Vietnam’s textile export value up almost 7 pct in eight months hinh anh 1The factory of the Ho Guom Garment JSC in My Hao district, Hung Yen povince (Photo: VNA)

Hanoi (VNS/VNA) - The Vietnam Textile and Apparel Association (VITAS) said the total export value of textiles, fiber, and cloth reached 25.7 billion USD in the first eight months of the year, up 8.6 percent year on year, including 60.6 percent from foreign direct investment (FDI) enterprises.

The textile and garment industry spent 14.9 billion USD to import textile and garment materials for production, up 2.3 percent year on year, including 62 percent from FDI enterprises.

The industry’s trade surplus in the first eight months reached 10.8 billion USD.

According to the Ministry of Industry and Trade, domestic textile enterprises face many challenges in production and business activities.

The US-China trade war has affected exchange rates, leading to higher prices of processed goods in Vietnam compared to regional competitors such as the Republic of Korea and China. That has also affected the number of export orders for local enterprises.

In the first eight months of this year, textile production and exports have grown over the same period last year, but due to changing orders, local businesses need to have solutions for production and business.

Industry experts said export orders have fallen. Some businesses have only received 70 percent of new orders against the same period in 2018.

Consumption of fibres and raw materials has struggled as Vietnam's major export market – China (accounting for 60 percent) – has cut import volume. Garment enterprises also saw a drop in orders.

In 2018, many large enterprises in the industry had export orders throughout the year, while this year, they could only sign monthly export contracts with small volume. Buyers are concerned the US-China trade war will escalate, so orders are broken up instead of in bulk.

Phi Viet Trinh, General Director of Ho Guom Garment Group, said the firm's orders have fallen against the same period last year. But there are still enough jobs for workers. It expects by year-end, orders will increase because demand is higher in the last months of the year.

No benefit

As the third quarter comes to an end, it is unlikely that Vietnamese textile enterprises will increase exports due to the on-going US-China trade war as some previously predicted.

In the textile and garment industry, enterprises from the Republic of Korea and Taiwan in Vietnam have gained advantages from the trade war because they own production factories under the value chain.

“Korean textile and apparel companies in Vietnam are the biggest beneficiaries of the trade war. This country’s 143 enterprises account for about 50 percent of Vietnam's textile and apparel export value to the US,” FiinGroup, a financial and business information provider in Vietnam, was quoted by the Dau Tu (Investment) newspaper as saying.

Vietnam has not seen investment flows to the textile and garment industry due to the US-China trade war, according to the Vietnam Textile and Garment Group (Vinatex). There have not been significant shift in production from China to Vietnam.

The investment from a country to another depends on many factors, said a Vinatex leader.

Nguyen Thi Thu Trang, Director of the WTO Centre under the Vietnam Chamber of Commerce and Industry (VCCI), said Vietnam has not benefited from the trade war as many forecasted, including the moving investment from China to Vietnam.

Another problem is that although the export turnover is large, the domestic textile and garment industry still lacks input materials. It has to import all cotton and 80 percent of fabric and other material from China and India so the product costs of domestic firms are much higher than FDI companies, she said.

Therefore, if local firms have increased garment exports, textile companies of China and India would benefit, because the local firms have to increase their imports of raw materials./.