Vietnam Garment-Textile: A Global Top Ten Exporter

After joining the WTO, the garment and textile industry has three advantages, namely quota-free export, non-discriminatory tax and investment increase. Nevertheless, the possibility of unfair competition among garment and textile companies on the global market still exists. Barriers protecting the domestic market are weakened to the minimum level (the current import tax of 40 per cent on material and 50 per cent on textiles will be reduced to some 15 per cent on average.) Meanwhile, barriers to foreign markets will be established, including environment conditions and antidumping.

 

Before competitive pressure, the garment and textile industry sought for more export markets under the “accumulation” policy, lessening reliance on the key traditional export markets. Then, it focuses more on improving product competitiveness and intensifying material production investment in the domestic market. At the same time, we have already discussed possible plans to protect the rights and interests of enterprises and support them, such as brand name development and advertisement, market expansion promotion activities, market information updating, technology, human resource development, protection of member companies’ rights and interests in case importers introduce protectionist barriers. As for the US market, we will continue lobbying the US Administration to end the special supervision mechanism on Vietnamese garment and textile industry.

 

Vietnam now ranks the 16^th largest exporter of garments and textiles in the world. The industry must now double its efforts to cope with stiff competition in both domestic and foreign markets. Accordingly, to realise this ambitious goal, the Vietnam Textile and Garment Group will become a strong economic entity without State controlling stakes, presenting national brand name garments and textiles. A current difficulty and constraint for the industry is protectionist taxes imposed by importing nations causing a sharp drop in volumes in the first months of 2007. Moreover, the US’s special supervision policy on the Vietnamese garments and textiles unnerved big importers. Meanwhile, export profit is not high, as many Vietnamese companies are outsourcing for foreign firms.

 

To overcome these weaknesses, the industry will focus on investment and increase the localisation ratio and value-added export products. The Vietnam Textile and Garment Group will join hands with international investors in the fields of material manufacturing, designing and branding. Besides, the industry is intensifying trade promotion activities in traditional markets and seeking new markets to reduce reliance on the US market.

 

 

At present, we are selling stakes in subsidiary companies and expect private stakes will be present in all affiliated companies. The Group is equitising 15 out of 23 its affiliates. The eight remaining will go public in 2008. The State is a controlling shareholder in important garment and textile companies. Under the proposal to operate the Group as a holding company, to facilitate its scale expansion and sharpen its competitiveness in Southeast Asia, Vinatex will invest in business and provide services for member companies. Its member companies are business partners of the Group. Currently, several affiliates have been turned into holding companies like Viet Tien Garment Corp, Hanoi Garment and Textile Corp. and Phong Phu Textile Corp.