Garment exports increase, but difficulties ahead

Garment manufacturers are experiencing a strong period due to a high number of orders. However, they still feel insecure because they see numerous difficulties ahead.

Garment companies said at a meeting held on August 19 in HCM City that they do not have to worry about export markets. More and more orders have come as the world market has recovered from the global economic crisis. Vietnamese garment companies now have many opportunities to choose export markets, clients, and orders. However, they also complained that they are facing a number of difficulties. Garment manufacturers believe it will be very difficult to obtain high profits, because the price of input materials have increased, thus increasing production costs.

Diep Thanh Kiet, Chairman of the HCM City Garments, Textiles, Embroidery, and Knitting Association, warned that if the Government agrees to the proposal by the Electricity Utility of Vietnam to increase electricity prices, garment companies would face even larger difficulties.

Besides higher production costs, the lack of workers is now the biggest worry for many garment companies. Many exporters say they have to refuse many orders placed by foreign importers, because they fear they cannot fulfill the orders with their limited labor force.

Some companies said that in order to settle the labor shortage problem, it is necessary to increase investments in machinery and equipment. Experts believe that the capacity of one machine is equal to the capacity of five workers. If companies want to expand their businesses in the long term, then they should upgrade the technology on their production lines.

However, according to Pham Xuan Hong, General Director of Saigon 3 Garment Company, every company should have its own plan to upgrade machines based on each company’s demand and financial capabilities. Companies still need to retain workers, because machines cannot totally replace workers.

Recently, many enterprises have applied a lean management model that allows for production costs to be reduced, managers to be trained, and technology to be renovated.

Garment companies have been told to be cautious when signing new export contracts. Garment orders have been flocking from other countries, especially from China. Companies should not take on too many orders if they do not have enough workers.

Export prices are forecast to increase in the near future, so companies should consider contracts carefully before signing, in case they mistakenly sell products at a loss. They have also been warned that the price of input materials may see big fluctuations.

Experts all forecast that the garment industry will see a stronger recovery in the near future. Therefore, Vietnamese companies should take full advantage of the Government’s policy of low interest rates to access bank loans to expand their businesses. Besides, expanding sales in the home market has also been cited as a measure to increase business.

In 2010, Vietnam’s garment companies are believed to be obtaining a high growth rate, with the target of exporting $10.5 billion worth of products within reach. In the first seven months of the year, Vietnam’s garment export revenue had reached $5.8 billion, an increase of 17 percent over the same period of 2009.-Thoi bao Kinh te Vietnam

Tags: Vietnam garment exports, Vietnam Garment industry