According to the latest data just released by the Vietnam Textile and Apparel Association (Vitas), textile and apparel export sales will reach US$18.6 billion in the first six months of 2023 compared to the same period in 2022. Dollar appreciated, down 17.6%; Import sales are estimated at $10.7 billion, down 20.5%. With this result, the textile and clothing industry recorded a trade surplus of $7.9 billion in the first 6 months of 2023 (in the same period of 2022 the trade surplus was $8.8 billion).

SUCCESSFUL, EXPORT DECIDED

In 2023, the negative impact of the epidemic and political fluctuations in the world led to the fact that global economic growth continued to decline (in 2021 it will increase by 6%; in 2022 it will increase by 3%, for 2023 it is expected to be around 2%).

Accordingly, the textile and clothing industry was affected by a drop in orders from important markets such as the USA and the EU. In the first five months of 2023, exports to major markets mostly fell: US down 27.1%, EU down 6.2%, Japan up 6.6%, South Korea down 2%, Canada down 10.9%…

Analyzing this sharp drop, Vitas said it was not only due to the impact of the economy, but also to pressures from a “greening” of the industry, the OECD, the EU Supply Chain Traceability Directive and the Germany Supply Chain Assessment Act (effective January 1, 2023).

In addition, although the state bank cut the operating interest rate four times, due to the high deposit interest rate from the end of 2022, the lending interest rate is still high. Businesses don’t have access to support packages, such as a 2% rate cut on a 40,000 billion package…

According to Mr. Le Tien Truong, Chairman of Vietnam Textile and Garment Group, the decline in export turnover and market share of Vietnam’s textile and garment industry, in addition to objective reasons for the general market gloom, are the trend of shifting orders to other countries with geographical advantages, also due to the decline in competitiveness of Vietnam’s textile and garment industry caused by both macro and micro factors.

At the macro level, the exchange rate factor has had a major impact on exporters in general and textiles in particular. From an exchange rate perspective, Vietnam’s exports are less competitive than other exporting countries. Vietnam’s currency is stable and almost flat against the US dollar, while textile exporting countries maintain a cheap local currency to boost exports.

In addition, Vietnamese textile and clothing companies are also struggling with high interest rates on loans. Lending rates are currently 3.5% in China, 7% in Bangladesh, 5.7% in Indonesia, while Vietnam’s average is 9-11%, which is 5-7% higher.

Although the government has instructed the State Bank to steadily lower the operating interest rate to ease the pressure on businesses, Vietnamese businesses are still under pressure from bank lending rates, which are much higher than those of rival countries.

In addition, the logistics factor also poses a major obstacle for Vietnam’s textile and garment export compared to competing countries. According to Vietnam Credit, the average logistics cost per total turnover of Vietnamese companies is currently almost 17%, which is higher than other countries.

In addition, higher labor costs are also one of the challenging factors for companies. According to Trading Economies statistics, the average monthly wage cost for textile workers in Vietnam is around USD 300/person/month, while Bangladesh is only USD 95/person/month, Cambodia USD 190/person/month and India USD 145/person/month.

IMPLEMENTED SEVERAL SOLUTIONS TO ACHIEVE THE GOAL

Production and export are forecast to gradually improve, however, the difficulties will continue until the end of 2023 as many companies still do not have enough orders for the third and fourth quarters.

In addition to the lack of orders, taking orders is not their forte, and companies are also facing difficulties as unit prices have fallen sharply, even by over 50% compared to the normal state.

In 2023, the entire textile and apparel industry aims to reach $39-40 billion. To achieve this goal, Mr. Truong Van Cam, vice president and general secretary of Vitas, said companies need to focus on three core issues.

The first, Find solutions to retain employees, especially core workers. Organization of professional training courses, training of staff for green and digital transformation.

Monday, Customer loyalty, taking orders is not a strength, there is no profit in having jobs for employees and so that customers do not move elsewhere. Build a reliable, long-term partnership. Opening up new markets, paying attention to the domestic market.

Tuesday, Minimize unnecessary company expenses.

Mr Cam said Vitas will continue to do well in its role in connecting business with business, business with brands and business with government; We actively collaborate with renowned international organizations to implement programs on labor, green energy, circular recycling, digital transformation, design, branding and human resource management.

In addition, the association organizes trade promotion delegations, creating opportunities for companies to learn, share experiences and attract customers.

In particular, Vita’s will always accompany companies to reflect, propose recommendations, seek government and ministries, branches and municipalities for support on worker-related issues and help reduce costs for companies. The association will always promote its role as an effective bridge between state administrations and textile companies, raising awareness of the industry’s development towards “green-clean-sustainable”.

In order to remove difficulties and improve enterprise competitiveness in the current context, it is necessary in macro management, especially in the exchange rate, to fully calculate the impact of the export decline, Mr. Truong said. When exports fall, the costs need to be expended, such as Such as the cost of lost labor, social problems and loss of customers, but the cost of recovery will be very high.

State support measures must reach companies directly: tax cuts, quick VAT refunds, maintenance of the debt burden…