- News in Vietnam
- 27 April 2022
Full of orders, textile enterprises still can’t rest assured
After Vietnam controlled the Covid-19 epidemic, export orders of enterprises, including the textile and garment industry, were on an uptrend. However, businesses are also facing a sharp increase in input prices, worrying about not ensuring order progress, even falling into “the more you do, the more you lose.”
According to preliminary statistics of the General Department of Customs, in the first quarter of 2022, textiles and garments were the group of goods that contributed the most to 1.46 billion USD to the increase in exports of the whole country and had the highest growth over the same period last year from 2012 to present.
1. Many worries
Mr. Truong Van Cam, Vice President and General Secretary of Vitas, said that the vital point for textile and garment enterprises, besides having to have orders, needs to have a large workforce. Enterprises that want employees to stick together must take care of their lives, ensure jobs, and provide welfare.
At present, many textile and garment enterprises have ordered until the third quarter of 2022, but it is impossible to predict the market after that because it depends a lot on the epidemic situation and input prices. Some large textile and garment enterprises in Vietnam, such as Vietnam Textile and Garment Group, Garment 10, Thanh Cong Textile and Garment, said that orders will be closed until the end of the second quarter, even the third quarter of this year.
However, as reflected by businesses, although this year’s orders are high, companies face a series of challenges such as transportation fees, port infrastructure fees, and raw materials increase, making it difficult for businesses to ensure the progress of signed orders.
To compete to attract workers, enterprises have to adjust their salaries by 5-10%. Meanwhile, the price of raw materials and accessories increased by 10-20%, logistics costs increased by 10-25%, even 100%, and the cost of transporting export goods also increased by about 30%. This makes businesses worry because “the more you do, the more you lose.”
For example, Dony Garment Company (Thu Duc City), although there were orders until the end of the year with about 3 million USD. But the increase in the price of input materials is causing this enterprise a headache in calculating how to keep the cost, ensure the salary for workers, and make a profit.
However, according to this business leader, if the price of input materials continues to increase, the price may have to be adjusted. In addition, the risk of inflation may also cause businesses to recalculate the problem of labor and salary.
2. Efforts in difficulty
To minimize difficulties and avoid disruption of orders due to the rapidly increasing price of raw materials, many businesses are trying to “tighten their belts and tighten their belts,” improve the value of creativity and take the initiative in raw materials because raw materials are present domestic raw materials can only meet 3%-4%. Besides, training and improving the quality of human resources in the design and trade stages to offer Vietnamese brand design products increase the competitiveness of Vietnamese branded garments in the domestic market land.
In particular, businesses have to manage the norms of raw materials to form products strictly. For example, for Garment 10, the processing cost of the total cost of a shirt product accounts for 15-20%. If the productivity of the processed part is increased, it will reduce the pressure to increase costs in the context of not being able to increase the selling price of the product.
To overcome the shortage of raw materials and accessories due to dependence on imports, this enterprise has promoted cooperation and association with domestic suppliers, thereby helping Garment 10 make the most of the incentives from FTAs. In addition, May 10 is also flexible in managing imports and export in the transportation stage (ship, road, air). Therefore, May 10 always ensures timely delivery and creates an excellent reputation with customers.
“Garment 10 currently has over 60 customers who are garment importers in the markets: the US, Europe, Japan, Korea, Canada… Especially the unit has built about 600 suppliers of raw materials around the world to serve production and business”. General Director of Garment 10 Corporation Than Duc Viet shared.
According to Vice President Vitas, the textile and garment industry is developing quickly. However, it is still weak in input materials, so I hope the Government will soon approve the “Strategy for development of Vietnam’s textile, garment and footwear industry to 2030, with a vision to 2020. 2035” so that the industry can be self-sufficient in raw materials, meeting the rules of origin of the Free Trade Agreements.
In addition to the efforts of enterprises, the textile and garment industry hopes that the State will have specific support mechanisms and policies to encourage the development of supporting initiatives. It includes master planning, allocation of investment attraction investment, export promotion funds, financial support, interest rates, and exchange rates to help businesses improve their competitiveness in the international market,” suggested Mr. Cam.
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