Apparel sector enjoys robust export growth, good prices

Workers at a garment factory in HCMC. Increasing prices of garment and textile products have helped local producers boost exports - Photo: Le Toan

HCMC – The apparel industry has gained robust export growth of over 20% in the January-September period to earn US$8 billion due to good prices and ample orders, and is poised to fulfill its 2010 target of US$10.5 billion, sources said.

The Ministry of Industry and Trade said in a report on Monday that prices of garment and textile exports have increased by 15-20%, making life easier for garment exporters who have faced a surge in input costs including higher materials prices.

Furthermore, shipments to most markets except the slow-moving European market have recovered strongly, according to the report. In particular, the nine-month export revenue of the country’s garment and textile products to Korea had surged a staggering 80%, while that to Japan also increased by 15%.

Recognizing that apparel exports in the January-September period increased 20.6% year-on-year to US$8 billion, experts in the industry predicted that the target of US$10.5 billion in export revenue for this year will be highly obtainable.

The ministry said that although the labor cost in Vietnam is higher than in other nearby countries such as Bangladesh, Cambodia and Myanmar, many foreign buyers still prefer Vietnam’s products because the country’s garment producers can meet their choosy demands.

But many challenges are still ahead, according to the ministry.

These include the lack of laborers hindering garment enterprises from expanding production, the rising prices of imported materials and accessories for the industry, and especially the illegal import of garment and textile products from China stonewalling local enterprises from boosting their local market shares.

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More garment businesses expand scale

A dozen of garment and textile enterprises, mostly in northern region,
have been investing in expanding production since 2009 in a trend that
is forecast to be continued, said experts from the Vietnam Garment and
Textile Group (Vinatex).

Analysing the positive trend, Nguyen Van Thoi, General Director of the
Thai Nguyen Investment and Trade Company (TNG), said the world’s garment
and textile suppliers are shifting their attention from China to
Vietnam and in the country, the market is moving from the south to the
north due to more labour competitiveness.

In addition, customers
now tend to directly connect to suppliers instead of through
intermediaries such as international contractors and retail groups, thus
creating opportunities for development for Vietnamese garment firms,
including TNG.

Recently, TNG invested 210 billion VND (11 million
USD) in building its fourth plant, which is scheduled to be put into
operation in the first quarter of 2011, bringing the company’s total
sewing chains to 172, making it one of the country’s leading garment
suppliers.

The TNG leader said that the investment was based on
long-term and stable commitments and orders from its customers,
including those from the US and Canada like Columbia ,
Sportswear, The Children’s Place and Capital.

After this project,
TNG plans to invest further in its equipment with the aim of taking on
more steps of international garment orders by 2015, Thoi said.

Earlier,
the Nha Be Garment Joint Stock Corporation, which has 22 garment
factories and eight trading companies, invested trillions of VND in
nearly 10 projects despite fluctuation in the market. Two of them, with a
combined investment capital of over 200 billion VND (over 10 million
USD) will become operational late this month.

The new investment
is expected to raise the company’s export turnover by between 20-25
percent this year, said Duong Thi Ngoc Dung, President of the Board of
Directors of Nha Be.

According to experts, increasing investment
in expand production is necessary at a time when Vietnam still has
many advantages in sub-contracting. However, for sustainable
development, enterprises should invest in supporting industries like
materials processing, textile and dying in order to switch from
sub-contracting to selling products of their owned designs.

Garment
and textile have been Vietnam ’s leading export items with turnover
hitting nearly 10 billion USD a year for the past two years.

In
the first eight months of the year, the garment and textile sector
earned almost 6.9 billion USD from exports, a 17.8 percent increase over
the same period last year and is expected to earn 10.5 billion USD for
the whole year./.

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More garment businesses expand scale

A dozen of garment and textile enterprises, mostly in northern region, have been investing in expanding production since 2009 in a trend that is forecast to be continued, said experts from the Vietnam Garment and Textile Group (Vinatex).

Analysing the positive trend, Nguyen Van Thoi, General Director of the Thai Nguyen Investment and Trade Company (TNG), said the world’s garment and textile suppliers are shifting their attention from China to Vietnam and in the country, the market is moving from the south to the north due to more labour competitiveness.

