Vietnam’s local clothing companies are in a difficult situation
According to a report by Vietnam’s “Saigon Economic Times” on August 4, local garment companies in Vietnam are facing an extremely difficult situation: rising costs, falling unit prices, and reduced orders.
1. Reduce cost increase. Wage levels have increased rapidly for many years. The Vietnamese government implements an annual increase mechanism for the minimum wage standard. Over the years, the minimum wage standard for Vietnamese workers has increased by an average of 12-15% annually, while social insurance premiums (22% of basic wages) and union fees have also increased. Currently, the labor force of Vietnamese garment enterprises The cost accounts for 65-70% of the total cost, which is 10 percentage points higher than a few years ago, making enterprises breathless. In addition, the Vietnamese government plans to make social insurance premiums based on employees’ total income from 2018, which will make it more difficult for enterprises to bear the burden. In addition, the high bank loan interest rate (8-10%/year) is also a major burden for enterprises.
2. The unit price dropped and orders decreased. Due to the impact of the world economic downturn, especially the competition from similar products from China, India, Bangladesh, and Cambodia, there has been a serious shortage of orders, many companies have under-operated, and some are on the verge of bankruptcy. In the case of insufficient orders, customers also deliberately lowered prices by 10-15% or even 20%. However, in order to ensure the operation of factories, companies have to accept orders reluctantly. Even so, orders are still insufficient.
3. Another factor that reduces the competitiveness of Vietnamese garment enterprises is the fixed exchange rate of the Vietnamese dong. The report believes that the Vietnamese dong is bound to the strong US dollar, while the currencies of Vietnam’s main export markets for clothing have depreciated significantly: for example, the euro has depreciated by 18%, the Japanese yen has depreciated by 17%, and the RMB has depreciated by 8%. At the same time, the currencies of Vietnam’s competitors, such as other ASEAN members, India, Bangladesh and other countries, have also depreciated by 10-20%.
The above factors make Vietnamese clothing 20-30% more expensive than other competitors, making it impossible to compete at all, resulting in the loss of orders.
In the first half of this year, Vietnam’s textile and apparel exports totaled US$12.67 billion, a year-on-year increase of 4.72%, the lowest growth rate in the same period in the past 10 years, and the growth was mainly contributed by foreign-funded enterprises, while local enterprises encountered great difficulties in finding orders. . It is expected that Vietnam will be destined to fail to achieve the US$31 billion export target set at the beginning of the year. Vietnam’s local clothing companies are in a difficult situation
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
