Textile enterprises lack high-value export orders

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	Lacking orders, textile and garment exports drop

Producing export garment and textile products at Saigon 3 Garment Joint Stock Company. Photo: N. Hue

According to the latest information from the Ministry of Industry and Trade, in the first seven months of this year, textile production increased by 1.8%, while clothing production decreased by 4.6% compared to the same period in 2019. The impact of theCovid-19 pandemic, the situation of production and export of textile and apparel industry still faces many difficulties due to the shortage of export orders.

Export turnover of textiles and apparel in seven months was estimated at $16.18 billion, down 12.1%; fiber and textile fibers decreased by 20.9% over the same period in 2019.

By July, many textile enterprises have not had orders for the last two quarters of the year for high-value products such as suits and high-end shirts, while masks and protective goods, households are helping many garment businesses in the second quarter, the current price has dropped sharply due to an oversupply worldwide.

Vietnam Textile and Garment Group (Vinatex) forecasts that Vietnam's textile and garment export in the last six months of the year will continue to decrease by 14-18% over the same period last year. The total export turnover of the whole year is about $32.75 billion, down about 16% compared to 2019.

Mr. Le Tien Truong, General Director of Vinatex, said that consumption behavior after the Covid-19 pandemic has changed significantly. Recent surveys in both international (conducted by Deloitte) and domestic (conducted by the Group) markets all share the same perception that pharmaceutical, food and savings are common priorities.

Although clothes still ranked fourth in the priority list after savings, the budget for garments is very limited. The trend of less consumption, more use of basic goods, lower purchase quotas will dominate the fashion market in the near future.

The reduction in aggregate demand will make the competition between textile and apparel producing countries more intense, lower prices, and greater pressure from buyers.

"In the first six months of the year, because Vietnam has not stopped production like China or Bangladesh because of social distancing, the market share of Vietnam textile and apparel in the US and EU has increased, regaining market will take place in the near future,"Vinatex’sleaders emphasized.

Although the market situation of all products in the textile supply chain is difficult, according to Mr. Le Tien Truong, basic products will seehigher demand.

Therefore, the Group's member units need to implement solutions so that they can serve basic products to customers and accept flexible, non-specialized production plans in the short term; continuing to focus on cost savings, improve competitiveness; accept competition and production in difficult conditions to maintain the system.

The Ministry of Industry and Trade acknowledged that in the second half of the year, textile enterprises should offset the shortage of export orders by boosting the exploitation of the domestic market; while minimizing the decline in sales and profits by managing production costs and maintaining product quality.

In addition, businesses need to rearrange the production force, identify the key workforce that needs to maintain jobs and income for workers to accompany enterprises through the difficult period when the market is not yet recovered.

In terms of promoting the exploitation of the domestic market, Mr. Le Tien Truong emphasized: "Asthe size of the domestic market is small (only accounting for 10% of the industry capacity), it cannot be a solution for job creation. However, the domestic market still needs to be considered a solution for employee psychology, encouraging the spirit of using Vietnamese goods.”