Garment Exports Waiting for Breakthrough

In 2010, the global textile and garment market will be severely competed by exporters. However, many Vietnamese exporters anticipated that exports might bring in US$10.5 billion this year thanks to ongoing positive signs.

 

The first signal is the export turnover of US$750 million in March, bringing the total textile and garment export revenue to US$2.16 billion in the first quarter of 2010, up 12.3 percent year on year. The textile and garment outpaced crude oil to top Vietnamese exports.

 

Mr Le Quoc An, President of the Vietnam Textile and Apparel Association (Vitas) said: Most Vietnamese garment and textile producers have signed export contracts with foreign importers. Several companies reported enough work through the third quarter or even the end of the year. Commonly, export orders this year have larger quantities and values than 2008 and 2009. The price is about 10 percent higher than mid-2009.

 

Mr Phan Van Kiet, Deputy General Director of Viet Tien Garment Corporation, asserted: “Until now, orders worth US$80 million at Viet Tien have ensured enough work until the end of the second quarter.” Although orders received were not as big as before the crisis, this was an extremely good result in comparison with 2008 and 2009, he pointed out.

 

Industry experts said the first quarter growth was creating a momentum for higher export growth in the second quarter. Major producers and exporters of garments and textiles like China and Bangladesh are limiting the expansion of this industry, given labour-intensiveness, much investment requirement and low rate of returns. “Once these above shift to other industries, the Vietnamese garment and textile export will spur,” An commented.

In spite of good signals, Vietnamese textile and apparel exporters are facing up with many difficulties. Several exporters are complaining about difficulties arising from heavy import of materials and accessories from Chin while the yuan is strengthening, causing the material price to increase. Besides, prices of raw materials, fuels and accessories are adding hardships to the industry. Specifically, this year raw cotton prices have increased most in recent years, averaging US$1.9 per kilo while the rate was usually at US$1.5 per kilo. It is not to mention that other inputs such as fuel oil and electricity are rising. Into the bargain, in the second quarter, wages will also increase as base wage starts to rise from early May 2010.

 

On the other hand, Mr An also expressed his concern that when the Law on Consumer Protection of the US took effect from January 1, 2010, new technical barriers will be raised against Vietnamese apparels. Accordingly, export shipments to the United States must have third-party written testing certification for products which guarantees the use of raw materials unharmed to consumers' health. Manufacturers take responsibility for any damage caused to consumers.

 

In addition to pressures of technical barriers, Vietnamese textile exporters are facing a hard issue of improving operating efficiency. Currently, the export price still decline 10-15 percent and the price hike is highly unlikely.

 

To deal with those difficulties, the Ministry of Industry and Trade has revealed a plan to build a modern laboratory to be certified and licensed by US authorities, replacing old quality testing equipment built in the 1990s. The scheme has put forth several solutions to attract orders, retain traditional customers and seek new ones. It will attach much importance to building business strategies with retailers and importers in the world and participate in their chains in order to stabilise orders, access management and business experience.

 

Moreover, in 2010, Vitas will also invest more than VND1,100 billion (US$60 million) to create breakthroughs in productivity and production technology. The industry will also focus on associating importers and exporters, reorganizing the domestic supply of raw material and adding efforts to attract investors into the sector to increase the localisation ratio. With the efforts above, Vietnam's garment and textile industry will thrive and create new breakthroughs.