Textile industry shows rapid development

Despite the fluctuations on global and domestic markets, the Vietnamese textile industry continues to grow fast which helps Vietnam remain in top 10 world garment export countries.

Garments exports on the rise

Export revenue of the Vietnamese textile in 2010 can surge to US$11 billion, an increase of 23-24 percent over same period last year and 5 percent above this year’s set plan. This was an extremely hard target to achieve, according to experts.

December will be the sixth successive month that export revenue from garments exceeds US$1 billion, said Le Van Dao, Deputy Head of the Vietnam Textile and Apparel Association (Vitas).

This means that the net profit for the whole industry will increase by 18 percent to over US$4.5 billion. Textiles will become the country’s largest export sector.

Speaking at the 6th congress of the Vitas, Deputy Prime Minister Nguyen Sinh Hung praised the industry’s contribution, saying that it has overcome many difficulties to keep its strong position in the domestic market and win the global market by its quality, brand names and social responsibility.

The industry helps generate jobs with good income for many workers.Le Quoc An, former Chairman of the Vietnam National Textile and Garment Group (Vinatext) said that the industry’s accelerated production and export was recognised already the first months of this year when the economies of Vietnam’s large import markets, including the US, the EU and Japan showed signs of recovery at the end of 2009.

The increase in the number of orders and quantity of raw materials as well as the raise in workers’ salaries helped boost the productivity.

The quality of the growth also improved considerably, in both 2009 and 2010. The rate foreign currency surplus in the industry was 42-44 percent over the import earnings, and the localisation ratio surpassed 40 percent. The marketing performance has improved remarkably as shown at the vote for outstanding businesses in the garment and footwear industry in 2009 and 2010 has remarkably improved.

More than 40 percent of the businesses gained investment returns of over 40 percent. Specifically, the Hung Long Garment Company earned 170 percent, the Hung Yen Garment Company 135 percent and the Tien Hung Garment Company 115 percent.

In addition, some manufacturers including the 10/10 Textile Joint Stock Company, the Nha Be Garment Corporation and the Gia Dinh-Phong Phu Textile Joint Stock Company attained both high sales and growth rates of over 200 percent.

Most remarkably, the Viet Tien Garment Joint Stock Corporation earned the export revenue of US$205 million giving it the first position in the whole industry. The 10/10 Textile Joint Stock Company also made a breakthrough with its US$117 million earned.

While in other industries many are still waiting for orders for the new year, the textile industry is already busy working on orders for up until the second quarter of 2011. They said that they have to carefully consider signing contracts with their partners for fear that the prices will increase by 10 to 15 percent over 2010.

Vitas proposed that the businesses sign long-term negotiable contracts taking into consideration their production capacity, and only agree to specify prices on a quarterly basis. Signing contracts earlier helps businesses plan their production for the whole year, but they need to be aware of possible fluctuations in the market and changes in market prices.

According to experts, importers want to place orders ahead of time because they trust the quality and price of products, the reliability of the delivery offered by Vietnamese producers. This is why, many of them have switched from China to Vietnam.

Achievements in the domestic market

Garment and textile companies also hope to tap in the domestic market of more than 86 million people with an ever growing income. The domestic market for the industry has shown many positive signs and many businesses have estabilished their prestige on their home ground. This is where businesses earned about US$3-5 billion to obtain an annual growth of 15-18 percent.

To implement the strategy to develop the domestic market initiated by the Ministry of Industry and Trade, businesses have invested in market research, fashion design, restructuring production lines, building brand names, boosting marketing in the large cities and bringing Vietnamese goods to the rural and remote areas. Some businesses managed to earn additional profit and expand their distribution network at the same time.

Many Vietnamese brand names such as Nino Maxx, N&M, Foci, Sanciaro, Manhattan, Mattana, De Celco, Sanding, FC, Wow, Vera, Brilliant, Burtley, Three Camel, F House, An Phuoc, Thaituan, Pharaoh, Chambray and Molis have become familiar to the domestic consumers in Hanoi and Ho Chi Minh City along with other famous western fashion houses.

However, the industry still shows some weaknesses. The supporting industry is underdeveloped and the processing rate remains high. The industry lacks high quality work force and the design capacity remains limited.

To increase the export revenue to more than US$ 19 billion in 2015 and US$25-27 billion in 2020, the industry is implementing some large-scale programmes including producing 1 billion metres of cloth for export, planting more cotton to raise the proportion of locally made products, developing the human resources to meet the growing demand, setting up specialised co-operatives to make Vietnam a fashion centre in the region.

Phan Van Kiet, Deputy General Director of Viet Tien Corporation, said that the industry should introduce comprehensive solutions with a middle and long term vision in order to remain competitive on both domestic and international markets.

The Deputy General Director of Vinatext, Le Tien Truong said that the industry must increase its productivity while developing its sub-branches to link the production lines more efficiently. – VOV

Tags: Vietnam textile industry