Abundant orders, manufacturing enterprises expect strong growth towards the end of the year

Many businesses said that orders have begun to stabilize, with some businesses having orders until October-November 2024. Therefore, domestic manufacturing businesses expect stronger growth towards the end of the year.

Expectations for the last 6 months of the year

In the first 6 months of 2024, textiles and garments were one of the industries with the highest export turnover in the country with 16.282 billion USD, an increase of 3% over the same period last year.

Mr. Cao Huu Hieu, General Director of Vietnam Textile and Garment Group, said that most garment enterprises have enough production orders until the end of the third quarter of 2024 and continue to negotiate and sign contracts for the fourth quarter of 2024 - the peak production season for Christmas and New Year orders.

“Based on existing signals, especially the situation of many orders in the third and fourth quarters, combined with a 5% growth rate in the first half of the year, it is forecasted that the export turnover of the Vietnamese textile and garment industry in 2024 will increase by 8-10% compared to 2023. For the Group, with more positive signals from the market, especially the fiber industry, the production and business results in the last 6 months of the year will be better than expected,” Mr. Hieu commented.

The textile industry has many improvements and abundant orders.

Along with that, information from the Vietnam Leather, Footwear and Handbag Association (Lefaso), in the first 6 months of 2024, Vietnam's leather and footwear export turnover reached over 6.5 billion USD, an increase of 5.7% over the same period in 2023. In 2024, Lefaso forecasts that export turnover will reach about 26 - 27 billion USD.

Ms. Phan Thi Thanh Xuan, Vice President and General Secretary of the Vietnam Leather, Footwear and Handbag Association, said that businesses are continuously recruiting workers to speed up production after a period of cuts. According to Ms. Xuan, for the export market, the leather and footwear industry still focuses on 5 main markets. The US accounts for the largest proportion of about 35%, followed by the EU at 26%, Japan and South Korea. China alone currently accounts for 9% of the proportion and the turnover is increasing day by day, this is also the market that helps the leather and footwear industry have room for export growth in 2024.

According to many experts' analysis, major economies are also potential export markets for Vietnam's footwear industry, with growth expected in 2024. In particular, Vietnam has some significant competitive advantages over other countries that produce and export footwear and handbags.

Currently, 15 free trade agreements (FTAs) have been signed with a short tax reduction roadmap, continuing to support domestic footwear enterprises in market development; good quality labor resources with more than 30 years of footwear production skills and the reputation of made-in-Vietnam footwear brands are increasingly affirmed.

In 2024, in addition to markets with FTAs, the Vietnamese leather and footwear industry will continue to expand and diversify markets, while focusing on maintaining traditional markets such as the US and EU due to their large purchasing power and market capacity.

In terms of product segmentation, Vietnam is assessed to be able to produce footwear products of medium quality and high difficulty. In the near future, the footwear industry will not focus on producing low-value products due to low profits and waste of resources, but will continue to focus on the mid-range and high-end product segment.

Also with many improvements, wood and forestry product exports in the first 6 months of the year earned 7.95 billion USD, up 21.2% over the same period in 2023, reaching 52.3% of the year's plan. In particular, some major markets increased sharply such as: the United States reached 4.38 billion USD, up 27.6% over the same period in 2023; China reached 1.059 billion USD, up 46.6%. Meanwhile, the import value of wood and wood products in the first 6 months of 2024 is estimated at 1.29 billion USD, up 19% over the same period in 2023.

According to Mr. Ngo Sy Hoai, Vice President and General Secretary of the Vietnam Timber and Forest Products Association, the United States is still the largest market for Vietnam's wood and forest product exports. Specifically, in the first 6 months of 2024, the export turnover of wood and wood products to the United States reached 4.38 billion USD, accounting for 55% of the total export turnover of the whole industry. Since the beginning of the year, wood and wood products exported to the US market have grown strongly, showing that demand is recovering rapidly in this market. Wooden furniture is the main export item to the United States, which is also an item that brings high added value to the wood industry.

