Business Circle 21

January 3-9, 2022 l www.vir.com.vn

Garment and textiles face reality of fierce global rivalry

By Van Nguyen the States reached $16 billion Textile Association, its gov-
with a growth rate of 25 per ernment decided to extend tax
Vietnam’s garment and textile cent, followed by Vietnam and refund schemes for textiles
sector has reached the 2021 and Indonesia at 14 and 10 per until March 2024 and speed
export target, but is confronted cent, respectively. up the implementation of oth-
with ever-growing competi- Many US importers are er preferential programmes to
tion from the Asian continent shifting towards suppliers provide credit subsidies for
as well as other markets. from Vietnam’s competitors capital in the textile sector.
The high growth rate in after the production disrup- Despite this harsh compe-
the fourth quarter helped tions. The Bangladesh Knit- tition, Vietnamese garments
Vietnam’s garment and wear Manufacturers and and textiles could remain com-
textile sector complete its Exporters Association stated petitive if they make good use
export target of $39 billion, that garment exports to the US of existing advantages. For
equivalent to 2019. But Le have continued to increase, example, with the EU market,
Tien Truong, chairman at the with many buyers now turning Vietnamese businesses could
Photo: Le Toan

Vietnam National Textile and to Bangladesh again. take advantage of the EU-Viet-
Garment Group, said that Meanwhile, India is also nam Free Trade Agreement to
the growth of 11.2 per cent rising, with self-sufficiency in increase their market share.
compared to 2020 does not Vietnam is attempting to compete in textiles with the likes of Bangladesh and China input materials such as cotton But Vinatex’s Truong
indicate an “improvement in and yarn, reasonable labour believed that businesses must
market share”. remain high, and there is a aries have also difficulty com- to an increase in the annu- costs, and an efficient supply be cost-competitive com-
According to him, Viet- serious shortage of empty con- municating with buyers. al base salary and the new chain. The Indian government pared to Bangladeshi prod-
namese garment and textile tainers, and shopping demand “Vietnam’s garment and insurance policy.” has set the goal of increasing ucts, which have lower prices,
groups “don’t know what to could decline again if the pan- textile sector is facing severe Labour costs at garment its export turnover for the tex- and offer faster delivery than
do when the world stops and demic continues to surge. competition to export to companies in Bangladesh cur- tile industry to $80 billion by Turkish products, as these are
does not know what to do The cost of transporting major markets, especially the rently account for about 20 the 2024-2025 period. closer to the EU’s border. Viet-
when the world trades again”. goods by air has increased EU and the United States,” per cent of the cost of goods, The Autonomous India nam annually exports about $5
The Vietnam Textile and fourfold, from around $4,250 said Giang. while this figure in Vietnam is programme and various other billion to the EU, equivalent to
Apparel Association (Vitas) per tonne to $17,000, which Currently, China, Bangla- 26-30 per cent. Labour costs policies have come into play, about 2 per cent of the total
has developed three growth “has become a huge challenge desh, Cambodia, and Pakistan in Pakistan and Cambodia are helping the country’s textile import turnover of garments
scenarios for 2022. The most for textile enterprises,” Giang are the main competitors of also lower than in Vietnam. industry to recover quickly in and textiles in that market.
positive scenario is to strive said. A survey by the Research Vietnam in exporting textiles According to the US 2021. In 2020, the pandemic The global garment and
for an export turnover of up Centre for Employment Rela- to the world. All have a more Office of Textiles and Appar- caused that nation’s textile and textile sector is focusing on
to $43.5 billion and the low- tions found that only 16.7 per complete domestic supply el, Bangladesh currently ranks garment exports to decrease more efficient models to
est would be a maximum of cent of buyers agree to share chain than Vietnam. third in exporting ready-made by 13 per cent compared to the establish flexible relation-
$39 billion. air freight costs with business- Giang also worries, garments to the US, up about previous year, only reaching ships, with responsive sup-
Vu Duc Giang, chairman es with long-term contracts. “Labour costs in Vietnam 27 per cent over the same peri- $29 billion. pliers, while the environment
at Vitas, said that freight rates Factories that act as intermedi- will continue to rise due od in 2020. China’s exports to According to the Indian remains a priority.n

