Vietnam's Textiles and Garments to Face Challenges in First half of 2005
VIB Forum's reporter held an interview with Ms. Doi Thi Thu Thuy, deputy general director of the Vietnam Textile and Garment Corporation, about Vietnamese enterprises competitiveness in non-quota market after the World Trade Organisation (WTO) removed quotas on textiles and garments on its member countries.
In 2005, quotas on Vietnam's textiles and garments will be removed, what do you think about the future of Vietnamese enterprises when they export their products to non-quota markets?
A: The removal of quotas means that Vietnamese enterprises are free to export to any market. However, this is a challenge when all enterprises and individuals are allowed to export to any market. In relation to supply and demand, the demand is limited while supply is unlimited. Vietnamese products must meet tough customer requirements and must be competitive enough to enter a market. Therefore, the removal of quotas is an opportunity and a challenge for Vietnamese textile and garment exporters.
What has Vietnam done in preparation for a world non-quota market in 2005?
We have considered this issue. The US market, for example, will be a non-quota market for many countries which have joined the WTO but this market remains a quota market for Vietnamese enterprises. This will be a real difficult for Vietnam when other countries are free to export to the market. However, the European market is a different story. This is because when quotas are removed from Vietnam, the opportunity for Vietnam’s textiles and garments is the same to that of products of other countries. In fact, for each Vietnamese enterprise, careful technical preparations should be made, so as its products are competitive enough to enter markets which removed quotas. The textile and garment industry and the Vietnam National Textile and Garment Corporation have made careful preparation for such a development. Vietnamese enterprises, in general, apart from their product strategies, have concentrated on training qualified technicians and marketing cadres to take all export opportunities. At present, enterprises should concentrate on improving their products’ quality and reducing costs, so that they will create favourable conditions for their products to enter the future potential markets.
What do you think is the major reason for Vietnam's textile and garment industry's implementation of subcontracts but not FOB ones?
There are many reasons. Firstly, sale channels for Vietnamese enterprises remain constrained, so we have to implement subcontracts for other countries, such as the Republic of Korea and Taiwan. However, in the past, our enterprises have progressed in developing sales channels. Another reason is the poor ability in design, which has led to constraints in offering customers collections of designs. The third reason is the constraint in skills of marketing and trade cadres, who lack dynamism and negotiation skills, and ability to calculate input costs and output prices. In addition, implementing subcontracts we do not have to care about sources of materials. Meanwhile, we have to do all things from contract signing and material seeking to production organisation. Now, we should improve our management capability to get access to the FOB market.
What do you think about the competitiveness of Vietnam's textiles and garments?
Admittedly, Vietnam’s textiles and garments have major competitors, namely products freom China, India and some other countries. However, in recent years, especially in the last two or three years, the Vietnam textile and garment industry has progressed significantly to meet demanding requirements of markets. We believe that with such a momentum, the Vietnam textile and garment industry will stand firm in the market.
What should Vietnam do to increase its textile and garment industry's competitiveness and value?
In the past, most Vietnamese textile and garment products were made under subcontracts. In recent years, many local enterprises, in particular enterprises within the Vietnam National Textile and Garment Corporation, have concentrated on developing product design for export. Many enterprises have been capable of designing and seeking material supplies, signing directly FOB contracts with foreign partners. More importantly, enterprises should be active in seeking markets for their products. They will succeed if they can meet the fashion demand of the market. Also, they should improve their competitiveness by building their trademarks right on the local market apart from their export orientations.
What do you think about the Vietnamese textile and garment market in 2005 and the years to come?
We have talked about quota barriers in the US market. Since the two countries signed their trade agreement in the middle of 2002, Vietnam’s total export turnover to the US market has become huge. For example, US$600 million from a total export turnover of US$1 billion estimated for 2004 by the Vietnam National Textile and Garment Corporation is expected to go to export to the US. This means that total export turnover to the US accounts for a high proportion, about 60 to 70 per cent of Vietnam’s total textile and garment export value. In 2005, we will have quotas imposed while other countries are free to export to the US. Therefore, challenges for the Vietnam textile and garment industry remain huge, particularly in the first half of this year.
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