Workers at a Garment 10 factory. (Photo: baosoctrang.org.vn) According to the Vietnam Textile and Apparel Association, export prospects forthe industry are getting better as major importers have reopened theireconomies and various free trade agreements have begun to take effect.
Under a likely scenario, Vietnam’s textile export is expected to reach up to 43.5billion USD in 2022.
However, Garment 10 Corp. is concerned that the Chinese Zero-COVID policyand the Russian military operation in Ukraine will disrupt supply chains,hindering its ability to fulfil new orders.
"The Russian military operations in Ukraine have driven up our inputcosts. The Chinese Zero-COVID policy will cause material shortages in theshort-term, fueling the situation," said Than Duc Viet, directorof Garment 10.
The director said China remained the leading material exporter to Vietnam,accounting for half of the supply. His corporation has planned to diversify itssuppliers in the next 5-10 years to be less dependent on China, but it has toaccept the situation and seek support from its partners in the short term.
The situation is even worse for Dap Cau Garment JSC., which imports 80 percentof its material from China at the request of its partners.
Nguyen Duc Thang, director of Dap Cau Garment, underlined delayed shipmentsfrom Shanghai (China) as the main cause for his company's disrupted production.His company has to re-negotiate with its partners to put back delivery.
"For orders that we cannot fulfil on time due to material shortages, weare re-negotiating their delivery terms. The delivery can be moved to laterdates but not so far that we may face high payment risks," he said.
Tran Nhu Tung, chairman of Thanh Cong Textile Garment Investment Trading JSC.,revealed that this company would seek the substitution of Korean and Thaimaterials or rely on domestic materials to deal with the shortages.
Some other companies also thought of the same idea, but only deep-pocketed onescould make it work due to high costs. Those with limited financial capabilitynormally have no choice but to ask for a delay in delivery.
Trinh Xuan Lam, chairman of Tien Son Thanh Hoa JSC., said his company had beensticking to diversification to get through a hard time but with little success.Material from other countries is insufficient to fill the gap left by China.
"We've found new suppliers from other countries and additional domesticsuppliers, yet their production still falls short of our demand by around30 percent," he said.
For companies feeling the pain of the shortages like Viet Thang Jean LTD.,diversification might go with higher costs due to Chinese price advantages, butthey are willing to bear such costs to have more stable production.
"Never be dependent on a single supplier. We are glad to partner withany country that provides a stable supply, even with higher costs. Weaccept lower profits to secure output stability," said Pham VanViet, chairman of Viet Thang Jean.
According to the General Department of Customs, textile exports reached 8.8billion USD in Q1/2022, up 23 percent compared to the sameperiod last year, representing the highest quarterly growth in10 years.
VITAS said Vietnamese textiles are urging the Government tosoon approve the Development Strategy for Textile and Footwear by 2030 tomake the industry self-sufficient in material production and compliantwith rules of origin as stated in free trade agreements./.
VNA
