Employees of Garment 10 Corporation produce orders. (Photo: Duc Duy/Vietnam+)
Orders are abundant, the market has shown positive signs of recovery, but many textile enterprises are worried about the challenge of raw material supply.
This is not only a short-term difficulty but also a problem of input autonomy of domestic enterprises, towards a sustainable development strategy in the future.
Rising input prices put pressure on production
As one of the famous brands, Garment 10 Corporation currently has orders until the end of the third quarter of 2022, especially for veston products, there are orders until the end of the year. But May 10's biggest worry is that China's implementation of the Zero COVID policy has had a significant impact on the supply chain.
Than Duc Viet, General Director of May 10, shared that the business is currently adjusting its assessment of the market in the face of many fluctuations. It was the Russia-Ukraine conflict that caused the price of gasoline and gas to escalate, leading to an increase in the price of input materials.
In particular, with 50% of textile and garment materials imported from China, while the country applies the Zero COVID strategy, it leads to a shortage of raw materials in the short term and high costs.
However, the representative of this business said that, even if the cost increased, the selling price of the product would be difficult to increase, or if it did, it would not be possible to keep up with the growth rate of input materials. While the production of the enterprise must still be maintained, but if the input price increases too high, the more difficult it is for the enterprise to do.
“In fact, transportation costs are three times higher than the average in the past five years. The disadvantage of the exchange rate makes Vietnamese textile and garment enterprises less competitive against their competitors,” said Mr. Than Duc Viet.
According to Mr. Hoang Van Linh, Chairman of the Board of Directors of Aligro Joint Stock Company, seasonal and winter fashion textiles and garments have been produced since early summer. Therefore, Aligro prioritizes orders that have enough raw materials first..., ensuring stable input and jobs for workers.
“Facing the complicated situation of the epidemic, Aligro emphasized the stability of both mental and resources to promptly respond, avoiding losses, especially having to take time off due to the epidemic. Company leaders and employees must be responsible for themselves and the community...,” said Mr. Hoang Van Linh.
The assessment of the Vietnam National Textile and Garment Group (Vinatex) also shows not very positive signs about the supply of raw materials due to the impact of the world market.
Mr. Cao Huu Hieu, General Director of Vinatex, said that the increase in the price of input materials such as cotton, fiber and yarn has affected the production and business results of the textile and garment industry.
It is estimated that spot cotton prices increased by about 19.1% compared to the beginning of the year. Not to mention, the prices of other commodities such as other man-made fibers also increased sharply because the price of input materials from petrochemicals also increased rapidly.
"The increase in the price of raw materials and the slow return of imported goods due to the Zero COVID policy from China, and the high increase in other transportation costs such as logistics cause many difficulties for textile and garment enterprises," said Cao Huu. Hieu said.
Flexibility in the face of change
Vietnam's textile and garment industry in recent years has made positive strides both in terms of production and export. In which, the average growth rate of textile and garment production in the period 2016-2020 is 7.9%/year, in 2018 alone, it increased by over 33%.
However, in the past 2 years (2020-2021), the textile and garment industry has been one of the industries that have been negatively affected and prolonged by the COVID-19 epidemic. In particular, the assignment in the global production supply chain, including raw materials and accessories, has had a multi-dimensional impact on the performance of the domestic textile and garment industry.
Than Duc Viet said that although in recent years, domestic enterprises have invested and increased the production of textile and garment materials, but Vietnam's textile and garment and fashion are in the global supply chain. localization rate and supporting industries are not high.
To overcome the shortage of raw materials and accessories due to dependence on imports, May 10 has promoted cooperation and association with domestic suppliers and suppliers. Thereby also helping May 10 take full advantage of incentives from FTAs.
In addition, May 10 is also flexible in the management of import and export in the transportation stage (ship, road, air...). Therefore, May 10 always ensures on-time delivery and creates a great reputation with customers.
“In addition to the issue of ensuring supply, for a long time, May 10 has focused on green materials. Customers require the use of recycled materials, recycol, materials of natural origin, easy to decompose and recycle... May 10 has been focusing on cooperating with partners with environmentally friendly products, "Mr Than Duc Viet added more information.
On the side of Vietnam National Textile and Garment Group, this unit has a plan to closely monitor the market situation to have short-term and long-term strategies.
“At this time, risk management is a top priority. The Group continuously gives the most intimate updates on the situation of cotton and fibers, changes in input materials for member enterprises, and imports a certain amount of cotton reserves for yarn enterprises with a good price, avoiding the risk of price increase,” said Vinatex General Director.
According to the Department of Industry (Ministry of Industry and Trade), the situation of dependence on raw materials not only affects production development and economic growth in the short term, but will also continue to affect the industry. in particular and Vietnam's economy in general in the long run. Moreover, the development of supporting industries, step by step self-sufficiency in domestic raw materials and components, is one of the core issues for the sustainable development of Vietnam's industry.
On that basis, the representative of the Department of Industry said that it is necessary to improve the capacity of supporting industry enterprises, the prerequisite is to have a developed domestic processing and manufacturing industry. From there, opening up market opportunities for supporting industry enterprises to become suppliers and participate in the supply chain of enterprises manufacturing and assembling final products.
In addition, the Department of Industry also mentioned the factor that creates opportunities for the formation and development of domestic value chains, through effective investment attraction and promotion of business connections and linkages between Vietnamese enterprises and enterprises. multinational enterprises, domestic and foreign manufacturing and assembly companies.
In which, building concentrated supporting industrial parks to create clusters of industry linkages; develop material industries in order to increase autonomy in input materials for production, reduce dependence on imported sources, thereby improving added value and competitiveness of products and businesses. Vietnamese industry in the global value chain./.
Duc Duy (Vietnam+)
https://www.vietnamplus.vn/phat-trien-cong-nghiep-ho-tro-hoa-giai-thach-thuc-cua-nganh-det-may/793683.vnp
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