Vietnam's garment-textile units see rising orders,
Many export-oriented garment units in Ho Chi Minh City recently said
that in the fourth quarter of 2020, orders, especially from the US
market, started increasing again. Though this is positive news, raw
materials have become scarce because of a rise in their prices by a
fifth, and costs have also increased by 15-20 per cent in associated
industries like packaging, adhesive tapes and chemicals, leading to
rising production costs and lower profits.
Revenues of many enterprises are just enough to cover expenses and
Though with new free trade agreements (FTAs), the country can use raw
materials from many countries, as companies have been using raw
materials from China for a long time, they reportedly become passive in
raising production when orders rise due to scarcity of raw materials.
According to the Vietnam Textile and Apparel Association (VITAS), the
country’s garment and textile industry imports raw materials, including
yarn, fabric, and auxiliary materials, mainly from China. Of that,
fabric imports accounted for nearly three-fifths of the total imports of
$13.5 billion in 2019, and fibre imports 55 per cent.
To limit the negative impacts on production and business, VITAS has
recommended member enterprises to discuss with customers and focus on
exploiting domestic raw materials and auxiliary materials, or import
from other countries.
Another problem is raw materials from other countries like India, South
Korea and European nations cannot match either the quality or the price
of Chinese ones.
According to VITAS, the demand from Europe and the United States in 2020
decreased by 45 per cent and 40 per cent respectively for garments, and
27 per cent and 21 per cent respectively for footwear.
However, Vietnam's garment and footwear industries also have many
opportunities in the context that global trade has changed. When China
reduced its total exports by up to 50 per cent for some items, Vietnam's
garment exporters still expanded their share in the US market, mainly
thanks to high-value items.
VITAS chairman Vu Duc Giang says in future, besides the advantages, the
country’s garment and textile industry will also face difficulties when
the supply of raw materials is inadequate and imbalanced, and there is a
blockage in the phases of weaving and dyeing.