During the first ten months of 2008, the U.S imports approximately US$80 billion of garment and textile commodities. Statistics of the U.S Department of Trade show that though the growth of export turn-over is going down, the volume of commodities imported from Vietnam, Indonesia, Bangladesh and Honduras, etc. is going up while that from China, Pakistan, Mexico and Korea is reducing. Many people seem to be optimistic but whether or not this is a signal of happiness?
Director of Tan Chau Garment Company, Ms Tran Thi Kim Loan, says that the result of this month’s export is attributed to contracts which were signed one year ago. As such, according to Ms Loan, despite the fact that her enterprise is the one with a quite big export turnover, she is currently very worried since the volume of work she has been negotiating and signing to deliver in 2009 has dropped.
Failure in domestic market?Annually, Tan Chau company can produce between three and five million clothing units for export. Given the current situation, only 2 – 3.5 million units can be made in 2009. Traditional markets of Tan Chau, including the U.S, EU and Japan are all encountering heaps of difficulties. Also according to Ms Loan, the company is planning to exploit the domestic market but in fact, this is not an easy task and she is not reluctant to admit that her company is a step behind.
According to Vinatex’s assessment, the domestic garment and textile market in 2008 can reach US$4.5 billion and can increase to US$5.5 – 6 billion in 2010. However, Vietnam garment and textile enterprises are slow-footed in the home market and capable of occupying 1/3 of the market. The rest is for China products and a very small volume of luxurious commodities which mainly comes from the EU. When encountering obstacles in exporting markets, enterprises start and make their way back to the domestic market. They also start to learn that it is too difficult to have a standing here.
Mr Hoang Ve Dung, Director of Duc Giang Garment, states that with the current average income of US$450 per annum per capita, purchasing clothes still makes Vietnamese consumers consider, completely unlike consumers in European countries, America and Japan. Their incomes are tens of times greater than ours. This means that Vietnam’s biggest rival, the China giant is currently occupying 20 percent of Vietnam’s garment and textile market and will continue to overpower Vietnam products right in Vietnam market in terms of pricing factor. In terms of style and design, Vietnam’s garment and textile products also do not have many opportunities since up to now, Vietnam’s products have stopped at processing only. This is the phase which brings the lowest efficiency, only 5 – 8 percent. The whole system of designing, the phase which brings the most profit, is not invested in and even stays too far from scratch. It seems that returning to the domestic market while encountering hindrances in exporting market cannot be an exit for garment and textile enterprises in a near future.
Global garment and textile industry slows down
Global price of cotton in September and October has gone down by some 17 percent. Forward contracts for October 2008 fall to 56.59 US cent/lb from 67.91 US cent/lb while those for December 2008 drop to 58.34 US cent/lb from 70.18 US cent/lb. The lugubrious drop in oil price in contrast to the global increasing output of cotton force price of artificial fiber drop quickly. Mentioned above fact plus information on economic recession of leading economies which are also leading garment and textile consumption markets makes the forecast for the garment and textile industry in the year to come somber.
As of the end of September 2008, price of artificial materials for the global garment and textile industry drops to US$1 – 2.09/kg. Polyester of Malaysia is priced at US$1.73/kg while that of Thailand, around US$1.2/kg. Generally speaking, price of synthetic fiber from all origins drops between 2 and 3 percent in case of Indonesia’s fiber and up to 15 percent in case of Malaysia’s and Thailand’s fiber.
America’s import of garment and textile products in the first ten months of 2008 witnesses a decrease of over 6 percent in terms of volume and approximately 4 percent in terms of value compared to that of the corresponding period last year. This situation has taken place since early 2008 and is forecasted to continue in 2009. While more and more economies plunge into a hard time, the global garment and textile industry also slows down and has not showed any signs of recovery.
Too many barriers
Vietnam garment and textile currently consists of over 2,000 enterprises and employs some two million labourers. With the above working force, garment and textile products for export of the industry account for about 15 percent of total annual export turn-over. In 2007, the whole sector sees its export turn-over reach US$7.75 billion, trailing after oil and gas sector. Vietnam plans to be listed among the world’s top ten biggest exporters of garment and textile within this year.
However, to minimize risk and enhance the sense of initiative, Vietnam’s garment and textile industry cannot be strong without making investments in supportive industries, building its own prestigious brand names and finding ways to escape from the “career” of processing for other countries. Instead of setting export turn-over target of US$10 – 12 billion, usage of 2.5 million labourers in 2010 and higher speed in the years to come, Vietnam’s garment and textile industry should aim at setting a target for itself to occupy which piece of cake in the cycle from designing to consuming products in the global garment and textile industry.
Minh Giac
Vietnamese
