Home / Knowledge / News / Market Trends / Vietnam: Textile sector sees over $30bn in exports revenue
Vietnam: Textile sector sees over $30bn in exports revenue
27
Dec '17
A government decision to raise the minimum monthly wage by 6.5 per cent in 2018, over $30 billion in exports revenue, expansion of investments by Chinese and Taiwanese firms, and India’s Reliance Industries Limited (RIL) deciding to join hands with PetroVietnam to restart the Dinh Vu polyester plant marked the year in Vietnam’s textiles and apparel sector. Dipesh Satapathy reviews the developments.

Beginning January, the minimum monthly wage in Vietnam will rise 6.5 percent, or an extra 180,000-230,000 Vietnamese dong ($7.94-$10.14), depending on the region. That brings the total monthly minimum wage to between $136 in the lowest rate region and $175 in the highest wage region.

The Vietnam Textile & Apparel Association (VITAS) kept opposing the move, saying several enterprises are struggling with wage hikes in the last decade. Minimum wage in domestic enterprises increased by 21.8 per cent between 2007 and 2017, leading many to reduce workers’ bonuses and use machines instead of labourers, it said.

In October, VITAS appealed to the government not to increase import tariffs on polyester fibre from zero to 2 per cent. The request followed feedback from many domestic enterprises that are finding it tough to sustain because of the high cost of importing raw material.

The sector attracted more than $750 million in foreign direct investment (FDI) in the first six months of 2017, mostly from investment capital increases in existing projects, despite a reduced number of FDI projects in recent years and the US withdrawal from the Trans-Pacific Partnership (TPP) in January. In the first 11 months this year, the country imported $5 billion worth of materials for use in the textile, garment and footwear sector.

VITAS expects the sector will generate more than $30 billion in exports this year, a year-on-year rise of 10.23 per cent. The sector’s exports were worth $28 billion in 2016.

The United States, Japan, South Korea, China and the European Union (EU) are the five major destination markets for Vietnamese clothing goods. From January to September this year, the clothing industry grossed $23 billion in export turnover, including yarn exports at $2.6 billion, materials and non-woven fabrics at $1.1 billion and clothes at $19.6 billion.

Exports to the US market grew by 6.5 per cent and are expected to reach $13 billion this year. Exports to Europe and Japan have posted slower growth, between 4 and 4.5 per cent. Exports to the South Korean market are expected to hit nearly $2 billion this year. In the first eight months of this year, apparel and textile exports to China rose by 30 per cent to $670 million. Export turnover to the Russian market will likely exceed $200 million this year making it among the top ten export markets.

US garment, textile and footwear firms sought investment opportunities in Vietnam after their country withdrew from the TPP, according to American Apparel & Footwear Association (AAFA). The imports of Vietnam’s garment-textile and footwear to the United States grew by 8.74 per cent and 11.83 per cent respectively over the past 12 months and Vietnam was the second biggest exporter to the US market, after China, AAFA said.

In the first eight months of this year, textiles and garments exports grew steadily to $19.8 billion, with export value increasing by 9.9 per cent over the value during the same period last year. Vietnam’s cotton imports surged over the past ten years from 150,000 tonnes in 2005 to approximately 1.2 million tonnes in 2016, said VITAS.

The country is using purer US cotton more now as its cotton cultivation areas have narrowed down to just 0.04 per cent of the total demand.

On September 12, Ho Chi Minh City hosted the Cotton Day 2017 organised by VITAS and the US Cotton Council International. It exposed enterprises to worldwide cotton demand and consumption trends. CCI granted investment licenses to 12 businesses operating in Vietnam using US cotton.

Vietnamese producers fulfill a mere 0.04 per cent of the total domestic cotton demand. The country imports cotton, with the United States accounting for over 60 per cent of the imports. AAFA and the American Chamber of Commerce in Vietnam held a series of activities in Ho Chi Minh City, including a workshop on product safety and compliance issues, in late October.