In addition, customers now tend to directly connect to suppliers instead of through intermediaries such as international contractors and retail groups, thus creating opportunities for development for Vietnamese garment firms, including TNG.

Recently, TNG invested VND210 billion (US$11 million) in building its fourth plant, which is scheduled to be put into operation in the first quarter of 2011, bringing the company’s total sewing chains to 172, making it one of the country’s leading garment suppliers.

The TNG leader said that the investment was based on long-term and stable commitments and orders from its customers, including those from the US and Canada like Columbia , Sportswear, The Children’s Place and Capital.

After this project, TNG plans to invest further in its equipment with the aim of taking on more steps of international garment orders by 2015, Thoi said.

Earlier, the Nha Be Garment Joint Stock Corporation, which has 22 garment factories and eight trading companies, invested in nearly 10 projects despite fluctuation in the market. Two of them, with a combined investment capital of over VND200 billion (over $10 million) will become operational late this month.

The new investment is expected to raise the company’s export turnover by between 20-25 percent this year, said Duong Thi Ngoc Dung, President of the Board of Directors of Nha Be.

According to experts, increasing investment in expand production is necessary at a time when Vietnam still has many advantages in sub-contracting. However, for sustainable development, enterprises should invest in supporting industries like materials processing, textile and dying in order to switch from sub-contracting to selling products of their owned designs.

Garment and textile have been Vietnam’s leading export items with turnover hitting nearly $10 billion a year for the past two years.

In the first eight months of the year, the garment and textile sector earned almost $6.9 billion from exports, a 17.8 percent increase over the same period last year and is expected to earn $10.5 billion for the whole year.

 

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Opportunities for garment, footwear industries

Photo: Tuoi Tre

As China took the second rank in world economies from Japan, experts described the event as an opportunity for small economies depending on outsourcing, including Vietnam.

Experts predict that China would reduce outsourcing activity in industries using large numbers of workers, such as garment and textiles, and boost development of products with high added value.

The country may lose its advantages of competitiveness in materials and low production costs and face pay increases.

Diep Thanh Kiet, Deputy President of the Vietnam Leather and Footwear Association, forecast that with cheap labour costs, Vietnam would be able to take a large volume of orders in garment and textile, leather and footwear and furniture.

Until now, most Vietnamese garment and textile exporters had enough orders for 2010, and some stopped receiving new orders to give priority to already signed contracts. In addition, prices of export items increased 15 percent over last year in US, Japanese and European markets.

The increase in Vietnam’s export turnover is also credited to the country’s implementation of economic and trade agreements with other countries.

Vietnam’s garment and textile exports to the Republic of Korea increased 80 percent thanks to the tax reduction under the ASEAN-RoK Free Trade Agreement. Meanwhile, the Vietnam-Japan Economic and Trade Agreement helped Vietnam’s garment and textile exports to Japan increase 15 percent over the same period last year.

In the first eight months of this year, Vietnam earned nearly US$6.9 billion from garment and textile exports.

Kiet said that many customers selected Vietnamese footwear instead of Chinese ones for their high quality and reasonable prices.

The country obtained an export turnover of more than $3.2 billion from footwear exports, a year-on-year increase of 18.8 percent. Of this figure, almost $700 million was earned from the US.

However, Kiet showed his worry about the capacity of Vietnamese enterprises if they receive orders transferring from China, which exports about 8 billion pairs of shoes a year. He said for Vietnam to take just 10 percent of that amount, local footwear industry must double its production capacity.

For the garment and textile sector, the lesson will be the same. This means the sector must increase its capacity by 2.5 times to receive 10 percent of orders from China. In 2009, China exported $150 billion worth of garments and textiles, while Vietnam exported $9.2 billion.

To take those opportunities, experts said Vietnamese garment and textile and footwear industries must promptly overcome outstanding problems in human resources, materials and technology to raise capacity and the competitiveness for their products.

 

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Opportunities for garment, footwear industries

As China took the second rank in world economies from Japan,
experts described the event as an opportunity for small economies
depending on outsourcing, including Vietnam.

