Flexible, creative production transformation to overcome difficulties

Statistics from the Vietnam National Textile and Garment Group (Vinatex) show that the total export turnover of Vietnamese textiles and garments in the first four months of 2023 reached about 11.7 billion USD, down 20% over the same period in 2022.

Production of textiles for export at Nam Dinh Textile and Garment Joint Stock Corporation.

Apart from the Japanese market which continued to maintain a growth rate of more than 6%, other markets all decreased sharply such as the US and Chinese markets decreased by more than 30%, the EU decreased by 12%, Korea decreased by 5%,...

To overcome difficulties, businesses are making efforts and actively seeking orders, diversifying products and promoting thrift practices to ensure production efficiency and retain employees.

Diversified markets and products

Vice President and General Secretary of the Vietnam Textile and Apparel Association (Vitas), Truong Van Cam, said that the textile and garment industry, like other industries, is currently facing many difficulties due to fluctuations in the world economy, causing a sharp decrease in consumer demand and an increase in inventory. Normally, every year, businesses have enough orders until the end of August, September, or even the end of the year, but now they have to "eat by the handful" each month, many businesses have to accept the situation of "picking up" unwanted orders at low prices to ensure jobs and wages for workers.

"When the market shows no signs of improvement, businesses need to promote the development of niche markets, accept orders with specialized value as well as save and cut costs to the lowest level to quickly overcome the difficult period," Mr. Cam emphasized.

General Director of Viet Thang Corporation, Nguyen Quang Minh added that in the context of the general difficulties of the market, the unit had to flexibly change production, diversify customers and products, focus on strengths to maintain jobs for workers, and stabilize production. In particular, to maintain production, it is necessary to flexibly change and innovate to create a difference, try to maintain old customers, and seek new customers at home and abroad through different channels. At the same time, improve production efficiency, business, and product quality by specific measures such as automating key production stages, balancing the chain reasonably, calculating optimal and thorough production items to save raw materials from cotton fibers, supplies, spare parts, and energy. In addition, the unit will increase investment in finished fabric production, stabilize the quality of printing, dyeing, and finishing stages to improve efficiency, increase profits, and create jobs for workers. To develop sales and expand the market, the corporation will increase human resources for the market sales department; apply incentives such as revenue bonuses, strengthen sales marketing through different channels, including traditional channels and online sales channels such as: Amazon, Alibaba, on social networks such as Zalo, Facebook, YouTube, ...

Similarly, General Director of Hung Yen Garment Corporation, Pham Thi Phuong Hoa, said that in 2022, the unit also faced many difficulties when orders showed signs of "reversing" and shrinking. If previously the strength of the corporation was the production of woven products, high-end women's fashion products, on a small scale, but facing difficulties, the unit had to invest in more machinery and production lines to produce cheaper knitted products but with large orders to maintain production. With the unpredictable situation of 2023, the corporation certainly has to continue to diversify products and customers, accept the production of small orders but with high technical requirements to maintain production through in-depth investment in machinery and equipment. At the same time, build innovative and creative movements to improve production and business efficiency.

Make good use of opportunities

General Director of Vietnam National Textile and Garment Group (Vinatex) Cao Huu Hieu said that businesses are currently facing many difficulties due to lack of orders and low unit prices with a decrease of 20-50% compared to 2022. According to forecasts, the lack of orders, small orders, low quantity, and low unit prices will last until the end of the third quarter. Therefore, businesses must optimize production activities, focus on improving productivity and product quality. In addition, they must closely follow customers and the market to have flexible and timely policies to maintain production and trading of goods.

Chairman of the Board of Directors of Vinatex, Le Tien Truong, affirmed that reputable organizations have not yet made any forecasts about the time of strong recovery of the textile and garment market. Total textile and garment inventories, after decreasing in January and February, increased again in March and April. High inventories and small, quick orders have led to a trend of shifting orders closer to the consumer market for more flexibility in delivery, even though production costs may be higher. This has also caused demand for orders from the US and Europe from Asia to decline.

Mr. Truong also said that, in terms of relative competitive advantages, Vietnam is facing more limitations than other exporting countries. First of all, the Vietnamese currency is getting stronger in the first quarter, while textile and garment exporting countries maintain cheap domestic currencies to stimulate exports, including China with an exchange rate of 6.91 CNY/USD compared to 2018, 2019 at 6.3-6.5 CNY/USD. Loan interest rates in Vietnam also fluctuate higher than those in these countries by 5-7%/year. Increasing electricity prices by 3% from May 4, increasing the basic salary of the public sector to 1.8 million VND/month also puts additional cost pressure on businesses. Therefore, businesses need to focus on niche markets with small, difficult, constantly changing orders as well as diversifying customers, not depending on a few traditional customers. At the same time, thoroughly save all operating costs, do not expand scale, focus on in-depth investment in automation and digitalization with the ability to quickly recover investment capital within two or three years.

Vinatex and its member enterprises will continue to maintain, consolidate and develop their positions in the existing supply chain as well as seek and join new supply chains.

Consistently pursuing the goal of building Vinatex into a destination providing complete solutions, starting from knitting but being flexible in determining goals that are suitable for market developments, including the option of adding special products to develop complete solutions; fully implementing, without delay, commitments related to environmental protection, implementing management standards in the direction of circular economy that organizations and major brands have set for all members in the supply chain.

The Group promotes research, analysis, and updates on the market and competitors to have flexible production and business solutions, making good use of opportunities, especially the new generation of free trade agreements that Vietnam has participated in.

According to Vice President and General Secretary of Vitas Truong Van Cam, in addition to difficulties in orders and sharp declines in unit prices, textile and garment enterprises are also under great financial pressure such as high interest rates, pressure to repay loans and interest, etc. Many enterprises have to use reserve resources or lay off workers, reduce working hours, and produce at a moderate level to maintain the workforce. Therefore, the State needs to have financial support mechanisms and policies, reduce loan interest rates, restructure debt repayment periods, etc. to help textile and garment enterprises develop sustainably and make green transformations to meet market requirements.

Source