The year also witnessed expansion of operations with substantial investments by a few foreign companies. In February, ThreadSol, the pioneer of enterprise material management for sewn products sector, launched its cost-cutting garment solutions IntelloBuy and IntelloCut in Vietnam.

Worldon Vietnam Co. Ltd under the Chinese Shenzhou Group is likely to expand investment in the country as it established a garment-textile production chain there. The knitwear-manufacturing company operationalised the chain’s last project worth $310 million at Dong Nam (South East) industrial park in Cu Chi district, Ho Chi Minh City, in December.

In April, Taiwanese textile major Far Eastern New Century completed its expansion project in Vietnam to manufacture 6,000 tonnes of knitted fabrics per year. Another expansion in its garment unit there saw production expand by a million dozen garments per year. The company has earmarked investments of $760 million in the country, to be spent over three years.

US-based biotechnology company Kraig Biocraft Laboratories Inc., a developer of genetically-engineered spider silk-based fibre technologies, received government approval in October to produce high-tech silk in the Quang Nam province.

After discussions with PetroVietnam Petrochemical and Textile Fiber JSC, a joint venture of PetroVietnam and Vietnam National Textile and Garment Group, both state-owned, India’s Reliance Industries in September decided to collaborate with PetroVietnam to restart the Dinh Vu polyester plant in Haiphong. Reliance will provide personnel for maintenance, material supply and sales operations.

Lack of adequate training for workers and trained engineers remained a major challenge for the sector. Some 300-400 engineers are needed every year by the yarn, fabric and dyeing sectors while universities supply only around 30.

The year also saw domestic fashion brands facing increasing pressure from global brands, which spent high amounts in marketing and advertising campaigns. (DS)

Fibre2Fashion News Desk – India


Must ReadView All

Uzbekistan-China meeting discusses textile cooperation

Textiles | On 20th Aug 2018

Uzbekistan-China meeting discusses textile cooperation

A meeting of the Uzbek-Chinese business forum on cooperation in the...

Amazon infuses additional $400 mn into India operations

Apparel/Garments | On 20th Aug 2018

Amazon infuses additional $400 mn into India operations

Amazon has invested an additional $400 million (₹2700 crore) in two...

Moldova wooing Indian investors in textiles, agriculture

Textiles | On 20th Aug 2018

Moldova wooing Indian investors in textiles, agriculture

Moldova is wooing Indian investors in textiles, agriculture and a few ...

Interviews View All

Pinkesh Jain
Everflow Petrofils Ltd

‘An innovative technology which India needs desperately is the...

Nitin Soni
Dolphin Jingwei Machines

Taxation policies need to be made simpler

Anshul Sood
Oceedee

‘Indian footwear market is nascent and largely a trend follower’

Kamal Kulshreshth

Colorjet is among the fastest-growing wide format digital inkjet print...

Sandip Bhojani, Manthan Patel

Krypthm Tradelink LLP is a Surat-based manufacturer of westernwear....

Gagan Gulati

PG Silk Mills Private Limited had a humble start with a hand-dyeing unit....

Johan Berlin
Investkonsult Sweden AB

Investkonsult Sweden AB are consultants in the nonwoven and absorbent...

Larry L Kinn
Suominen Corporation

Larry L Kinn, Senior Vice President - Operations Americas of Suominen...

Ayyappa Nagubandi
Broadcast Wearables Pvt Ltd

Hyderabad-based Broadcast Wearables has come up with the country's first...

Jay Ramrakhiani
Occasions Elegance Wear

It is believed that by early 19th century, Varanasi weavers had moved away ...

Anisha Chaudhari
Threads & Shirts

Threads & Shirts is a freshly-tailored concept providing men/women a...

Chandani Sahi
By Chandani

By Chandani is a womenswear prêt couture brand with fusion silhouettes by...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


editorial@fibre2fashion.com

Letter To Editor






(Max. 8000 char.)

Search Companies





SEARCH

Leave your Comments


August 2018

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

news category


Related Categories:

Advanced Search