Experts predict
that China would reduce outsourcing activity in industries using
large numbers of workers, such as garment and textiles, and boost
development of products with high added value. The country may lose its
advantages of competitiveness in materials and low production costs and
face pay increases.

Diep Thanh Kiet, Deputy President of the
Vietnam Leather and Footwear Association, forecast that with cheap
labour costs, Vietnam would be able to take a large volume of orders
in garment and textile, leather and footwear and furniture.

Until
now, most Vietnamese garment and textile exporters had enough orders
for 2010, and some stopped receiving new orders to give priority to
already signed contracts. In addition, prices of export items increased
15 percent over last year in US, Japanese and European markets.

The
increase in Vietnam’s export turnover is also credited to the
country’s implementation of economic and trade agreements with
other countries. Vietnam’s garment and textile exports to the
Republic of Korea increased 80 percent thanks to the tax reduction
under the ASEAN-RoK Free Trade Agreement. Meanwhile, the Vietnam-Japan
Economic and Trade Agreement helped Vietnam’s garment and textile
exports to Japan increase 15 percent over the same period last year.

In the first eight months of this year, Vietnam earned nearly 6.9 billion USD from garment and textile exports.

Kiet said that many customers selected Vietnamese footwear instead of Chinese ones for their high quality and reasonable prices.

The
country obtained an export turnover of more than 3.2 billion USD from
footwear exports, a year-on-year increase of 18.8 percent. Of this
figure, almost 700 million USD was earned from the US.

However, Kiet showed his worry about the capacity of Vietnamese
enterprises if they receive orders transferring from China, which
exports about 8 billion pairs of shoes a year. He said for Vietnam
to take just 10 percent of that amount, local footwear industry must
double its production capacity.

For the garment and textile
sector, the lesson will be the same. This means the sector must increase
its capacity by 2.5 times to receive 10 percent of orders from China. In 2009, China exported 150 billion USD worth of garments and
textiles, while Vietnam exported 9.2 billion USD.

To take
those opportunities, experts said Vietnamese garment and textile and
footwear industries must promptly overcome outstanding problems in human
resources, materials and technology to raise capacity and the
competitiveness for their products./.

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Jan-Aug textile export poised to surge 17%

HCMC – The garment and textile industry expects to achieve total export revenue of some US$6.8 billion in the first eight months of the year, a year-on-year rise of nearly 17%, said a Vietnam Textile and Apparel Association (Vitas) official.

Nguyen Son, deputy general secretary of the association, told the Daily on Tuesday that the export of garment and textile products of the country was steadily growing, with August revenue projected to amount to around US$1, equivalent to July.

Son said garment and textile exports to some foreign markets such as Korea, the U.S., Japan and Europe were still on the path to recovery. Garment exports to the U.S. in January through August are forecast to attain year-on-year growth of 20%, European markets 3%, Japan 13% and Korea nearly 70%.

“The industry is striving for average export revenue of US$900 million a month from now to the year-end to translate into reality its target of US$10.5 billion for all of this year,” said the deputy general secretary of Vitas.

Export garments and textiles, particularly those of high quality, can compete well with those in other countries in terms of prices.

Though the industry’s export performance is brighter than in previous months, Son of Vitas said, local producers are still grappling with rising production costs because import materials such as cotton and fiber have inched up 2% from last month.

Meanwhile, he said, domestic materials supply for the industry is barely sufficient while demand keeps growing. Most materials for the industry are imported from other markets, such as China with 35% and Korea with 16%.

To guarantee adequate materials for local garment and textile manufacturers, the Government assigned the Vietnam National Textile and Garment Group or Vinatex long ago to develop materials production zones around the country.

“But the country now has one operational materials center that supplies for local garment firms in the southern region,” said Son of Vitas. This is Sanding Tam center located in HCMC’s Tan Binh District but, he said, this center was not doing fine.

While local garment enterprises have strong demand for quality materials to fulfill their export orders, Son said, construction of material centers nationwide has made no headway.

This is ascribable to unclear policy for material center development. Certain companies have spent their own money building material supply centers but some of these centers have died young due to lack of customer interest, Son said.

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