take advantage of these opportunities, the Government needs to resolve those aforesaid entanglements to create favorable conditions for the development of garment and textile industry as well as solve difficulties in customs clearance, import-export and tax refund procedures.

 

Moreover, the Government should have policies to help enterprises to reduce production costs and policy to allow investment in weaving and dyeing stages. In recent years, in order to attract orders, rivals of Vietnamese garment and textile industry have all applied policies to support domestic garment and textile enterprises, including cutting corporate income tax and import tariffs of materials.

Vice chairman cum general secretary of Vitas Truong Van Cam said that amid fierce competition, achieving a growth of about 9 percent is great effort of garment and textile industry. In order to reach export target of $40 billion this year, from now to the end of this year, enterprises must zealously seek for partners, expand export market, change production and business method that is in line with the tendency and meet the increasing demand of consumers.

At the same time, they should also focus on orders that require high techniques and make the most out of local skilled workforce as well as meet fast and punctual delivery time and ensure quality as required by clients. Garment and textile enterprises should cooperate with each other through affiliating and supporting programs of the association in order to meet the rules of origin in accordance with commitments in free trade agreements. Small enterprises can establish a production chain to meet large orders in terms of quantity, quality and delivery time to build long-term prestige with partners.

The association will continue to accompany enterprises in reporting difficulties and proposing solutions for enterprises when implementing legal procedures. At the same time, it will run several trade promotion programs, conferences, trainings in certificate of origin and sustainable development program of the industry. The Government should carry out from macro to micro solutions to assist most effectively the process of manufacturing and exporting garment and textile products, the representative of Vitas said. SGGP

Thuy Doan

VN textile-garment thrives with technology

VN textile-garment thrives with technology

Adopting advanced technology and improving the localisation ratio of materials and accessories are textile and garment enterprises’ best chance.

Vietnamese textile and garment firms aggressively seeking more orders

Vietnamese textile and garment firms aggressively seeking more orders

Thirty-eight Vietnam’s textile and garment companies recently attended ‘Global Sources Fashion and Global Sources Lifestyle’, the biggest fashion exhibition in Hong Kong, to seek buyers.

 
 

Other News

.
17th China-ASEAN Expo & Business and Investment Summit on the horizon
17th China-ASEAN Expo & Business and Investment Summit on the horizon
BUSINESSicon  19/11/2020 

The 17th China-ASEAN Expo and the 17th China-ASEAN Business Investment Summit will be held online between November 27 and 30 in Nanning, Guangxi Province of China.

First-ever Epidemic Prevention and Public Health Exhibition Area in the CAEXPO
First-ever Epidemic Prevention and Public Health Exhibition Area in the CAEXPO
BUSINESSicon  18/11/2020 

The upcoming 17th China-ASEAN Expo will launch its first-ever physical exhibition area for epidemic prevention and public health.

Multi-billion US dollar deals kick off new investment wave
Multi-billion US dollar deals kick off new investment wave
BUSINESSicon  18/11/2020 

More and more investment deals are still being been made despite the Covid-19 pandemic. 

Retailers rush to expand market share
Retailers rush to expand market share
BUSINESSicon  17/11/2020 

The race for domestic retail market share was heating up as local and foreign firms looked to expand their networks, experts said.

Vietnam to see boom in supply of industrial property next year: Savills
Vietnam to see boom in supply of industrial property next year: Savills
BUSINESSicon  17/11/2020 

Vietnam will see strong growth in industrial property next year due to higher demand for industrial parks as business expand production or relocate out of China, according to Savills Vietnam.

Wind power: Ministry wants to extend FIT policy
Wind power: Ministry wants to extend FIT policy
BUSINESSicon  17/11/2020 

Following a proposal by 10 provinces, the Ministry of Investment and Trade (MOIT) wants to extend the deadline for FIT (Feed in Tariff) application because many wind power projects cannot become operational prior to the given date.

