Declining demand for apparel products in the global market has caused global textile supply chains to suffer. Vietnam’s textile and garment industry is no exception, orders decreased, competition with competitors increased, the forecast of “falling points” is still prolonged, requiring businesses to actively overcome challenges…
Due to the impact of the Russia-Ukraine conflict, the consequences of damage caused by the Covid-19 pandemic along with the decline in world economic growth, high inflation in some countries, while the inventory of garments increased, leading partners and customers to limit bulk orders, even stop receiving goods.
ORDERS PLUMMETED
As a major rival of Vietnamese textiles and garments, Bangladesh is no exception. According to the updated data of the Bangladesh Export Promotion Agency, textiles and garments, which are Bangladesh’s main export products (accounting for nearly 90% of export turnover) also grew negatively for 2 consecutive months.
In April, Bangladesh’s textile and garment export turnover only reached 4.3 billion USD, down 3.15% over the same period, dragging Bangladesh’s export results in the first 5 months of 4 only equivalent to the same period last year while by the end of the first quarter of 2023, Bangladesh’s textile and garment export turnover increased by more than 2023% over the same period.
The United States, Bangladesh’s largest apparel export market, also slumped in the first quarter of 2023 due to an economic slowdown as export shipments fell in both value and volume.
Bangladesh’s exports to the United States will reach just $2.13 billion in Q1 2023, marking a decline of 13.33 percent. Bangladeshi garment exporters and experts attribute weak demand due to the economic slowdown, high inflation and high interest rates in the United States leading to this decline, the same situation in the European region.
In anticipation of the outlook in the near future, garment businesses in Bangladesh, believe that their country’s exports may grow negative until at least June due to global economic uncertainties, even if the current trend will continue until August 6.
As a major textile exporter, India’s textile export situation is similar. India’s apparel exports in March 3 will reach $2023.1 billion, down 45.16 per cent year-on-year. By the end of Q7 1, India’s apparel exports reached $2023.4 billion, down 35 per cent from the same period in 11.
As for Vietnam, statistics of the Vietnam Textile and Garment Association (Vitas) show that, in the first 3 months of 2023, Vietnam’s total textile and garment export turnover reached more than 8.7 billion USD, down 18.63% over the same period in 2022. In the first 4 months of 2023, textile and garment exports will only reach a turnover of 11.6 billion USD, down 19.6% over the same period last year. Meanwhile, in the past, the first months of the year averaged over 3 billion USD / month.
Specifically analyzing the causes, Mr. Vu Duc Giang – Chairman of the Vietnam Textile and Garment Association, said that due to many reasons such as epidemics, the Russia-Ukraine war so far does not know the end point, the Fed’s interest rate increase, inflation of major textile and garment importing countries, and the decrease in global purchasing power. In particular, the inventory of 2022 globally is the largest with cheap goods, knitwear, jean denim clothing.
Vietnam’s key textile and garment export markets such as the United States (accounting for over 44%), the EU (19%), Japan (18.5%), South Korea (15%), China. Other markets such as Asia, Middle East, Latin America … low number of import orders. Therefore, items such as knitted, denim, cheap goods orders are not as abundant as before due to large inventories in importing countries. However, some items have good effects such as workwear in factories, factories, forests … good growth. Veston commodities have also started to pick up demand again.
For businesses that offer solutions to diversify markets and diversify items, there are already orders until October 10. Slower businesses are still looking for orders for July and August.
Also due to the decrease in orders, labor in some enterprises also decreased, but Mr. Giang affirmed that the decrease was not much. Because businesses consider their workforce as their number one asset, in difficult conditions, business leaders still try to find orders to maintain production, reduce working hours… Wait for the market to bounce back.
SHIFTING AND DIVERSIFYING MARKETS
Vitas leaders said that textile difficulties from last year until now due to many objective reasons, so this “falling point” will take about 3 years, that is, extend to 2024, while the “falling point” of previous periods is only 12-14 months.
However, according to Mr. Giang, this “falling point” will not reach the bottom like the end of 2022-early 2023, but will gradually recover at a low level, not up as quickly as in previous years.
Therefore, in order to withstand the prolonged “storm”, the textile and garment business community must shift and diversify the market – this is the goal to go, there is no other way. Instead of depending on the traditional market, it is necessary to find its own market segments, especially those of CIS (Commonwealth of Independent States) countries. Orders in the region have begun to grow rapidly.
The next market that textile and garment enterprises target is Latin America, Africa, the Middle East, and China. Argentina’s bright spot is a market for textile and garment enterprises to target because the two governments are aiming to sign a new generation free trade agreement. “Enterprises need to find their own way, creating a stable market in the coming time,” Mr. Giang said.
On the Government side, Vitas leaders said that in the current context, it is necessary to have policies to reduce corporate income tax, reduce interest rates in the financial – banking system, extend debt payment time to help businesses not be under pressure on payment cash flow.
On the other hand, there should be policies to encourage loans to enterprises with low interest rates, applied as when Covid-19 occurred, helping enterprises have capital to pay wages for workers in the months of shortage of orders.
To overcome this difficult period, Cao Huu Hieu, General Director of Vietnam Textile and Garment Group, said businesses must optimize production activities, improve productivity as well as product quality. In addition, keeping abreast of customers and the market to have timely and flexible policies according to the situation is also essential.