On the afternoon of December 22nd, Vietnam Textile and Garment Group announced the results of manufacturing and business activity and labor movement in 2022 with a view to 2023.

HARDWARDS FROM Q4/2022

Mr. Le Tien Truong, Chairman of the Board of Vietnam Textile and Garment Group (Vinatex), said, “2022 will be a year of many contrasting emotions for the textile industry in general and Vinatex in particular.” The atmosphere was exciting, but changed at the end of the year the direction quickly.

In the first 6 months of 2022, the textile and clothing industry shows the highest growth rate of the last 15 years at 35-40%. This high increase is due to post-pandemic demand from consumers who are buying more, which is causing the order volume of the first quarter of 2022 to skyrocket. However, in the third and fourth quarters of 2022, orders fell sharply, with some units falling by 70-80% of orders.

Group Chief of Office Mr. Vuong Duc Anh also admitted that the first 6 months of the year and the last 6 months of the year are two different colors of the market. Among the 5 most important export markets of Vietnamese textile and garment industry, the two markets, USA and EU, are experiencing a very rapid reversal.

In the first 6 months of 2022, textile and apparel imports in this market are still growing by up to 40% compared to the same period last year. From the fourth quarter of 2022, however, the situation followed the worst-case scenario forecast by the group.

In October-November 2022, exports of textiles and garments to the US fell by 10-14% while still increasing by 20% in the first 8 months of the year. This is also in contrast to other years, as the fourth quarter is usually the period with the best export results.

In the 9 months of 2022, Vinatex’s profit reached VND1,186 billion, up 24% from the allocated plan. But from August the market showed bad signs and from September the textile and clothing market turned down.

In the first months of the fourth quarter, companies found themselves in a difficult situation, when the yarn market was almost illiquid, orders in the clothing market fell sharply, and information about losses of units, especially fiber units, was constantly reported. This partially led to a slowdown in the operating results of some of the Group’s entities.

Many difficulties “circled”: Vinatex’s production and business results in 2022 are expected to reach consolidated sales of VND19,535 billion, up 15% over the same period and achieve 108% of plan; Consolidated profit is estimated at Dong 1,090 billion, exceeding 14.6% of plan. “This is a positive result related to extremely difficult market conditions including orders and manpower,” said Mr. Vuong Duc Anh.

This situation in other textile exporting countries is no better. China’s textile and apparel exports fell 13% in October – a loss of about $3 billion, Bangladesh was the only country to maintain export momentum, India fell 35% in October, Cambodia fell 17%… So from On the supply side from exporting countries, there are fluctuations in the worse direction on the demand side.

DETERMINED TO PROTECT 2 HIGH-VALUE RESOURCES

It is expected that in 2023 the market will not be able to recover soon. There are 4 main factors affecting the market in 2023. These are the Fed’s interest rate policy, the ongoing Russia-Ukraine conflict, China’s zero-Covid policy and general business environment, supply chain congestion, logistic rates, global inflation, etc.).

In the uncertain context, the head of Vinatex said that clearly identifying the immediate difficulties helps the group to be more proactive, no longer confused by the “uncertainties” but to provide solutions to deal with the difficulties, with negative business – and production conditions to deal with.

“The only way is that the whole system in the group must be firm, wise and determined, to be able to set up a flexible plan and deploy, adjust and upgrade with a new position according to the current situation,” said Mr. Truong confidently.

Vinatex found that the two most valuable assets of a company are labor and position in the supply chain. Therefore, Vinatex’s goal is to keep skilled workers, stabilize the workforce and keep a position in the chain, even if the orders are not efficient, they still have to be done.

Therefore, companies in Vinatex’s system have not had to directly reduce working hours by deferring or curtailing employment contracts, although there is no overtime or overtime, reducing about 20% of hours compared to the average peak months of previous years.

The group still handles enough production orders to allow staff to work 40-48 hours/week. On average, the average income of employees in the entire Vinatex system is estimated at 9.69 million/person/month in 2022, an increase of 15% compared to 2021.

Currently, 100% of the companies in the Vinatex system guarantee the 13th monthly salary for employees. Some big entities like: Hoa Tho Textile and Garment Joint Stock Company, Hue Textile and Garment Joint Stock Company, Phong Phu Corporation, Hanoi Textile and Garment Joint Stock Corporation… all have at least 0.5 to 2 additional expenses for employees per month surcharge for the 13th salary month.