Garment firms eye bottom line

Local garment and textile companies are concerned about whether they will be able to earn sufficient profit in the next two quarters to meet their annual export targets.

Export revenue of garments and textiles topped US$6.16 billion in the first half, retaining the industry position as the country’s largest earner.

The sector expects to earn more than $7 billion in the latter half of the year to reach its target of $13.5 billion.

In previous years, the remaining months of the year were the sector’s major export season, with many high-value export contracts.

But this year, the market is not expected to develop in the same way, Sai Gon Giai Phong newspaper reports.

The general director of Sai Gon Garment Manufacturing Trading JS Company, Nguyen An, said foreign importers predicted that garment and textile sales in the US and EU would fall 30 per cent compared to the same period last year because of economic difficulties in those countries.

This would affect the number of contracts and export contract volume, he said.

Local garment and textile companies should adjust their production and trading plans for the remaining months, he added.

Pham Xuan Hong, deputy chairman of the Viet Nam Textile and Apparel Association, said local companies would probably face a shortage of export contracts because demand for garments and textiles in the country’s traditional markets was decreasing.

In the last two years, costs in China for production of garments and textiles has increased, and, as a result, many importers have shifted their orders from China to other countries.

In an effort to attract international buyers of garments and textiles to return to China, the country recently adopted measures to cut prices.

With advantages in raw material sources and production capacity, Chinese enterprises can offer more competitive prices than other countries in the region.

Despite these changes, the production level and the number of contracts of local enterprises had changed only a little, Hong said.

He also asked them to update market information and take precautions to avoid price pressure from importers.

High input costs

Many local garments and textiles said with current high input costs, it was difficult to achieve profits despite having many contracts.

Phung Dinh Ngo, director of Binh Hoa Garment Company, said export prices for this year increased by 10-15 per cent over last year, while input costs went up two – to three-fold.

In addition, the adjustment in minimum salaries for workers also affected companies.

Enterprises in the sector hope the Government creates new policies to help companies weather the economic storm. — VNS

Tags: Vietnam garment exports, Vietnam Garment industry