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Vietnam: Garment makers review strategies
The domestic textile and garment industry needs to devise new measures to realise its development plan for the 2010-15 period, the Viet Nam Textile and Apparel Association (VITAS) has said.
The deputy general secretary of VITAS, Nguyen Van Tuan said yesterday at a conference held by EU-Viet Nam MUTRAP and the Viet Nam Chamber of Commerce and Industry that one of the biggest problems facing the industry is the reliance on import materials.
Under the industry's current plan, it would have to achieve a growth rate of 25 per cent and total turnover of US$25 billion to reach its 2012 targets. At least US$19 billion of that total figure would have to come from exports.
The industry's growth rate is targeted to be 25 per cent in 2013 and 15 per cent in 2014 and 2015, with total turnover estimated at US$31.25 billion, US$36.94 billion and US$42.48 billion, respectively.
After 20 years of achieving a growth rate of 20 per cent, in 2011 the domestic textile and garment sector became one of the country's biggest industries, with 4,000 enterprises and a turnover of US$20 billion, accounting for 15 per cent of the national GDP.
"The industry is also the country's biggest export earner and one of the world's five biggest exporters of apparel and textile products. It has also created jobs for 2.5 million people," Tuan said.
It was able to record such growth because of several reasons, including international integration, proper development strategies, and equitisation of textile and garment enterprises, among others.
However, it still imports a great deal of raw materials. With a need of 400,000 tonnes of natural cotton per year, the industry receives only 3,000 tonnes or 0.75 per cent from domestic resources.
About 400,000 tonnes of artificial fibres are needed, but domestic resources can provide only 120,000 tonnes.
In addition, all equipment and parts needed in the textile industry are imported.
Last year, enterprises in the apparel sector had to import 5.2 billion metres of fabric of the total 6 billion metres needed for production activities.
Seventy-five per cent of accessories used in garment enterprises originated from other countries.
The domestic textile and apparel industry has about 4,000 enterprises, 650 of which are foreign-invested. Most foreign-invested enterprises use original branding manufacturing (OBM), or Original Designing Manufacturing (ODM), while domestic enterprises choose the mode of Cut/Make/Trim (CMT).
Because of this method, Vietnamese companies have been unable to directly export their products and have had to ask for assistance from middlemen. As a result, profits have dropped.
Tuan cited other limitations, including outdated production equipment and machinery, weak management ability, poorly skilled employees, and an unstable financial ability.
To take full advantage of its potential, the industry should further develop distribution networks in addition to building brandnames for their products, according to Tuan. "In addition, to reduce dependency on imported materials, companies should pour more investment into the production for raw materials and accessories, including natural cotton, artificial fibre and dyeing," he said.
Vietnamnews
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