In 2013, garment - textile and leather - footwear companies enjoyed good business, had stable workforce, and attained relatively high export growth to major markets despite slowing or even declining imports of apparels and footwear in these markets. In addition, many businesses actively grasped the opportunity to expand to new markets in countries like South Korea, Turkey, African nations and the Middle East, while maintaining shipments to traditional markets like Russia, Eastern Europe, USA, Japan and EU.
Big win for garment - textile industry
The Ministry of Industry and Trade said the garment - textile industry was estimated to earn US$20 billion from exports in 2013, up 16.28 percent over 2012, of which fibre and yarn exports brought in US$2.132 billion and apparel shipments fetched US$17.89 billion. State-run Vietnam National Textile and Garment Group (Vinatex) earned US$2.915 billion in 2013, up 11.2 percent year on year. Natural fabric output was estimated to 290 million square metres, up 3.1 percent, and synthetic and artificial fabric output was forecast at 590.9 million square metres, down 9.8 percent.
The garment - textile industry has shifted from quantity-based production to content-based production and focused on high-quality items. In addition, many companies flexibly adapt to various orders to ensure shipment delivery, while many are very good at fulfilling small and medium orders for niche markets. This demonstrated the flexibility and efficiency of the two-market strategy that the garment - textile industry had applied in the current tough period in order to maintain their markets, especially utilise competitive advantages to make inroads into niche markets and increasing market share in new markets rather than just open up new markets in pursuit of quantity goals. Garment - textile companies did not concentrate on expanding new consumption channels, but they focused on improving the quality of current distribution channels and tap local markets to supply high-quality products at reasonable prices for consumers. This approach helped them maintain stable production and employment. They also actively took part in branding events like attending fashion fairs and exhibitions like VIFF in Ho Chi Minh City and Hanoi.
Leather - footwear exports surge
In 2013, production and trading activities of Vietnamese leather - footwear companies regained growth momentum from the second quarter when export orders increased and stayed steady the rest of the year. These positive signs together with new business opportunities opened up new hopes for the leather - footwear industry to complete its export target of over US$8 billion set for 2013. Footwear output was forecast to reach 256.1 million pairs in 2012, representing an on year increase of 9.5 percent. Footwear exports were projected at US$8.366 billion in 2013, up 15 percent over 2012.
Although the leather - footwear industry is projected to grow faster and export orders will increase, key export markets like the EU and the US always impose quality and technical standards on imports. Thus, Vietnamese leather - footwear firms must invest in upgrading technologies to enhance quality to meet higher requirements. In addition, Vietnam’s leather - footwear export still faces potential risks because of the current volatility of global market and heavy reliance on imported materials of Vietnamese companies. So far, the localisation value accounts for only 40-45 percent, mainly coming from sewing stages, while the most important inputs like tanned leather and artificial leather are imported. In the long term, the leather - footwear sector must promote business connectivity of companies in supply chains to strengthen development sustainability.
Preparing for TPP
Some garment - textile companies have built up production roadmaps and plans based on FOB and ODM (original design manufacturer) methods and prepared for TPP participation by gradually upgrading and renovating modern technology and improving management efficiency, particularly in the weaving, dyeing, finishing and designing stages. Besides, foreign direct investment into the garment - textile sector, especially upmarket segments, has stretched beyond economic centres to many provinces and cities, to tap advantages in transportation, human resources and investment incentives.
Currently, Vietnam is negotiating four free trade agreements, namely Trans-Pacific Partnership (TPP) Agreement (with the US and Japan), EU - Vietnam FTA, FTA between Vietnam and Customs Union of Russia, Belarus and Kazakhstan potential Vietnam - South Korea FTA. Vietnam’s garment and textile exports to these partners are expected to rise sharply if the agreements are signed. However, this industry is facing many difficulties because it still relies heavily on imported raw materials. So, Vietnam needs to have better solutions to develop material sources to increase localisation value in exports.
Huong Giang
Vietnamese
