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Garment firms cut production on sluggish domestic demand
06
Aug '11
Garment firms in Vietnam had shifted focus to cater to the domestic demand when the exports market shrunk due to global economic crisis. Now, owing to sluggish demand and accumulation of stocks, these firms are required to downsize their production.

Heavy stocks have caused some of the Vietnamese garment firms to bear considerable loss, as sales have dwindled since April this year. However, the firms are continuously trying to lure customers by offering heavy discounts, gifts, sales promotional campaigns and lucky draw offers.

Some companies have even consented to sell their products at half the worth. Still, there is a degree of uncertainty whether the reduced prices could really help these garment firms to clear their huge stocks, as some firms have failed to clear their stocks even by offering the same at 25 percent of actual value.

Experts say, not just housewives, but even the youngsters are now trying to save money. Earlier, young consumers chose to purchase minimum two of the five items they liked, but now they are settling for just one.

Even companies that have reported a 15 to 20 percent increase in sales over the corresponding period last year, have actually seen no growth or a decrease in their sales, if one considers the 20 percent rise in price of garments.

Some companies have reported a 35 percent decline in volume of sales during May and June and are compelled to sell the lots at discounted rates and also offer the facility of deferred payment. However, sensing a good business opportunity, big garment manufacturing companies are getting ready to acquire those firms that have fallen into bad situation, i.e. they are unable to pay workers and are planning to shut down.

Fibre2fashion News Desk - India

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