By Hai Van

Positive indicators light costs from Vietnam to the US

V
about 15-20 per cent higher
ietnam is emerg- than from China. It takes about
ing as one of the 30-45 days for ships to travel

up footwear trade to US
largest suppli- from Vietnam to the West
ers of footwear Coast of the US compared
and leather accessories to the to 12-18 days from China,”
United States, opening more Khoa explained.
opportunities for domes- “received many orders from er and footwear to the US as outsourcing processors, as stand very well the strengths The challenges are great,
tic companies to exploit the the US market through the US market comes mainly in the they are unable to design their of the Vietnamese leather but leather and footwear could
world’s largest market for -Vietnam Trade Council. Cus- form of processing orders and own models. Thus, despite the and footwear industry. They benefit from the positive
these goods. tomers placed orders direct- importing them back to the efforts to promote their own still import goods from Viet- achievements in the bilateral
Golden Victory Vietnam ly, moving away from other US. According to Lefaso, high products, local manufacturers nam but often through for- relationship when the trade
Co., Ltd., a foreign-invested countries,” Xuan said. labour costs in the US are the had been unable to attract the eign intermediary companies turnover between the two
enterprise with a factory in Economic indicators and main driver of this as compa- attention of buyers. because they do not believe in countries reached $100 billion
the northern province of Nam consumption are recovering nies there could not compete Further, major brands such the domestic enterprises’ abil- by the end of 2021.
Dinh, in November 2021 put strongly in the US, helping with imported goods. Current- as Nike, Reebok, and Bata ity to organise production and Nguyen Thang Vuong
a solar power system with a Vietnam maintain its position ly, the US only has about 250- focus only on design develop- manage quality efficiently. from the European-American
capacity of four million kWh as the second-largest leather 300 manufacturing companies ment and sales, so they need to The US is the world’s Markets Department under the
per year into operation, with and footwear exporter to the with about 12,000 workers, find production partners. This largest footwear importer, Ministry of Industry and Trade
the desire to meet Nike’s cri- market since 2012, after Chi- but domestic production only makes it suitable for domestic accounting for 40 per cent said in November that Presi-
teria for greening production. na. Footwear exports to the meets a mere 1.5 per cent of enterprises that can meet buy- of global footwear imports. dent Joe Biden has a selective
Nike has committed to reduc- US in the first 10 months of consumer demand. ers’ orders, according to set Data from Lefaso recognised succession policy in applying
ing greenhouse gas emissions 2021 reached $5.98 billion, A study by the US-Viet- design models, without having great competitive pressure for pressure to partners in negoti-
by 65 per cent at its own loca- accounting for 42 per cent of nam Trade Council showed to rely on the source of raw footwear exporters to the US, ations, thus “Vietnam needs to
tions and by 30 per cent across Vietnam’s export turnover in that a common feature of local materials. especially since Vietnam has take careful steps forward.”
its supply chain by 2030. this group, up 18.2 per cent manufacturers is that they act American partners under- not yet enjoyed preferential According to Vuong, there
“The number of orders over the same period in 2020. tax rates that are given to some is a discrepancy between
from the US is very large, In 2020, Vietnam sold developing countries. Vietnam Vietnam and the US when
but only qualified businesses 453 million pairs of footwear also does not have a free trade it comes to the requirements
can meet the requirements of to the US. Vietnam could agreement with the US. and the ability to meet them.
social responsibility and for sell more in 2022 when the Dao Trong Khoa, general “In the process of negotiating
other quality certificates,” said average American consumes Economic indicators and consumption director of T&M Forwarding agreements, the US always
Phan Thi Thanh Xuan, gen- more than six pairs of shoes a Co., Ltd. also noted, “Trade considers Vietnam a trading
eral secretary of the Vietnam year. But what worries Lefa- are recovering strongly in the US, helping with the US is facing many partner that is benefiting from
Leather, Footwear and Hand- so is that Vietnamese busi- obstacles related to shipping global uncertainties. There-
bag Association (Lefaso). nesses “still have to work
Vietnam maintain its position as the sec- and supply chain disruption. fore, it is necessary to care-
As soon as Vietnam with large brands to appear ond-largest leather and footwear exporter The long-distance and no fully calculate and balance
reopened production, leath- in the market.” direct shipping routes between the trade of both countries,”
er and footwear enterprises Vietnam’s supply of leath- to the market since 2012. the two countries render the Vuong said.n