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| Many textile and garment enterprises are worried as orders are shifting from Vietnam to Bangladesh and India. (Source: VnEconomy) |
Losing the advantage
According to statistics from the World Trade Organization (WTO), in 2020, Vietnam surpassed Bangladesh to become the world's second largest garment exporter. However, from the end of 2022 to the end of the second quarter of 2023, many domestic textile and garment enterprises had to reduce production and lay off thousands of workers due to a decline in export orders.
Meanwhile, in Europe and the US, consumers have yet to ramp up their shopping activities again, leading to low demand, causing businesses to worry about inventory levels.
Thanh Cong Textile - Investment - Trading Joint Stock Company (TCM) is facing a shortage of orders in the second quarter of 2023, causing factories to not operate at full capacity.
Mr. Tran Nhu Tung, Chairman of Thanh Cong Board of Directors, said that China's reopening led to increased supply and increased competition, while demand did not increase.
“In addition, the Vietnamese textile industry also faces fierce competition from Bangladesh. The textile industry in this country has an advantage over Vietnam in terms of labor costs and the Bangladeshi currency has depreciated more sharply than the Vietnamese dong,” Mr. Tung analyzed.
At the recent 2023 Annual General Meeting of Shareholders, Mr. Le Tien Truong, Chairman of the Board of Directors of Vietnam National Textile and Garment Group (Vinatex), noted that the cost of wages for garment workers in Vietnam is at 300 USD/person/month, much higher than in Bangladesh (95 USD/person/month).
Similarly, Mr. Pham Van Viet, Vice President of the Ho Chi Minh City Textile and Garment - Embroidery Association, added that in addition to lower labor costs than Vietnam, Bangladesh has achieved 4.0 technology and automation, while most of Vietnam's machinery and technology are still at the traditional level.
“Not to mention, the Bangladeshi textile industry has identified the reduction and exemption of corporate income tax and technology innovation tax and planning as a key, spearhead industry for investment. On the contrary, in Vietnam, the textile industry is considered a traditional industry with a large labor deficit... and is no longer a key, spearhead economic sector, contributing to ensuring social security as before. Current business support policies are only encouraging, there is no specific plan on how to change the textile industry, how to support development in each stage,” Mr. Viet worried.
Efforts to find a solution
At Viet Thang Jean Company Limited, after the first 6 months of difficult operations, entering the third quarter of 2023, the company is confident that it can compete better in the market thanks to products that meet green standards from raw materials to technology and come with good pricing policies when applying digital transformation.
The company representative informed that Viet Thang Jean has invested in 4.0 technology in highly complex processes with laser machines, ozone machines, color spraying machines, automatic drying lines, etc. All equipment is imported from Europe, Spain, Germany, Italy, Turkey, etc., helping to reduce labor costs by 85%, and product prices decrease proportionally. From there, Viet Thang Jean can both compete for orders and recover capital for re-production and investment.
Ms. Tong Thi Tra My, Deputy Director of Navitex International Company Limited, shared that the company applied cost-saving measures. Accordingly, it cut 30% of operating costs at the office, cut 30% of staff and reduced 20-30% of profits so that each product can compete well.
Mr. Tran Nhu Tung said that Thanh Cong Textile - Investment - Trading Joint Stock Company has been implementing environmental, social and governance (ESG) responsibilities for a long time. In the coming time, it will accelerate due to pressure from the market, customers, etc.
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