Garment products selling slowly – companies scaling down production

The low demand for garment products in the context of the high inflation has forced garment producers and suppliers to narrow their production scale.

Huong, one of the biggest fabric suppliers at Soai Kinh Lam and Tan Binh wholesale markets in HCM City, specializing in distributing fabric to garment companies nationwide, said the sales are just equal to 30 percent of that of the same period of the last year. The three companies run by her, which previously sold nearly one million meters of fabric a month, now can only sell 200,000 meters.

Consumers tightening the purse strings

At Soai Kinh Lam and Tan Binh, the products that still are selling, are white and blue fabric, used to make school uniforms. However, the sales of these products have also decreased with the turnover lower by 20 percent than that of the same period of the last year.

Cotton, linen, and some other kinds of fabric used to make summer clothes, swimming suits and pajamas, which sold very well last summers, are now still in big stocks.

Vien, the owner of the shop specializing in selling fabric and garment materials on Ba Gia Road in theTan Binh District, said “in general, April is the peak fabric sale season, because it is the right time for companies to order fabric to make clothes for sale in summer. However, the market remains quiet these days, while very few tailors have called to place orders.

Nguyen Huu Toan, Director of Sanding Fashion Center belonging to Saigon 2 Garment Company, said “the prices of all kinds of goods and services have increased, while salaries of regular employees remain unchanged; therefore, people have to tighten their purse strings. They should prioritize spending money on the most essential goods like rice, food and vegetables.”

Sanding has reported a 25 percent decrease in the business results of the Sanding system nationwide, in comparison with the same period of the last year. The center said that the number of people who have the demand for purchasing clothes has decreased, while those people who have the demand, have also cut down the purchases: instead of buying three or four items, they only buy one.

Phan Van Kiet, Deputy General Director of Viet Tien Garment Corporation, also said that the growth rate of Viet Tien’s brands on the domestic market is only 25 percent now; much lower than the 40 percent growth rate of the last year.

He went on to say that garment companies once faced big similar difficulties in 2008, but the situation seems to be more serious this year. The fabric price has increased by two folds, while the material stocks have decreased.

Regarding the purchasing power, Kiet said “with one million dong, one could purchase four shirts last year, while he would be able to buy 2-3 shirts this year with the same amount of money.”

“Meanwhile, people have to cut down the expenses on clothes to spend on food, because the food price has also been increasing dramatically,” he said.

Enterprises have to scale down production

Huong said that ten of the workshops, which always purchase fabric from her to make clothes for sale, have to narrow their production. Thanh Hang, the owner of a garment workshop in the Tan Binh district, has reduced the number of workers from 20 to 11; while Hai workshop, which previously consumed 10,000 meters of fabric a month, now only orders 2000 meters a month.

As for Viet Tien Company, Kiet said the production plan has been reconsidered in order to avoid big stocks. Also, Sanding said it has to reduce the number of products per every design. According to Toan, “Sanding previously made 200-300 products per every design, while the number has dropped to 100.”

General Director of a garment company headquartered in the Tan Binh District said “though the company has cut the production by 20 percent, 40 percent of the products for domestic consumption still have been left after Tet.” Consequently, 800 products for the Tet sale campaign still have been left unsold, even though the prices have been slashed by 70 percent.

Tags: Vietnam garment exports, Vietnam Garment industry