Vietnam’s textile and garment industry still casts a shadow
Many small Vietnamese textile and garment companies plan to merge, while large companies are trying various methods to retain customers, including lowering prices. The manager of a Vietnamese company that has specialized in manufacturing garments for American and Japanese manufacturers in the past 10 years said that the company is facing difficulties, mainly due to very few orders last year (2015). Last year (2014), the company predicted that market demand would increase, so it decided to set up a new factory in Binh Duong Province. However, the number of orders was not as expected.
Many small businesses in the north and south of Vietnam, including Ho Chi Minh City and Bac Ninh City, have decided to auction off their factories due to increasingly difficult operations. The auction price ranges from VND 60 million to VND 35 billion, depending on the age and size of the factory. Not only small businesses, but also large companies are facing difficulties. For example, Vietnam’s largest textile and garment group Vinatex’s revenue increased by 11% last year (2015), but its pre-tax profit was the same as the previous year (2014). Hoang Ve Dung, deputy general manager of the company, said textile and garment companies must cut prices hard to compete with competitors from mainland China, India and Malaysia.
Vinatex is still pessimistic about the economic climate this year (2016). The group plans to increase productivity by 11% and aims to increase revenue by 8%. In addition, Tran Viet, a senior manager of the company, said that the company will be very careful in its production planning this year (2016) because the exchange rate fluctuates greatly, which will affect the company’s execution efficiency. He said that the fluctuation of the Vietnamese dong was one of the reasons why the company’s profits did not increase. Channel explained that the Chinese yuan depreciated by 4.8%, while the currencies of Vietnam’s fierce rivals, Malaysia and India, also depreciated significantly against the Vietnamese dong. In addition, cotton and polyester fiber prices have also dropped sharply, affecting fiber manufacturers, with customers canceling contracts or requesting price reductions.
Competition with mainland China is also a headache for Vietnamese companies. Dung, manager of Vinatex, said that although labor costs have increased in mainland China, manufacturers in mainland China still have great benefits over Vietnam because they can effectively control the supply and demand of materials. Qu said Vietnam can only attract other markets by increasing its production of materials.
Foreign direct investment (FDI) in textiles and garments has increased significantly recently. According to a report, FDI reached US$1.5 billion last year (2015), which is equal to the total domestic investment in the past 20 years.
AAA
Disclaimer:
Disclaimer: Some of the texts, pictures, audios, and videos of some articles published on this site are from the Internet and do not represent the views of this site. The copyrights belong to the original authors. If you find that the information reproduced on this website infringes upon your rights and interests, please contact us and we will change or delete it as soon as possible.
AA
