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Saturday, February 24, 2024

Few bright spots among Vietnamese garment sector challenges

The Vietnamese textile and garment industry continues to face challenges in light of the slowdown in export orders from its main markets, but the sector also has a few bright spots.

Many businesses are struggling to find ways to survive in the context of reduced aggregate demand, increased input costs, and increased competition from other countries.

The industry is also facing a more significant challenge of adhering to various environmental and sustainable means of production regulations from multiple regions and countries.

According to a recent survey conducted by the HCM City Textile, Embroidery and Knitting Association (AGTEK), members said that their textile and garment businesses still face many difficulties.

Only 15 percent of member companies could increase revenues in the first ten months of the ongoing year, while for the rest, revenues have reduced.

15 percent of members said their revenues have declined by 40 percent or more, while those who could increase their profits accounted for 27 percent of members.

In addition, garment orders often have to be received six months in advance for businesses to be able to manufacture them in time.

Many businesses have not had orders in the fourth quarter, while some have orders but cannot run at total capacity, a common phenomenon.

Only 36 percent of members said that they have orders for deliveries in the first quarter of next year, while the number of orders from the second quarter of 2024 onwards is almost non-existent.

Up to 86 percent of members said the difficulties were mainly due to reduced orders, while 57 percent quoted falling prices as another challenge.

50 percent quoted increasing costs, and 36 percent of businesses faced difficulties due to competitive pressure from competitors in other countries.

But during the challenges, there are also a few bright spots. This year, Vietnamese textiles and garments were exported to 104 countries and regions for the first time.

Vietnamese companies have also put efforts into diversifying markets, increasing the product portfolio, and even accepting unprofitable orders to survive and maintain labor and cash flows.

In the first eleven months of 2023, textile and garment exports reached $30.7 billion, a drop of 12.7 percent over the same period last year.

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