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Textile - Garment Sector and a chance for break-away

(Vietnam Logistics Review) Việt Nam hiện là một trong năm nước sản xuất, xuất khẩu dệt may lớn nhất thế giới. 6 tháng đầu năm 2018, các doanh nghiệp (DN) dệt may VN đã xuất khẩu ước đạt 16,5 tỷ USD, tăng 16,49% so với cùng kỳ năm trước, cao hơn so với tốc độ tăng 10,43% của cùng kỳ năm 2017. Có 3 mặt hàng đạt kim ngạch xuất khẩu trên 1 tỷ USD là áo thun, quần và áo jacket. Các mặt hàng có giá trị xuất khẩu tương đối cao, từ 700 triệu USD trở lên gồm có váy, quần áo trẻ em, vải, quần sooc…

On progress of development

Since the beginning of the year, there have been good signals for Vietnam’s textile-garment export market: stable number of orders. Normally, in previous years, orders came for only 3 months in advance. However, in December 2017, there have been orders from large exporters’ from the U.S, EU and Japan until the end of August, 2018. According to the Ministry of Industry-Trade, although there have been unstable factors in the world market, Vietnams’ textile-garment sector has had good development, showing by the increasing number of orders and high values.

It is obvious that Vietnam’s textile-garment has had advantages this year. But in long-term, it will probably have to deal with difficulties: they mainly focus on outsourcing different phases while marketing their products of fiber, cloth… is still weak- it is the phase that brings high values to textile-garment products. At the same time, input cost keeps increasing together with minimum wages, insurance, power and water fees. Impacts from the industry 4.0 are strong to enterprises in the sector: they are likely to have more investment to modern equipment, and reduce labor force.

There should be adequate investment for sustainable development. And there should be tighter connection with markets taking part in FTAs for more incentives. Besides long-time existing market as the U.S, EU, Japan and Korea, Vietnams’ enterprises have been aiming to new deriving markets as China and Russia…

Although the agreement has not yet taken effect, the export in the first 6 months of 2018 to countries taking part in CPTPP has been on the increase, reaching USD 2.3bn- an increase of 23%, 13.2% in the EU market, 27% in Korea, 50% in China… Export turnover of many key products and in key markets has been increasing. The U.S is the largest consuming market: USD 6.3bn.

To reach the target of exporting USD 34bn in 2018, there should be proper strategy and adequate investment. In 2017, the sector made a breakthrough with the export turnover of over USD 31bn- an increase of 10.23% compared to 2016. Growth rate of 16.49% in the first 6 months of 2018 has been a stable base for the sector to reach its target. It remain the second profitable sector of Vietnam, after mobile equipment (mainly from Samsung factories).

Vietnam is the second largest exporter of textile and garment to the U.S, after China. Thus, the U.S is the largest market of the sector. In 2018, it is expected there is an increase of 8 to 10% of export turn-over, around USD 13bn, accounting for 38% of the total turn-over of the sector.

A chance for break-away

According to experts, in the coming time, Vietnam’s textile and garment will have many chances to develop or expand its market. Thanks to impacts from FTAs with roadmaps of reducing tax to 0%, many incentive articles in the principle of “from fiber” and a prospect of signing the FTA between Vietnam and EU (EVFTA) in 2018, Vietnam can have more expansion to the market.

FTAs have not only helped the textile-garment diversify its export market but also helped to improve its sources of materials. Most enterprises used to import materials and accessories for their production. But now, Vietnam’s textile-garment sector is exporting over USD 3bn of fiber, nearly USD 1bn of cloths and USD 400m of accessories.

Vietnam’s textile- garment sector has been exporting its products to 4 key markets of the U.S, EU, Japan and Korea. In addition, FTAs, signed and to be signed, will help enterprises change structures of export markets. Besides these four key markets, enterprises started exporting their products to new markets as China’s with expected turn-over of USD 2bn and Russia’s with expected turn-over of USD 500m in 2018.

Recently, labor cost in China has been higher so they have not invested much the export textile garment sector and have not had competitions with Vietnam’s textile-garment sector. In fact, some U.S’s importers have changed their supporters from China’s to Vietnam’s due to concerns on the trade war between China and the U.S. However, they are not many in number.

The fact that the US has imposed the tax of 25% on China’s USD 34bn goods since July 6th is one of the factors that affects the world’s textilegarment in 2018. However, according to experts, it is a chance for Vietnam’s textile-garment to break-away. For when there will be a possibility that the U.S will increase import tax on textilegarment products from China, it is a good chance for Vietnam’s enterprises to expand their export market shares to the U.S.

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