Textile and garment enterprises cope with shortage of orders

Not all is well

According to information from the Vietnam Textile and Apparel Association (VITAS), the total demand for textiles and garments in the world this year is likely to decrease by 8-10%, so the Vietnamese textile and garment industry will still face difficulties at least until the end of this year and early 2024. It is forecasted that Vietnam's textile and garment exports this year can only reach around 40 billion USD, down about 9-10% compared to 2022.

However, VITAS also "revealed" positive signs of recovery when recently, partners from Europe, Northeast Asia, Southeast Asia... came to learn about garment products with a tendency to increase rapidly compared to previous months.

Mr. Vu Duc Giang, Chairman of VITAS, commented: the decline in export turnover and market share of Vietnam's textiles and garments, in addition to the objective reasons of the general market's gloominess and the trend of shifting orders to countries with geographical advantages, is also due to the decline in the competitiveness of Vietnam's textile and garment industry. Vietnam's textile and garment industry is facing more difficulties in the face of strict demands from brands such as higher quality and compliance with policies such as sustainable development.

According to the Vietnam National Textile and Garment Group (Vinatex), data shows that Vietnam's textile and garment export turnover in July 2023 reached 3.81 billion USD, down 9.4% year-on-year, up 6.2% compared to June 2023. In the first 7 months of 2023, textile and garment exports reached 22.5 billion USD, down 15.9% compared to the same period in 2022.

Regarding the market forecast, Mr. Vuong Duc Anh, Chief of Office of Vinatex's Board of Directors, also said that the market in the last months of 2023 has no momentum to increase, total demand may only increase according to the natural annual increase with the year-end holiday seasons. For the US market, US apparel imports in the last 6 months of the year are expected to increase by 10% compared to the first 6 months of the year, bringing the total apparel import turnover of this market to 80 billion USD in 2023 (down 20% compared to 2022). For the Japanese market, the growth momentum of the first 6 months of the year may continue, but may be affected by a 5-7% depreciation compared to the continued depreciation of the Yen according to JP Morgan's forecast.

Chairman of the Board of Directors and General Director of M2 Vietnam Joint Stock Company (M2 Fashion) Nguyen Hai Duong said that the decline in orders from major markets such as the US and EU has affected the exports of the Vietnamese textile and garment industry. It is forecasted that the production and export situation will gradually improve, but difficulties will still last until the end of 2023, even into early 2024, because many businesses have not yet had enough orders for the third and fourth quarters. In addition to the lack of orders and accepting orders that are not their strengths, businesses are also facing difficulties due to sharp decreases in unit prices, even up to over 50%.

Although the market in the last months of the year has not shown any signs of improvement, many businesses believe that the worst time for textiles and garments has passed. To anticipate new development trends, businesses need to be proactive in terms of resources, finance, strengthen management as well as minimize expenses, etc. to improve competitiveness.

How to cope?

According to Mr. Nguyen Hai Duong, General Director of M2, to avoid dependence on export orders, businesses aim to promote domestic consumption, expand the domestic market, to promote production and business, remove difficulties for themselves, restore economic growth...

“The domestic market with a purchasing power of 100 million people is a support for textile and garment enterprises to maintain production and business. In addition to the M2F Tien Lang Factory serving export orders to the US and Germany, we also increase products for the domestic market... However, at this time, enterprises accept to give up profits to retain workers, ensuring an income of about 7 million VND/person/month, and preparing human resources to welcome the recovery wave,” said Mr. Nguyen Hai Duong.

Along with M2F, it is expected that in the near future, this enterprise will complete the construction of a factory in Thai Binh to seize opportunities when orders are in season. Currently, there are 2 Japanese customers and moving towards Korea because the Asian market is less affected than Europe due to political conflicts...

In addition to the lack of orders, many textile and garment enterprises have seen their profits shrink due to sharp price drops. However, in order to maintain production and retain business, they still have to accept that their products do not bring in profits.

Following the current trend, the global textile supply chain is gradually stabilizing with new characteristics such as: low processing prices; small orders, strict technical and product quality requirements, fast delivery time. Along with that are the requirements for using green materials, recycled materials,...

Vinatex General Director Cao Huu Hieu affirmed that the enterprise itself must flexibly adjust according to market and customer needs. In the current period, the group is focusing on key solution groups such as forming and promoting the activities of production and business departments of yarn-fabric-garment-household goods to take advantage of the experience of good units to support weak units to improve operations and production efficiency.

In addition, strengthen the coordination and connection functions between production and business departments to quickly form a production chain as well as build a product development and fashion business center of the group.

At the same time, develop service centers and shared management solutions among units in the same area to maximize the use of all resources, avoid waste and dispersion; focus on researching green production technology solutions; develop new products using green materials, recycled materials, etc.

VITAS Chairman Vu Duc Giang said that to meet green standards for export, the association aims to green up with a plan to reduce energy consumption by 15% and water consumption by 20% by 2023; by 2030, greening the Vietnamese textile and garment industry, and building 30 international brands.

To increase prestige in the international market, attract orders, and ensure sustainable exports, a representative of the Ministry of Industry and Trade said that Vietnamese textile and garment enterprises need to increase in-depth development, participate more deeply in the global textile and garment supply chain, especially focusing on stages that bring high added value such as design and production of input materials, rather than just mainly processing as at present...