Clothing, textile and footwear industries face falling orders

VIETNAM, September 27 –

HÀ NỘI — Companies in the textile, apparel and footwear industries are facing a drop in orders for the rest of the year and possibly into next year.

Phạm Xuân Hồng, president of the HCM City Textile and Embroidery Association, said that in the eight months of 2022, the value of Việt Nam’s textile and garment exports reached $30.1 billion, but this value came mainly from the first months of the year. Since July, companies in the textile and clothing industry have faced many difficulties, including the reduction of export orders.

Many textile and garment businesses in HCM City are experiencing a sharp drop in export orders, mainly to the United States and the EU, as inflationary pressure in these countries is high, forcing consumers to cut spending . Moreover, textiles are not essential goods, Hồng said.

A textile industry analysis report published by VNDirect Research also indicated that the demand for high-end clothing items such as shirts and T-shirts made from recycled cotton fibers will slow in the second half of 2022.

According to the report, garment companies said US customers had shortened the export ordering period to three months before the deadline for delivery of goods instead of six months due to high inventories and inflationary pressures.

At present, only a few large companies, such as Thanh Cong (TCM), Century Yarn (STK) and Damsan Joint Stock Company (ADS), have enough export orders for the third quarter of 2022. Still, some Customers canceled orders due to high inventory, while fourth quarter orders also slowed due to inflation concerns.

In the EU market, Phạm Văn Việt, Chairman of Việt Thắng Jean Co, Ltd, also admitted that his company’s orders have decreased by more than 30% and that they have been forced to reduce working hours. to maintain jobs.

In the United States and Europe, although global fuel prices have come down, inflation in these markets is still high to induce people to cut spending. This had a negative impact on the textile and clothing exports of Vietnamese companies as the two markets account for a large portion of Việt Nam’s textile, clothing and footwear exports.

According to a representative of the Vietnam Leather, Footwear and Handbags Association, Vietnamese leather and footwear exports will certainly be affected by the last months of the year due to inflation and lower consumer demand in key markets. Many companies in the leather and footwear industry would face reduced export orders by the start of 2023. Meanwhile, the leather and footwear industry is in stock due falling consumer demand.

To deal with the situation, the association said shoe companies have been forced to reduce overtime. At the same time, they negotiated with partners to make orders that were signed during the pandemic to maintain operations and ensure employee income.

Textiles, clothing, leather and footwear are all major export sectors of Việt Nam and are directly affected by fluctuations in the world market.

The shortage of raw materials for production is due to strict anti-pandemic measures in the Chinese and Japanese markets. At the same time, difficult economic conditions and rising inflation in major markets have affected purchasing power, orders and company prices.

According to the general manager of Đáp Cầu Garment Corporation Lương Văn Thư, the company has experienced difficulties in the market and consumption of goods, as well as reduction in terms of scale and price of export orders since the beginning. of this third trimester. As a result, orders from major US and European markets fell by up to 50%.

Hồng said exports are unlikely to recover soon.

Currently, large companies with many orders tend to share their orders with other companies that have none. Meanwhile, others are looking for short-term opportunities domestically, Hồng said.

In addition, companies are looking for orders in new markets. For example, companies in the HCM City Textile, Embroidery and Knitting Association have recently cooperated with partners in India and Pakistan to secure orders from these markets.

Trương Văn Cẩm, vice president and general secretary of the Vietnam Textile and Garment Association, said the association compiles statistics to find solutions to support businesses. It focuses on those with a large decrease in orders, affecting workers.

To overcome difficulties, Cẩm suggested that Vietnamese overseas trade offices continue to share information on markets, especially the EU.

The Việt Nam Trade Office in China coordinates with the Chinese authorities to create favorable conditions for the rapid transport of materials for production.

Việt Nam’s trade offices in the United States and France are to provide market information and textile and apparel fairs tailored to local businesses.

In addition, companies themselves must also diversify their markets, promote digital transformation and innovate in technology.

According to Lê Tiến Trường, chairman of the Vietnamese National Textile and Garment Group (Vinatex), unpredictable fluctuations will persist due to many factors, including the Russian-Ukrainian conflict, fluctuations in raw material and fuel prices, and inflation in export markets such as the United States and Europe.

Therefore, Vinatex will have solutions to stabilize export orders, jobs and customers for production and business results for the year.

To increase its competitiveness, the garment industry in Việt Nam must prioritize the production of bobbins, yarn and fabric, and sewing. It also prioritizes the development of green and recycled products to promote exports to European countries, Trường said.

The business community expects the government to soon approve the “Strategy for the Development of Textile, Garment and Footwear Industries to 2030, with a Vision to 2035”, creating conditions favorable to the development of green industrial parks.

Large companies are centralizing sewage treatment, advanced technologies and green technologies to attract investment in textile dyeing. This would solve fabric problems, meet origin requirements and take advantage of free trade agreements.

At the same time, the state plans to remove the import tax imposed on materials for the production of export goods; soon put in place support packages for the resumption of activity and employees.

According to VNDirect Research, the domestic textile and clothing industry will be brighter in the first quarter of next year, as clothing products will reduce 2-4% export tax to the EU market. in 2023 under the EU-Vietnam Free Trade Agreement (EVFTA).

Furthermore, the European Commission forecasts that inflation in the bloc will reach 8.3% in 2022 and fall to 4.3% in 2023.

The research estimates that lower inflation will boost the demand for purchasing fashion items in 2023. Therefore, it expects some textile companies exporting suits, shirts, pants and skirts to the US. Europe benefit from the EVFTA, notably May Sông Hồng, May 10 and Việt Tiến. —VNS

Michael O. Stutler