Apparel companies plan for long way

Before 2010 comes to end, Vietnam’s apparel companies are struggling to reach new orders for next year amid unclear pricing signs.

The major industry is looking for a new development orientation.

Acceleration

According to Le Quoc An-chair of Vietnam Textile and Garment Association, production and export acceleration signals were seen in first months of 2010 as big import markets such as US, Europe and Japan started to recover since late 2009. With such a development momentum, the association predicted that 2010 apparel export in whole 2010 was expected to bring in more than $11 billion, up 22 percent on year, surpassing 5 percent against the initial target of $10.5 billion despite most analysts said the work would be hard to be reached.

Noticeably, growth quality of the industry has been upgraded clearly. For example, between 2009 and 2010, the excess foreign currency in the apparel sector has reached 42-44 percent of export turnover, and its domestication rate of export products has gained over 40 percent. In addition, the selection for prominent apparel and leather shoes producers 2009 and 2010 helped indicate that their business efficiency had improved impressively. More than 40 percent of firms joining the selection posted a profitability ratio of 40 percent, (especially Hung Long Joint Stock Co reported all-time high of 170 percent and Hung Yen Garment JSC 135 percent).

A lot of companies todate have obtained both large revenues and high growth that is higher two fold against 2009, namely Textile October 10 JSC, Nha Be Garment JS Corp, Gia Dinh Textile and Garment JSC gaining total sales of almost 2 trillion dong. Prominently, Phong Phu International Joint Stock Co has reached a growth ratio of 248 percent year-on-year. Similarly, Viet Tien Garment JSC till now has earned $205 million from exports, leading the industry while Textile October 10 JSC posted $117 million.

Furthermore, famous brands including Viet Tien, Phong Phu, Nha Be, An Phuoc were chosen to the national trade names in 2010. Others, Nino Maxx, N&M, Foci, Sanciaro, Mahattan�are blossoming along with western luxury fashion brand names in HCM City and Hanoi.

More and more apparel producers have invested strongly in decisive factors for long-term competitiveness such as expanding domestic distribution system, upgrading living quality for workers in addition to building a harmonised labour relation, improving environmental production.

Problem needed to be settled

Despite all apparel firms see relatively good development steps, the industry still has to face difficult problems like record-high material prices in the global market, rising import export procedures and costs, suffering additional charge of $50-100 per goods container stagnated in ports. The companies also face a transportation cost of over 30 percent this year because of domino effects of rising power and fuel prices, weak administration at ports.

Labour costs, including salary and social, health and unemployment insurance in 2010 have grown 30 percent, making the business efficiency of apparel companies reduce 30 percent. – Vietbiz24

Tags: Vietnam Apparel companies