VietNamNet Bridge - Vietnamese garment companies are increasingly concerned as foreign partners are placing orders with producers from Laos and Myanmar. They have been told to focus on making mid- and high-end products.

Chair of the Vietnam Textile and Apparel Association (Vinatas) Vu Duc Giang said at a conference in HCM City in late April that the Vietnam’s textile & garment industry is facing big challenges.

Giang said many small and medium enterprises have had to shut down because they could not get orders to retain jobs.

A lot of partners have shifted to place orders with Myanmar and Lao instead of Vietnam because exporters from the two countries can enjoy preferential tariffs when exporting goods to US and European markets.

Many small and medium enterprises have had to shut down because they could not get orders to retain jobs.

Le Quang Hung, chair of Garmex Saigon, said he was worried about the strong rise of rivals from Myanmar, Laos, Cambodia and Bangladesh, admitting that the companies there can fulfill orders at more competitive prices than Vietnamese companies thanks to the lower labor costs.

However, Hung said that the problem was not too serious for the company because Garmex Saigon in recent years has been gathering strength on making products which require high-level technique.

“We may be uncompetitive in implementing big orders with low prices, but we have high advantages in implementing orders placed by mid- and high-end brands,” he said.

At the enterprise with more than 4,000 workers, the factories in Vung Tau City and Quang Nam province, which have lower production costs, are in charge of making products which do not require high technique, such as T-shirt and jeans. Meanwhile, its factory in HCM City focuses on implementing high-value orders which require higher technical standards.

Hung believes that what Vietnamese companies should satisfy choosy clients, rather than cut selling prices to compete for low-value orders.

Nguyen Huu Toan, deputy general director of the Sai Gon 2 Garment Company in Tan Binh district, HCM City, also said his company was taking necessary measures to renovate its operation to make it adapt to the new period of development, when TPP takes effects.

He said the company was now looking for domestic suppliers to implement the plan on shifting to domestic input materials instead of Chinese materials, which would allow the company to enjoy TPP preferential tariffs.

Meanwhile, Vinatex, the Vietnamese leading garment corporation, is implementing a plan on shifting from CMT (cut, make, trim) model to FOB (free-on-board, i.e selling definitively), while striving to the ODM (original design manufacturer) model to obtain better margin profit. 

Vinatex hopes that 60 percent of its exports would be FOB products by 2020, while the ODM would be 20 percent.


TBKTSG