Orders are abundant until the end of the year, garment enterprises have to work for more workers, increase hours to meet the needs of customers but the return is not commensurate.

According to the General Statistics Office, in the first half of 2018, textile and garment continued to be one of the key items with high turnover, reaching $ 13.4 billion, up 13.8% over the same period. Production of garment enterprises (DN) is relatively favorable because of abundant orders, most enterprises have orders until the end of the third quarter, even the end of this year.

The orders skyrocketed

 

These days, workers of Garmex Sai Gon Garment Joint Stock Company have to increase shifts and overtime to get export orders for partners. In previous years, the first half of the year is not the peak of the company's orders but this year, many orders, closed production schedule until the end of the year, even enterprises have to "rush" to deliver new products. Le Quang Hung, Chairman of CPGarmex Saigon, said the company's revenue target for this year was VND1.7 trillion but in the first six months reached VND900 billion, up 20% over the same period last year. "This is a strange and positive signal compared to previous years. Good market, enterprises also have the choice of finding more customers, partners," Hung said.

The garment enterprises are busy with export orders but profits have not increased. Picture: TẤN THẠNH

Meanwhile, according to Pham Xuan Trinh, General Director of Phong Phu Joint Stock Company, total revenue in the first 6 months reached 1.749 trillion dong, fulfilling the target set out. Export turnover of Phong Phu items such as cotton, cotton, demin fabric, towels ... reached more than 28 million USD and continued to export steadily into the traditional markets. As for yarn, the company has exported and has a firm foothold in the Japanese market.

Recently, Vietnam and the European Union (EU) officially completed the legal review process of the Vietnam-EU Free Trade Agreement (EVFTA). This continues to be a positive signal for the garment sector to increase its export turnover. The origin requirement of this agreement is from fabric, rather than fiber, such as the earlier Transpacific Partnership Agreement (TPP), which will make it easier for companies to meet their origin requirements.

Pham Xuan Hong, chairman of Ho Chi Minh City Textile and Apparel Association, said that the EU is now the second largest export market for Vietnam's textile and garment industry after the United States. The textile and garment industry expects exports to the EU to grow by 15% a year after the agreement goes into effect, up from 10% a year. Garment exporters to the EU are subject to a tax rate of 7% -17%, if EVFTA is effective, the tax rate will gradually reduce to 0% help businesses reduce costs, increase competitiveness compared to other competitors. The export to this market as Bangladesh, India, Pakistan.

The Comprehensive Partnership for Transpacific Progression (CPTPP, following from the TPP) was signed with 11 countries in March 2018, many of which will have two very promising markets. Exporting this item is Canada, Australia, besides the traditional markets are Japan, USA ...

Unit price reduced

Many orders, big opportunities but many textile and garment enterprises said the business efficiency is not high because of competitive pressure on human resources and export unit price with other countries. We have to deal with textile and garment enterprises with foreign direct investment (FDI) right at home. Therefore, domestic companies want to make profits and find ways to reduce their operating costs. As a result, textiles and garments, despite the achievement of the export target of US $ 35-36 billion this year, are more likely to bring about better returns for businesses.

Pham Xuan Hong acknowledged the fact that enterprises have to increase production to meet export orders, even for employees to increase overtime and overtime, but profits and business efficiency is only equal or lower than before. A lot of input costs have increased in the last time such as labor cost, materials, insurance ... but the export unit price is "stable"

Mr. Pham Xuan Tri also admitted that compared with 20 years ago, the price of denim fabric, just ... remained unchanged, the price of some raw materials of textile and clothing also almost no increase, while the cost of production , other activities of enterprises continuously change. "With the 4.0 technology applied by FDI enterprises, the export unit price may be lower in coming years, which is a problem for domestic garment enterprises to solve if they want to exist, cost of production "- said Trinh.

To exploit the advantages of EVFTA, enterprises need to meet the requirements of origin of fabric, while the current textile industry only provide about 30% of raw materials in the domestic fabric, the rest must be imported. According to Pham Xuan Hong, there are many solutions to take advantage of opportunities from EVFTA as well as other trade agreements. Because if the tax reduction that businesses do not benefit it does not work. The company itself must improve technology, improve quality, build product standards, designs, packaging ... in order to meet the requirements from the import market. In addition, the government should have policies to attract investment in the production of raw materials.

Can't afford to invest into 4.0

In order to increase labor productivity, minimize production costs, an important requirement is that textile and garment enterprises need to invest in technology in the trend of industrial explosion 4.0. However, according to experts, domestic textile and garment enterprises are difficult to "follow" FDI enterprises in this race. For example, a project of FDI in textile and garment investment in Vietnam has a total investment capital of USD 300-400 million each. Meanwhile, Vietnamese enterprises only invest in new factory about 20-30 million USD (equivalent to about 500-600 billion) has "bare ear". Therefore, it is difficult to solve the competition problem with FDI in the present context.

Vinatex.com