The textile and garment sector changed orders and stabilized life for employees
The year 2020 marked a tremendous change in the import-export sector, especially the garment group, due to the influence of COVID-19 pandemic breaking out in China. This is because 80% of the raw materials used for the garment production are all imported from this country.
In the second quarter of 2020, textile enterprises faced a new challenge again because the COVID-19 wave broke out and spread to the US, South Korea, Japan, and Europe. And the trouble is that these were also the primary export markets of the garment industry. As a result, many orders were cancelled, and hundreds of packages had to be stored because they could not be exported to other markets.
Enterprises producing interior decoration furniture or wood chip production for export was also "floundering" when hundreds of shipments are stagnant. Also, seafood export decreased due to the slow consumption market.
Shifting the supply chain
When facing the risk of shutting down many factories due to the inability to export textile products, many companies shifted export orders from traditional products to antibacterial fabric masks and medical protective gear.
Mr. Le Hong Long, General Director of Phu Hoa An Textile and Garment Joint Stock Company, said that this field produced more efficiently than traditional products. Furthermore, raw materials for manufacturing are mainly imported from domestic fabric loom; thereby, they are always ensured.
Thanks to the strong growth, the company invested 130 billion dong in starting the construction of the second garment factory with a capacity of 24 sewing lines. It is expected that the factory will be put into operation in the first quarter of 2021; thereby, creating jobs for 1,000 workers and meeting the export demand of masking products and medical protective gear for US partners.
Large-scale textile enterprises, such as Scavi, Thien An Phu, Hue Textile and Garment, HBI, etc., all decided to shift orders to ensure supply and demand and create stable jobs for employees.
Taking the chances
Mr. Tran Van My, the General Director of Scavi Hue Company, stated that COVID-19 is a big challenge for the textile and garment sector, especially fashion and warm clothes orders because the demand for these products decreased due to social distancing.
However, for exported underwear and sportswear products, it is an advantage when both the customer's demand and the number of orders increased in quantity. Currently, the orders have been signed until the end of 2021.
With about 10% of products to be exported to Europe, the rest will be focused on the US market. From 2021, Hue Textile Joint Stock Company plans to expand its partners in this market. With the advantage that the tariff will be reduced (according to the plan), especially when the company has a fabric factory to meet the requirement of "rules of origin from fabric onwards", this will be a competitive advantage in the coming time.
According to the company's leader, the Vietnam-Eu Free Trade Agreement (EVFTA) is a crucial tool to enhance the brand of Vietnamese products in general and Thua Thien Hue's products in particular in the European market. Increasing the export rate of garment products to Europe will create opportunities for businesses to expand their markets, increase the value of goods export, and contribute to recovering the economy after the COVID-19 pandemic.
For the wooden furniture sector, the European Union is considered one of Vietnam's five largest wooden furniture export markets. Therefore, the export of wooden products has many advantages after EVFTA being signed; particularly, products such as plywood and chipboard with the tax rate of 7% will decrease to 0% after five years meanwhile wooden boards currently have a tax rate of 3-4% and kitchen furniture at 2% tariff will be eliminated as soon as the agreement comes into effect.
According to Mr. Nguyen Thanh, Director of the Department of Industry and Trade, in the coming time, the department will focus on implementing the supporting industry development program, creating a driving force and a breakthrough for the local industry, especially the industrial support for textile and garment field. Besides, the department continued to support and create favorable conditions for businesses and new projects to be put into production and operate stably to maximize their capacity.
Simultaneously, it is essential to increase promotion and investment mobilization in industrial parks and industrial clusters, and encourage investment in projects producing raw materials and auxiliary materials for the production of the textile and garment industry to solve the problem of raw materials when other countries have the pandemic.
Currently, in the area, more than 90% of enterprises are of small and medium-sized. The common point of these businesses is the limitation relating to capital, technology and unstable market. This will be the group of enterprises that need to be supported with export promotion to develop the market.
Specifically, solutions to support businesses will be organized in many forms, such as connecting with representative agencies, foreign promotion organizations in the Central region. Besides, connecting exports through foreign supermarket chains and e-commerce channels, connecting through trade fairs - exhibitions abroad, and, at the same time, building a value chain of raw materials for export enterprises.
Story: Khanh Thu - Photo: Anh Thao