Vietnamese textiles, garments and furniture benefit from many breakthrough advantages in the global market

Vietnamese-designed furniture products make their mark at the Milan Design fair

Regain growth momentum

Ms. Duong Thi Minh Tue, Vice President of Ho Chi Minh City Handicraft and Wood Processing Association (HAWA), said that from the beginning of 2024, many businesses in the wood industry have had orders until the end of the year. Thanks to that, the export revenue of the wood industry is approaching the level of 2022 with 5-month export turnover reaching 6.1 billion USD. In particular, the main markets of Vietnamese wooden furniture are the United States, China, and Korea, all recording growth.

Ms. Tue also raised another positive signal that imports of raw materials and auxiliary materials of the wood industry have recorded a growth of 21% in the first 4 months of 2024. This shows a signal of recovery of production activities, export wood and wooden furniture in the coming months.

Mr. Tran Nhu Tung, Vice Chairman of the Vietnam Textile and Apparel Association (VITAS) also said that the difficulties of 2023 have almost ended, replaced by positive signals since the beginning of 2024. In the first 5 months of 2024, the order situation has reveal positive signals; most businesses in the industry have orders.

Thanh Cong Textile and Garment Investment - Trading Joint Stock Company (TCM) recently announced that its revenue in April 2024 of nearly 12 million USD, an increase of 13% over the same period last year; Profit after tax reached 907,047 USD, 5 times higher than April 2023. Accumulated in 4 months, TCM reached 51.7 million USD in revenue, growing 8% and profit after tax reached 3.4 million USD, growing 38%. TCM said that it has currently received about 88% of the revenue plan for orders in the second quarter of 2024 and about 83% of the revenue plan for orders in the third quarter of 2024.

Although there have been many improvements in orders, Mr. Tung said, businesses have to deal with price difficulties. “Salary costs are increasing, while other costs do not tend to decrease. Meanwhile, customers are becoming smarter with their orders because they always compare Vietnam’s prices with other countries, especially Bangladesh - the 2^nd in the world in textile and garment exports" - Mr. Tung shared.

Specifically, Bangladesh's minimum wage is only 80-90 USD, while Vietnam is currently 200 USD. Brands use Bangladeshi labor costs to place orders with Vietnam, causing great difficulties for businesses. Even domestically, price issues are fiercely competitive. Due to differences in labor costs between regions, there are orders that the South cannot receive but the North can. Additionally, in 2023, the Bangladesh currency has lost about 25%, causing Vietnam's prices to increase compared to Bangladesh.

Many competitive advantages

Mr. Tran Phu Lu, Director of the Ho Chi Minh City Investment and Trade Promotion Center (ITPC), assessed that there is a lot of development room for the fashion, furniture and household appliances industries of Vietnam in general and Ho Chi Minh City in particular. Especially, product quality, technical level, ability to meet strict labor and environmental requirements as well as tariff incentives of each market are Vietnam’s priorities.

Explaining this more clearly, Mr. Tran Nhu Tung said that among the 12 criteria of international brands evaluating major textile and garment exporting countries such as China, Bangladesh and Vietnam, Bangladesh only dominate 2 criteria compared to Vietnam in terms of low cost and tax policy. Because Bangladesh develops more slowly than Vietnam, this country is offered more preferential policies to encourage its development. Besides, the textile industry contributes up to 80% of Bangladesh's GDP, so the Government of this country has many policies to protect the industry.

Therefore, Mr. Tung assessed that in the long term, Bangladesh is not a competitor of Vietnam's textile and garment industry. Instead of current price criteria, many other requirements are needed. Recently, in Bangladesh, workers went on strike demanding a salary increase and the Government had to approve. This will cause difficulties in the future because labor costs will no longer be this country's strong point. In addition, Bangladesh also has the disadvantage of not having many seaports, especially deep-water port like Vietnam.

According to Mr. Tung, Vietnam's textile and garment industry still has many competitive advantages in the next 15 years, even if labor costs are increasingly high. Mr. Tung cited the story of China when it still leads the world in many manufacturing industries, even though the country's labor costs are very high. Accordingly, businesses are trying to meet green production criteria to have an advantage in attracting orders. Along with that, the shift to higher value products, investment in machinery and equipment to increase productivity, expand markets, and diversify products are also beneficiary...

Regarding the wood industry, Ms. Duong Minh Tue said that trade and trade promotion activities are being actively implemented to expand sales opportunities and connect with new customers for businesses. Notably, the Hawa Expo held last March brought very positive results with the participation of 20,000 visitors, through which 75% of businesses signed MOU contracts and the total preliminary order value was about 115 million USD. Accordingly, 72% of businesses have registered to participate in the exhibition next year.

HAWA also coordinated with the Department of Trade Promotion (Ministry of Industry and Trade) to register to participate in 4 consecutive times at the High Point fair - one of the largest fairs in the US, to impress customers on brand of Vietnamese wooden furniture. In particular, through 2 participation periods in October 2023 and April 2024, 3 businesses have had direct orders at the fair and 10 other businesses are making quotes for customers.

Ms. Tue also said that the Vietnamese wood industry is trying to reach a higher segment in the world wood market with investments in design and branding. Recently, HAWA also coordinated with ITPC to bring 30 furniture and fine arts enterprises to participate in the Milan Design fair - one of the pioneering design fairs in the world. "Introducing Vietnamese wooden furniture to appear at the fair with a neat image, right for this fair is an opportunity for the Vietnamese wood industry to affirm its design capacity" - Ms. Duong Minh Tue said. Thanks to current activities, it is forecasted that the export situation of the wood industry will regain growth momentum, even have a breakthrough, especially in the high value-added segment.