Garment and textile enterprises operate perfunctorily
According to the forecast and analysis from the Vietnam Textile and Apparel Association (Vitas), the garment and textile industry will recover and flourish in the fourth quarter of this year at the latest. Many garment and textile enterprises expect the market to grow again in the third and fourth quarters. However, visiting garment enterprises during this time, the business and production situation is still affected by the Covid-19 pandemic. Enterprises, especially small and medium-sized enterprises, are increasingly reducing production and contending their operations by processing every small order to pay wages for the few workers who they retain to wait for future orders.
At Phu Thanh Nam Garment Company in District 12, there were still over 400 workers a few months ago, but now, the number of workers is only one-third of that.
‘At the time when the pandemic started to break, US and European customers of the company all temporarily suspended, pledging to make orders again and pay off debts in August and September. But now, they said that their customers still have not paid yet, so they continue asking to delay their debts and making an appointment to resign orders in December. Currently, the company has closed two out of three workshops to maintain production at about 40 percent to provide jobs to workers and to wait and see the situation,’ said the leader of Phu Thanh Nam Garment Company.
Similarly, Mr. Nguyen Van Chien, Director of Line Style Garment Company Limited in Hoc Mon District, shared that his company is currently facing several difficulties due to a shortage of orders. As a small company specializing in the processing of skirts and dresses for export to Japan, due to the impacts of the pandemic, its customer owes it more than VND10 billion. To maintain operations, the company must receive the orders shared by other companies and have to accept a low processing price. Earlier, the processing price was $1 for an item. Now the customer forces down the price to $0.5. Despite the low processing price, the company still has to receive those orders to be able to pay its workers.
‘My workers have followed me for many years, I cannot abandon them even though my company encounters a difficult situation,’ said Mr. Chien.
Not only small and medium-sized enterprises are struggling to survive, but some large companies are also no exception. The representative of Garment Corporation 10 (Garco10) said that from March until now, large orders have severely dropped. It is currently the time to produce goods for the autumn-winter season, Christmas, and New Year, but in the markets of top textiles and clothing importers, such as the US and Europe, the atmosphere is very gloomy, trade almost stops. The orders for key products of Garco10 over the years, including suits, shirts, trousers, and office fashion products, have been cut sharply by 40-60 percent. Viet Tien Garment Joint Stock Company also reported a decrease of 40 percent in the profit of the second quarter to only VND52.5 billion. Not to mention that many customers have also asked to delay their debts, making it more difficult for production enterprises.
The leverage from the domestic market
According to the Ministry of Industry and Trade, up to now, just a few garment enterprises have received 50-60 percent of orders for September and October. Meanwhile, the situation of orders for the rest of this year and the next year remains unknown. The reason is that the purchasing power of consumer goods in the US, European, and Japanese markets has not shown many positive signals. Figures on garment imports and a series of price cuts to stimulate demand to clear inventory to avoid dead stock from retailers, as well as temporary suspension of garment imports by large importers, show that the market, as well as the demand for clothing products, is slowing down. It is also the reason why the garment and textile industry of Vietnam merely exported $25.5 billion in the first nine months of this year, down 12 percent over the same period last year. Mr. Vu Duc Giang, Chairman of Vitas, predicted that the export turnover of the garment and textile industry would reach a maximum of about $34 billion this year, while the target is from $40 billion to $42 billion for this year.
Amid the current situation, to make up for the shortage of orders in the international market, the representative of Vitas, as well as experts, said that textile enterprises need to promote the exploitation of the domestic market. Because the domestic market with nearly 100 million people always has great potentials. If the domestic market is exploited well, it will create leverage for the textile industry to overcome the crisis. Besides, it is necessary to minimize a slump in revenue and profit by managing production costs and keeping product quality. In the long term, to improve the efficiency of the garment and textile industry, the solutions are to promote chain linkage, reduce dependence on countries supplying raw materials and accessories, meet the origin requirements of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the EVFTA, and exploit the advantages of trade agreements. However, to effectively implement these solutions, it is essential to have the participation of the Government in developing the planning and policy mechanism, to urgently support enterprises in the garment and textile industry.
