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Vietnam textile industry’s USD 472.64 million at stake

The Vietnam National Textile and Garment Group (VINATEX) stated that its garment and textile industry’s VND 11 trillion (USD 472.64 million) are at stake as export orders continue to halt and cancel.

The garment and textile industry’s export orders were continuously canceled, suspended or temporarily halted, which might eventually lead to a shortage of jobs in April and May this year.

Vietnam-apparel-manufacturing-battling-Coronavirus
Figure: The garment and textile industry’s export orders were continuously canceled, suspended or temporarily halted, which might eventually lead to a shortage of jobs in April and May this year.

Le Tien Truong, CEO of Hanoi-based Vietnam National Textile and Garment Group (Vinatex), said that the figure was calculated based on the assumption that the pandemic is contained in May and the global economy starts recovering in June.

The estimate factored in contract cancellations since the middle of this month, he said at a meeting with 22 other textile companies. “The bigger the company, the higher the canceled contract ratio.”

40,000 shirts produced by Hanoi-based Garment 10 Jsc (Garco 10) have not been taken by a South Korean buyer, who also canceled an order for another 39,000 units next month.

Than Duc Viet, CEO of Garco 10, said that another buyer in the U.S. has suspended ongoing production of hundreds of thousands of products.

“We do not want to hear news of suspending imports from buyers anymore. The damage will be severe if this happens on a large scale.”

Da Nang-based Hoa Tho Textile and Garment Jsc reported 500,000 items being canceled or delayed.

Inventory is another issue. The industry imports about $1.5 billion worth of materials each month, but if 20 percent of contracts are canceled, about $300 million worth of materials will become unused inventory and lose value over time, Truong said.

Vietnam textile industry, the country’s third-largest in terms of export value, struggled to source materials from China last month due to the outbreak.

The larger the brand, the higher is the reduction ratio, to which there is no sign of recovery which leads to high pressure on garment and textile enterprises in terms of both finance and labor.

Further, if there is no policy adjustment chances are that enterprises may lose their financial liquidity by the end of April.

Vinatex has proposed that the government allows local producers to export protective products like masks to other countries to increase revenue.

There are about 6,800 textile businesses in Vietnam. Last year, they exported goods worth $32.85 billion, up 7.8 percent year-on-year, with the U.S., the E.U. and Japan the largest buyers, according to Vietnam Customs.

(Source: vietnamtimes)

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