Why are textile and garment enterprises still worried despite increasing orders?

Businesses accelerate production

Since the beginning of the year, export orders have improved, helping domestic textile and garment enterprises stabilize production, improve revenue and profit. According to Mr. Pham Minh Duc - General Director of Nam Dinh Garment Joint Stock Company, in the first 6 months of 2024, the unit's revenue is estimated at 420 billion VND, of which 90% comes from FOB revenue (raw materials, production), with an estimated profit of 10 billion VND.

Currently, the company has enough orders for 2024 and has started working on orders for the first and second quarters of 2025. To improve management efficiency, ensure internal capacity and the company's operating apparatus are suitable for the current growth rate, the company is focusing on digitalization, applying information technology in production, business and operation activities to optimize costs and promote efficiency on the digital platform.

Despite increasing orders, textile and garment enterprises are still burdened with worries. Photo: Quang Vinh

Similarly, Hung Yen Garment Joint Stock Corporation, according to Ms. Pham Thi Phuong Hoa - General Director of Hung Yen Garment Joint Stock Corporation, in the first half of 2024, the company's revenue is estimated at 311.5 billion VND, equal to 82.7% over the same period, pre-tax profit reached 28.2 billion VND, equal to 78.5% over the same period, average income of workers reached 10 million VND/person/month, equal to 105% over the same period.

Unlike Nam Dinh Garment, Hung Yen Garment has faced difficulties since the beginning of the year due to unusual labor fluctuations compared to previous years. The main reason is the trend of labor export and labor competition from FDI enterprises in the region, although the salary and income levels have continuously improved. In addition, the pressure of delivery and prices has not improved, affecting the company's performance in the first half of 2024.

Hung Yen Garment's market performance in the third quarter is expected to improve compared to the second quarter, but there have not been many positive signs in the fourth quarter. It is expected that the corporation's revenue will exceed 5% and pre-tax profit will increase by 15% compared to the plan for the whole year 2024.

Along with the stable production situation of enterprises, the export of Vietnam's textile and garment industry in the first 7 months of 2024 was quite good, with 19.8 billion USD, up 4.2% over the same period. In the remaining months of the year, due to the right season for serving holidays and Tet, enterprises expect more orders, production and business will be better.

Prepare to deal with new, strict regulations

The US is a major export market for the textile and garment industry. At the Trade Promotion Conference with the Overseas Trade Office System with the theme "Promoting trade to develop the market for processed and manufactured industrial products" held recently, Mr. Do Ngoc Hung, Head of the Vietnam Trade Office in the US, said that the US Department of Commerce has not yet recorded mandatory regulations related to green standards and regulations applicable to imported goods into the US, including textiles and garments. Therefore, Vietnam's textile and garment exports to the US may continue to increase in the coming time when autumn and winter are coming, as well as suppliers actively purchasing goods for stockpiling before the election in November 2024.

However, Mr. Do Ngoc Hung also suggested that the textile and garment industry continue to pay attention to US regulations on the Uyghur High Forced Labor Prevention Act, coordinate with the Ministry of Industry and Trade and the Vietnam Trade Office in the US to promptly report to the US customs and border agencies to promptly handle shipments stopped at border gates; coordinate with the Trade Promotion Agency to actively and effectively participate in international fairs in the coming time.

Regarding the EU market, the Textile and Garment Group informed that the Regulation on Eco-design for Sustainable Products has come into effect, in which the EU stipulates a ban on the destruction of unsold clothing, accessories and footwear products, expected to come into effect in mid-2026.

At the same time, products without a Digital Product Passport will not be allowed to circulate on the EU market. The EU Commission will publish technical Digital Product Passport standards to guide companies and passport providers by 31 December 2025.

Thus, in the major export markets of Vietnamese textiles, there are and will be very strict regulations, forcing businesses to comply. Not to mention, in the domestic market there are still many unfavorable factors, in which the most prominent is the labor issue.

Along with the rapidly increasing wave of FDI investment in Vietnam, the pressure on labor of textile and garment enterprises has increased. The demand for highly skilled labor and technical labor to operate new technological equipment is also increasingly fierce.

According to Mr. Nguyen Xuan Duong - Chairman of the Board of Directors of Hung Yen Garment Joint Stock Company, the requirement in the next 3 years is that if there is no comprehensive transformation, especially improving management capacity, labor productivity and innovation, it will not be able to stand firm in the context of a volatile market.

Therefore, Mr. Le Tien Truong - Chairman of the Board of Directors of Vietnam Textile and Garment Group said that enterprises need to research and apply the enterprise resource planning system to improve management productivity and innovation productivity to maximize resources, creating a difference in the medium and long term. However, the implementation of the system needs to identify the needs and goals to plan the implementation resources including both human resources and finance.

Source: https://congthuong.vn/vi-sao-don-hang-tang-doanh-nghiep-det-may-van-lo-336642.html