According to the forecast and analysis from the Vietnam Textile and Apparel Association (Vitas), the garment and textile industry will recover and flourish in the fourth quarter of this year at the latest. Many garment and textile enterprises expect the market to grow again in the third and fourth quarters. However, visiting garment enterprises during this time, the business and production situation is still affected by the Covid-19 pandemic. Enterprises, especially small and medium-sized enterprises, are increasingly reducing production and contending their operations by processing every small order to pay wages for the few workers who they retain to wait for future orders.
At Phu Thanh Nam Garment Company in District 12, there were still over 400 workers a few months ago, but now, the number of workers is only one-third of that.
‘At the time when the pandemic started to break, US and European customers of the company all temporarily suspended, pledging to make orders again and pay off debts in August and September. But now, they said that their customers still have not paid yet, so they continue asking to delay their debts and making an appointment to resign orders in December. Currently, the company has closed two out of three workshops to maintain production at about 40 percent to provide jobs to workers and to wait and see the situation,’ said the leader of Phu Thanh Nam Garment Company.
Similarly, Mr. Nguyen Van Chien, Director of Line Style Garment Company Limited in Hoc Mon District, shared that his company is currently facing several difficulties due to a shortage of orders. As a small company specializing in the processing of skirts and dresses for export to Japan, due to the impacts of the pandemic, its customer owes it more than VND10 billion. To maintain operations, the company must receive the orders shared by other companies and have to accept a low processing price. Earlier, the processing price was $1 for an item. Now the customer forces down the price to $0.5. Despite the low processing price, the company still has to receive those orders to be able to pay its workers.
‘My workers have followed me for many years, I cannot abandon them even though my company encounters a difficult situation,’ said Mr. Chien.
Not only small and medium-sized enterprises are struggling to survive, but some large companies are also no exception. The representative of Garment Corporation 10 (Garco10) said that from March until now, large orders have severely dropped. It is currently the time to produce goods for the autumn-winter season, Christmas, and New Year, but in the markets of top textiles and clothing importers, such as the US and Europe, the atmosphere is very gloomy, trade almost stops. The orders for key products of Garco10 over the years, including suits, shirts, trousers, and office fashion products, have been cut sharply by 40-60 percent. Viet Tien Garment Joint Stock Company also reported a decrease of 40 percent in the profit of the second quarter to only VND52.5 billion. Not to mention that many customers have also asked to delay their debts, making it more difficult for production enterprises.
The leverage from the domestic market
According to the Ministry of Industry and Trade, up to now, just a few garment enterprises have received 50-60 percent of orders for September and October. Meanwhile, the situation of orders for the rest of this year and the next year remains unknown. The reason is that the purchasing power of consumer goods in the US, European, and Japanese markets has not shown many positive signals. Figures on garment imports and a series of price cuts to stimulate demand to clear inventory to avoid dead stock from retailers, as well as temporary suspension of garment imports by large importers, show that the market, as well as the demand for clothing products, is slowing down. It is also the reason why the garment and textile industry of Vietnam merely exported $25.5 billion in the first nine months of this year, down 12 percent over the same period last year. Mr. Vu Duc Giang, Chairman of Vitas, predicted that the export turnover of the garment and textile industry would reach a maximum of about $34 billion this year, while the target is from $40 billion to $42 billion for this year.
Amid the current situation, to make up for the shortage of orders in the international market, the representative of Vitas, as well as experts, said that textile enterprises need to promote the exploitation of the domestic market. Because the domestic market with nearly 100 million people always has great potentials. If the domestic market is exploited well, it will create leverage for the textile industry to overcome the crisis. Besides, it is necessary to minimize a slump in revenue and profit by managing production costs and keeping product quality. In the long term, to improve the efficiency of the garment and textile industry, the solutions are to promote chain linkage, reduce dependence on countries supplying raw materials and accessories, meet the origin requirements of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the EVFTA, and exploit the advantages of trade agreements. However, to effectively implement these solutions, it is essential to have the participation of the Government in developing the planning and policy mechanism, to urgently support enterprises in the garment and textile industry.
