Vietnam's Garment-textile Sector: Subsidiary Materials Market in Urgent Need

Vietnam's Garment-textile Sector: Subsidiary Materials Market in Urgent Need

One of the weaknesses of the Vietnamese textile-garment sector is the unstable, high price and dependence on the foreign supply of materials. Mr. Diep Thanh Kiet, President of the Textile-Garment Association, Ho Chi Minh City, has pinpointed two key measures: production of materials and transaction centres.

Small production

The vigorous development of the textile-garment industry has seen more and larger enterprises requiring a bigger supply of materials. Meanwhile the local supply is inadequate, depending to a large extent on imports. According to 2003 statistics, local materials constituted 20 per cent of the total value, equivalent to US$700 million. Consequently, though the export value is high, the real value remains low. The shortfalls in supply have become a pressing issue and have created various negative effects.

At present, many large enterprises in Vietnam have produced materials of a high quality for the textile-garment sector. The Phong Phu textile company supplies Vietnamese companies with various kinds of textile (stripe kate, silk kate, coloured kate, tone textile, jean and khaki). The Viet Thang company has a yarn factory and two textile factories with the production capacity of 5,000 tonnes of yarn and 30 metres of cloth a year. Thang Loi Textile Company produces various kinds of textile (cotton and kate), which are highly valued by the enterprises and consumers, and the Nha Trang Joint Stock Company produces accessory materials (buttons, zippers, etc.) meeting the demand of Japanese, EU and US markets. Cam Phat Co., Ltd is also famous for its production of buttons for exported garments. Recently, Taiwanese and Korean companies have invested in the production of accessory materials and have supplied their products to the local industry. The joint venture between the New Trend Co., Ltd and Johnson Lake has produced subsidiary materials for gowns, underwear and children's clothes.

However, the ratio of imported materials remains high and investors still hesitate as the industry requires big investment and it takes a long time for capital recovery. It is further complicated with high costs in the workplace, transport, distribution and communication. For the industry to become more competitive, it requires a comprehensive development of the whole production line from yarning, dyeing and tailoring to the production of subsidiary materials. The production of subsidiary materials also needs a more favourable policy to develop its potential.

Future market for subsidiary materials

It is true that even with increased production of subsidiary materials, Vietnam cannot produce everything it requires and foreign supply remains key to the industry. Vietnamese enterprises also lack information and partnership with relevant units. To shift from contractual production to direct export for higher profit, it requires a stable and diversified supply of subsidiary materials.

The formation of a subsidiary materials market is most pressing. Mr. Vo Van Ngan, Chairman of Management Board, Hoan Cau Co., Ltd, and member of Textile-Garment Association, Ho Chi Minh City, said that in China, Korea, Taiwan and Hong Kong all kinds of subsidiary materials are available in the markets and orders can be made for special designs to meet the demand of the clients.

Due to the pressing demand, Vietnam Textile-Garment Corporation has established a centre for subsidiary materials (V-Fabric Center). Top ranking Vietnamese and foreign producers and suppliers participate at the centre as it offers opportunities for the demand and supply of subsidiary materials. The centre assists the enterprises to display products and sign contracts, and it also organises seminars, market surveys, exhibition fairs and meetings between Vietnamese and foreign partners. For instance, at the Vietnam Fashion Fair 2004 in July 2004 in Ho Chi Minh City, Chinese and Taiwanese suppliers had an opportunity to introduce their products to Vietnamese enterprises.

In the future, the centre will be a major transaction centre for the garment and footwear industry in the region. Mr. Kiet said that the centre will be located at 10 Nguyen Hue (HCMC) with space for office work, seminars, conferences and exhibitions introducing the capacity of the Vietnamese textile-garment industry, high technology, research and development, supporting services and new products.

• Yen Nhung