How does yuan price reduction affect garment, footwear industries? hinh anh 1A worker of Dinh Vu Polyester Fibre Plant in the northern port city of Hai Phong (Photo: VNA)

Hanoi (VNA) - The sudden depreciation of Chinese yuan against the US dollar brings more difficulties to Vietnam’s yarn industry, according to Vietnam Textile and Apparel Association (VITAS).

Vietnam imports cotton from the US to make yarn products for export to China.
If the yuan continues to fall, Vietnam's yarn producers will continue to face difficulties, the association said.

VITAS Chairman Vu Duc Giang told the Vietnam News Agency that due to the US-China trade war, in the period from May to September 2018, Vietnam yarn export price to China dropped from an average of 3.05 USD to 2.99 USD per kilo, down by 1.97 percent, causing average yarn export value each month to decrease by 2.5 percent.

According to experts, the US-China trade saw Chinese yarn importers buy the minimum quantity to meet manufacturers’ demand.

Giang said Vietnam yarn exports had been mainly shipped to China, accounting for more than 60 percent of total annual yarn export value to the world. Vietnam is also one of China’s major yarn suppliers, with a continuously growing market share.

In 2014, Vietnam ranked third in China's yarn import markets, after India and Pakistan. In 2017 and 2018, Vietnam rose to the first place, accounting for 30 percent of China's yarn imports, higher than both India and Pakistan.

The Dam San Joint Stock Company’s representative said in the past, the company sold 1,400 tonnes of yarns to China, but now the volume was declining sharply and even in September, it would not have export contracts to sign.

According to some enterprises, Chinese partners have pressured firms to reduce further import prices.

Other markets such as the Republic of Korea, Japan, Egypt, Turkey, the Philippines and Taiwan still have orders but only small quantity.

They also face fierce competition from domestic foreign-invested (FDI) enterprises and businesses from competing countries such as India, Thailand, Indonesia, and Pakistan to get contracts.

The selling price is still on a downward trend and there is no sign of recovery, while China has launched a large amount of cotton stockpiles, which makes cotton prices fall sharply.

The Vietnam Yarn Association said this year, the export volume of Vietnamese yarn industry would reduce by 10-15 percent year on year and the selling price had also dropped from 3.5 USD to 2.8 USD per kilo at present. Therefore, the industry could suffer no less than 500 million USD.

Meanwhile, Phi Viet Trinh, General Director of the Ho Guom Garment Group, said his company exports to Europe, Japan and the Republic of Korea who pay in US dollar so the depreciation of yuan would not have much effect on his group.

Than Duc Viet, General Director of the May 10 Corporation, also said the May 10 had not had much export volume to China and its payment was mainly in US dollar so it would not be affected much by the yuan depreciation.

For the domestic leather and footwear industry, Phan Thi Thanh Xuan, Secretary General of the Vietnam Leather and Footwear Association (Lefaso), said enterprises had to import many raw materials from China. However, these contracts mainly came from large-scale businesses and foreign direct investment firms so the payment for the contracts were in US dollar.

Lefaso was following developments in import and export activities of the industry to be able to inform its members, especially in the last quarter when the enterprises promote production meeting higher demand for holidays.-VNA