Vietnam’s textile sector has reached the same level as before the COVID-19 pandemic due to higher salaries and benefits offered by different companies that shifted migrants back to work. Vietnam is a major supplier of clothing and textiles to the world.
Its economy has been one of the best performings in 2020 (2.9 percent growth). Production has been on the rise since China, for the past decade, has wanted to move upmarket in its production.
Nike, New Balance, Puma, and Adidas, to name but a few, depend on this Southeast Asian country for much of their production. However, the pandemic, starting with the strict confinement of the Ho Chi Min region, with the army delivering the meals, did not spare this new workshop of the world.
Nike subcontractor offered 100 dollars a month bonuses to its workers – a quarter of their salary, and a New Balance supplier promised free transportation for those returning to Ho Chi Minh City. Cao Huu Hieu, general manager of Vinatex, told the Courrier du Vietnam that in October, 90 percent of the employees of the group’s companies had already returned to work. At present, nearly 100 percent of the group’s employees are present in their companies.
The sector’s recovery was possible, especially since the government had relaxed measures to prevent and control the epidemic, abandoning its “zero Covid” policy.
The high profits are mainly due to the choice of factory managers to prioritize the yarn industry, which has risen from 20 to 50-55 percent of total production. However, the concern remains that logistics costs are still four to five times higher than before the pandemic. Other challenges include a shortage of empty containers, shipping congestion that forces companies to deliver goods by air, and fluctuations in key export markets.
The sector targets USD 38-39 billion in export sales in the worst-case scenario and USD 42.5-43.5 billion in the best-case scenario.
