Textile industry expects to increase orders
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Textile and garment enterprises are making efforts to innovate and meet export orders. Photo: H.Diu |
Doing business slows down due to lack of orders
According to statistics from the General Department of Customs, accumulated in the 10 months of 2023, textile and garment export value reached US$ 27.67 billion, down 12.9%, equivalent to a decrease of US$ 4.08 billion compared to the same period last year. Thus, in the past 10 months, the textile and garment industry has only achieved nearly 70% of the export turnover target of US$ 40 billion in 2023. The reason clearly stated by businesses is that from the last months of 2022 until now, the shortage of orders and raw materials due to supply chain disruptions has not been resolved while foreign partners continue to force prices down.
Therefore, the business situation is very difficult. Financial reports for the third quarter of 2023 and the first 9 months of 2023 of listed textile and garment businesses showed that more than half of businesses had reduced profits, some businesses had moved from profit to loss, some businesses continued to lose profits and very few businesses had increased profits.
For example, Thanh Cong Textile and Garment Investment Trading Joint Stock Company recorded that nine-month profits decreased by 50% compared to the same period in 2022, reaching only VND 111 billion. Century Fiber Joint Stock Company recorded profit after tax of nearly VND 56 billion, down 72% compared to the same period last year. Century Fiber said its sales and average selling price were lower than the same period last year because customers indirectly and directly shrank the size of their orders.
Overall situation for the first 10 months of 2023, according to the report, revenue from textiles and garments of TNG Investment and Trading Company reached VND 6,007 billion, an increase of VND 178 billion, equivalent to an increase of 3% and more than 88% of the yearly plan were achieved. TNG said that in the context of domestic and world economic difficulties, this company had to accept even small orders with low profit margins to maintain output and ensure jobs for workers.
Order expectations are more positive
Although the revenue and profit situation of textile and garment businesses is quite "poor", according to information from a number of large textile and garment businesses, the order and export situation is tending to be more positive since 2024 due to protests by garment workers in Bangladesh demanding wage increases in the face of inflationary pressures.
Faced with a complicated situation with no "end" in Bangladesh, a representative of Song Hong Garment Joint Stock Company said that the company had received more orders for early 2024 when partners transferred orders from Bangladesh to Vietnam, so it was expected to have a positive outlook on revenue and business for 2024. From now until the end of 2023, the order situation would be "temporary enough".
Mr. Than Duc Viet, General Director of Garment 10 Joint Stock Company, said that in general, textile and garment businesses had shown more positive signs in terms of order output. However, he said that the unit price situation was still a worrying issue because Vietnamese businesses were being "squeezed" by international customers, causing orders to increase but the value of export turnover did not increase correspondingly.
Also on this issue, a representative of a textile and garment business shared that the number of orders for 2024 improved compared to the previous year when customers transferred orders from "competitor" Bangladesh to Vietnam. However, because inventory was high due to inflation, people were tightening their spending, so customers were also more cautious and gave more stringent requirements for export orders, such as ensuring certain labour conditions and environmental standards...
Around August 2023, a report by SSI Securities Company showed that, according to a survey of major retailers, although Vietnam was rated higher than Bangladesh in terms of quality and production capacity, Bangladesh had advantages in terms of costs, taxes and Government subsidies. Bangladesh was among 45 developing countries that currently enjoyed duty-free access to Europe. Vietnam benefited from EVFTA, but strict rules of origin from fabric onwards were an obstacle for the industry when 70% of fabric was imported from China. The minimum wage in Bangladesh was currently US$ 75 per month while the minimum wage in Vietnam and China was US$ 199 per month and US$ 300 per month respectively. Therefore, Bangladesh's export became more competitive than Vietnam's.
Along with the above issue, many opinions said that from the beginning of 2024, the textile and garment industry would have many advantages to recover. According to research by VNDirect Securities Company, demand for fabric and garment products in the US would return to a growth trajectory from the first quarter of 2024 thanks to a more positive macroeconomic context. At the same time, increased demand during the year-end holiday season would help promote sales and absorb high inventory levels, creating room for new orders to serve the Spring-Summer 2024 season.
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