Garment & Textile Export Aim for US$15 Bln in 2012

Garments and textiles account for 17 percent of Vietnam’s total exports. In the context of economic slowdown, widening trade deficit, and volatile material prices, the sector still made a trade surplus of US$6.5 billion in 2011, an increase of US$1.5 billion from 2010. Notably, the country earned nearly US$2 billion from synthetic fibre export. Synthetic fibre production investment has also helped raise the localisation rate to 48 percent from 46 percent in 2010.

 

Right from the start of the year, the sector has applied a series of measures to overcome difficulties to maintain markets and uphold the trust of customers. Good market forecast and orientation contributed to the success in 2011. Orders in many traditional markets increased significantly as we managed to choose the right niche markets to utilise our competitiveness. Export value to the US climbed 14 percent; the EU, 41 percent; and Japan, 52 percent.

 

It is more complex and difficult to have a foothold in the domestic market than in export markets. The domestic has never been forgotten. No companies forget this market if they want to exist. The problem is how to face competitive pressures, demand shrinkage and capital shortage. Without good preparation, in more than 10 years, no member companies affiliated to the Vietnam National Textile and Garment Group (Vinatex) can gain a foothold on the domestic market. To have its current position, Garment 10 Company has sold products in the domestic market for 20 years. To convince more than 80 million domestic consumers, companies must have all necessary elements like reasonable prices and nice designs.

 

In 2011, domestic sales expanded just 12 percent. Given difficult economic conditions and shrinking aggregate demand, we viewed the 12 percent growth this year as much as 30-35 percent growth in previous years. In the past, middle-income earners could afford to buy classy products, but now they can only afford popular ones.

For its part, Vinatex did not scale down its distribution network. At present, it is seeing some opportunities like better spaces with lower prices because others are confronting difficulties. The group has just opened two fashion shops.

 

I think our strategy for the upcoming time focuses on preserving capital, promoting capital efficiency, and investing in technology. Companies lack capital for production and investment because of high interest rates. Lending rates have been brought down to 16 - 19 percent per annum, but not many companies can access loans at this rate. Besides, they need to have better wage and remuneration policies for employees. This element serves an important role in the success and failure of a company.

Vinatex Group is restructuring its operations to boost production and business efficiency. Specifically, it will use P.E. fibres supplied by local producers. The group will expand its cotton acreage to 15,000 ha in 2012 and encourage affiliated companies to use domestic materials, machines and equipment to cut costs.

 

Despite potential challenges on global markets, Vietnam targets to earn US$15 billion from garment - textile export in 2012. It is not hard to win export orders, but prices will change. The group will continue enhancing the efficiency of internal chain links and boosting the competitiveness of the group and its member companies. The garment - textile sector will improve the value of every FOB order, reduce dependency on offshore outsourcing contracts, and increase ODM orders.

 

Besides, Vietnamese garment and textile companies will increase specialisation, analyse competitors to have appropriate competition strategies, strengthen traditional markets, seek new markets, and overcome difficulties to achieve export targets.