Responding to and resolving challenges

Commenting on the wood market in the coming time, Ngo Sy Hoai, Vice President and General Secretary of the Vietnam Timber and Forest Products Association, said that wood exporting enterprises are currently facing new challenges regarding international commitments such as complying with European (EU) regulations on anti-deforestation, accountability of the wood industry to fully implement international commitments under the Lacey Act (USA), the carbon border adjustment mechanism (CBAM) proposed by the European Commission (EC), etc. Therefore, in the remaining months of 2024, Vietnam's wood and wood product exports will still face many challenges.

In fact, the United States is currently the main market for the wood industry, but since the beginning of 2022, Vietnamese wood exporting enterprises have continuously faced anti-dumping lawsuits from the United States, South Korea, etc. According to the Vietnam Timber and Forest Products Association, the US Department of Commerce (DOC) has recently officially announced the application of new regulations on trade defense for imported goods into this market. This is raising concerns that it will have an impact on Vietnamese wood exporting enterprises.

Ms. Phan Thi Thanh Xuan, Vice President and General Secretary of the Vietnam Leather, Footwear and Handbag Association, said that some green standards and sustainable development such as policies on ecological products, extended responsibility to manufacturers, traceability of supply chains... can be applied by Vietnam's major footwear import markets this year and in the next few years will affect the industry's exports. Ms. Xuan said that compliance is mandatory.

“When complying with these regulations, businesses must carry out many activities to upgrade their internal capacity. The upgrade must come from technology and management, along with increasing input costs while output costs increase very little, which is extremely great pressure on businesses. However, in a world of equal competition, if we want to successfully participate in the supply chain, we must comply,” the Vice President and General Secretary of the Vietnam Leather, Footwear and Handbag Association analyzed.

Regarding the carbon pricing mechanism (CBAM), Ms. Xuan said that footwear is an industry that is assessed to cause large emissions during the production process, so it is also among the subjects affected by CBAM. The EU is currently a large export market for Vietnam, about 6 billion Euros per year, so it is necessary to prepare for changes and respond to this regulation.

To do this, businesses must first thoroughly understand the information and processes to meet and comply with CBAM. In addition, they need to prepare large resources in terms of human resources, technology, and finance to meet CBAM.

Therefore, businesses cannot go out into the open sea alone, but need to participate in better network activities to grasp information, have deeper and better preparation plans, learn and gain experience to be able to successfully meet regulations and participate in the supply chain.

According to Ms. Phan Thi Thanh Xuan, businesses need to apply digital transformation in management so that the data flow in the factory is continuous, helping leaders update information and make timely decisions. In particular, businesses need to focus on building a compliance department. This department updates information about customer requests to accurately transfer to the production system.

Mr. Tran Thanh Hai, Deputy Director of the Import-Export Department (Ministry of Industry and Trade), said that import-export activities in the first 6 months of 2024 continued to record positive results. According to the estimated figures of the inter-ministerial committee, the total import-export turnover of goods is estimated at 369.6 billion USD, up 16% over the same period last year, of which exports are estimated at 189.5 billion USD, up 14.2% over; imports are estimated at 180.2 billion USD, up 18.1%.

“The global economy in 2024 still faces many risks and is difficult to predict. The fight against inflation still has many uncertain factors, especially the monetary policies of major countries. The current problem of excess capacity in China will also increase competitive pressure in the market. When consumer demand declines, China's excess supply of cheap goods can be exported to other countries,” said Mr. Tran Thanh Hai.

Regarding export activities in the coming time, the leader of the Import-Export Department emphasized that the Ministry of Industry and Trade continues to innovate trade promotion activities, focusing on promoting at the highest level the digital transformation program in trade promotion activities and connecting Vietnamese enterprises and their products (especially agricultural and aquatic products) to the Vietnam Trade Office system in countries and territories, in order to introduce and promote products and seek opportunities to expand the market.

In addition, units of the Ministry of Industry and Trade need to review the key and focal products and markets that need to be prioritized for trade promotion in the short, medium and long term; at the same time, closely coordinate to jointly implement a series of specialized activities of many units within the framework of a trade promotion program, in order to improve efficiency and save resources in the context of limited state budget funding.

In addition, it is necessary to coordinate in guiding localities, industry associations, and enterprises to propose and develop plans to implement trade promotion activities to develop domestic markets and import and export, and digital transformation in trade promotion in accordance with the Strategies and projects approved by the Prime Minister.

Source