Vietnam’s tuna exports soar as EVFTA tariff cuts take effect
Vietnam’s tuna exports soar as EVFTA tariff cuts take effect
BUSINESSicon  17/11/2020 

While many seafood products have seen minus growth because of Covid-19, Vietnam’s tuna has been selling well in the world market.

The wealthy continue to spend big money on cars despite Covid-19
The wealthy continue to spend big money on cars despite Covid-19
BUSINESSicon  18/11/2020 

While Covid-19 has had a big impact on the economy and most people, it has not hurt the rich. They are stil spending big money on luxury car models.

Market rally to go on, corporate earnings in the sight
Market rally to go on, corporate earnings in the sight
BUSINESSicon  16/11/2020 

Vietnam’s benchmark VN-Index climbed to a 10-month high last week and the market rally will keep on going, experts and securities firms forecast.

Banks raise foreign ownership ratio to improve financial strength
Banks raise foreign ownership ratio to improve financial strength
BUSINESSicon  16/11/2020 

Vietnamese banks have been increasing their foreign ownership ratios to attract investment and improve financial strength.

Foreign investors increasingly drawn to VN education sector
Foreign investors increasingly drawn to VN education sector
BUSINESSicon  16/11/2020 

According to the General Statistics Office, foreign investment as of October 20 was US$23.48 billion, equivalent to less than 81 per cent of the figure for the same period last year.

Upward trend persists for M&A in real estate
Upward trend persists for M&A in real estate
BUSINESSicon  16/11/2020 

The recent trend of transferring sub-projects to other developers in large-scale real estate complexes is considered one of the efficient ways to bring many benefits to developers, investors, and buyers.

Vietnam's priority objectives to rise above pandemic tides economy
Vietnam's priority objectives to rise above pandemic tides economy
BUSINESSicon  16/11/2020 

Vietnam is now struggling to instrument the recovery of its economy that has been seriously rocked by the global health crisis. 

Eye-catching deals in a year of disruptions
Eye-catching deals in a year of disruptions
BUSINESSicon  16/11/2020 

Although share contributions and purchases have gone into a relative lull in recent times, there have still been numerous outstanding deals stealing the limelight in the market.

Triple amendments strike sparks in M&A
Triple amendments strike sparks in M&A
BUSINESSicon  17/11/2020 

Mergers and acquisitions in Vietnam are forecast to change from the beginning of next year, when three amended laws will come into effect at the same time.

Airbnb-style practices targeted with tax proposals
Airbnb-style practices targeted with tax proposals
BUSINESSicon  16/11/2020 

Proposals currently being pored over to recognise short-term leasing of apartments as a legal business will put pressure on popular homestay groups such as Airbnb.

Shoppertainment the name of the game for e-commerce sites
Shoppertainment the name of the game for e-commerce sites
BUSINESSicon  16/11/2020 

Ensuring the quality of products bought online has long been tricky, but commercial livestreams, e-consulting and virtual reality on e-commerce sites could change that.

Recovery continues
Recovery continues
BUSINESSicon  15/11/2020 

As opposed to that of supply, the recovery of demand remains weaker, which means that the recovery of growth in the coming time will depend largely upon whether consumers can bolster their purchasing power

Gov’t orders solutions to support rice exporters to EU
Gov’t orders solutions to support rice exporters to EU
BUSINESSicon  15/11/2020 

The Government has directed the Ministry of Industry and Trade to coordinate with other relevant agencies to support local enterprises exporting rice to the European Union (EU) to make the most of EVFTA,

Retail spaces left empty as shops go online
Retail spaces left empty as shops go online
BUSINESSicon  15/11/2020 

Although Vietnam has managed to effectively contain the Covid-19 outbreak, many unsuccessful shops have shut down, as retailers have opted to go online to reduce operation costs, with the trend expected to grow further in the coming time.

 
 
 
Leave your comment on an article

OR QUICK LOGIN