Order shortages put apparel exports at risk

The price of garment and textile exports has remained consistent while input costs have increased as a result of the rising prices of imported materials, thus hitting apparel firms. (Illustrative photo: VOV)

The majority of garment and textile firms have secured export orders until the year’s third quarter.

Tu Thi Bich Loc, director of the My Anh garment stitching company, said that her firm has faced a range of difficulties during 2019 in comparison with the previous years. This can be seen in the number of My Anh shipments ordered by importers dropping dramatically by 30 per cent on year.

The price of garment and textile exports has remained consistent while input costs have increased as a result of the rising prices of imported materials, thus hitting apparel firms.

Truong Van Cam, general secretary of the Vietnam Textile and Apparel Association, said order shortages have been occurring throughout the sector, adding that the total orders which many domestic firms have gained represent only 70 per cent of the figure seen during the same period last year.

Furthermore, the domestic sale of fibre and other materials have run into difficulties during the first half of the year while the export value of ancillary materials fell by 0.29 per cent on year.

The above-mentioned factors could make the sector fail to meet the full-year export target of US$40 billion.

Cam attributed the downward fortunes of the sector to the negative impacts of ongoing US-China trade tensions. The domestic fibre production has suffered the most from the trade war which has made fibre exports to China plunge.

Vietnam used to produce approximately 2.2 million tons of fibre annually. As many as 1.5 million tons are shipped abroad; of which 60 per cent are sent to China. During the first half of this year, fibre exports to China inched up only 1.1 per cent on year.

In response to the tariffs imposed by the US administration, China has undergone deep yuan depreciation in order to facilitate its exports while the Vietnamese dong has remained steady. This has made Vietnamese exports to China, including apparel products and ancillary materials, more expensive, subsequently putting the domestic sector at a disadvantage.

Impacts of the free trade agreements (FTAs) Vietnam has signed could pose another threat.

Foreign partners believe that opportunities arising from the FTAs have yet to present themselves; hence, there are no high hopes on the soaring export growth of the apparel sector. This might force foreign partners to shift their import from Vietnam to other countries, resulting in the order shortages facing domestic garment firms.

Cam stressed that local firms must maximize their efforts into boosting their growth in a joint bid to meet the sector’s 2019 export target.

In particular, the sector must strive to obtain an export growth rate of at least 11 per cent during the second half of 2019 if it wants to meet the projected export figure of US$40 billion. However, this is not a simple task, he said.

Local firms should be more active in seeking additional orders to keep their production ahead for the remainder of the year. They are advised to make alliances with partners to build up production chains in order to meet origin rules as committed to in the FTAs.

Cam urged domestic firms to strictly follow label requirements and seek ways of having labels recognized in order to attract long-term orders from overseas partners.