According to a report of the World Trade Organization (WTO), in 2020, when the COVID-19 pandemic occurred, Vietnam surpassed Bangladesh to become the second largest garment exporter in the world after China. Country. By 2021, when large textile consuming countries such as the US and EU have covered vaccines, the demand will return very quickly.
Risk of fines, loss of foothold in the supply chain
Along with that, the export turnover of Vietnam's textile and garment also improved. In 2021, the textile and garment industry exports 40 billion USD, Vietnam National Textile and Garment Group (Vinatex) in 2021 also achieved the highest profit in its 26-year history with nearly 1,500 billion dong in profit.
Vietnam's textile and garment industry is concerned about new environmental regulations, reducing greenhouse gas emissions (Photo: Int).
Continuing the momentum of 2021, by 2022, in the first 6 months of the year, the market still needs, Vinatex's profit reached 981 billion and exceeded the plan by 3%. Export revenue reached more than VND 10,000 billion and increased by nearly 40% over the same period last year.
However, about the last 6 months of 2022, Mr. Vuong Duc Anh, Chief of Office of the Board of Directors of Vinatex mentioned the concern that high inflation in the US or EU could slow down textile export growth. However, from another angle, Vinatex also sees the US job growth rate is still very good, in July, it still created more than 500,000 jobs, while maintaining an average increase of 300,000 - 400,000 jobs. /month.
“Because of inflation, the American people, when participating in the survey, all want to cut spending, but in fact, when it comes to other indicators such as retail sales or consumer purchasing power of the American people, Not really like that”, Mr. Duc Anh shared.
With the inflation situation, Mr. Duc Anh said that it is necessary to look at the reality, whether their people actually reduce their consumption or not, because we will evaluate the story of inventories in the consumption of goods of different countries. major export market for consumer goods, including garments in the last 6 months of the year.
On the other hand, Chief of Office of Vinatex's Board of Directors poses a bigger concern than inflation, which is that garment products must meet green standards. Specifically, in March, the European Commission approved the EU's Strategy for Sustainable Development and Circular Textiles. Producers must be held accountable for their products along the value chain, even when they become waste; and this is also a difficulty and challenge for the textile industry when the requirements are legislated.
“This is more of a challenge than inflation, once in business, businesses must accept to face market fluctuations and challenges even at the time of the COVID-19 outbreak. However, for green standards - this is a new point, previously this criterion was assessed as a plus point for suppliers, but in the near future when it is legalized, if it cannot be met, enterprises will will be fined and their own purchasing partners will also be fined”, Mr. Duc Anh shared.
Faced with this fact, the representative of Vinatex proposed to export activities in general and export of textiles and garments in particular, despite the Decision No. 493/QD-TTg dated April 19, 2022 on the import-export strategy to 2030, but that strategy has not yet specified the goals that the textile and footwear industries need to aim for in the near future.
“We would like to have a strategy in the period of 2025 - 2030 for the textile and garment and footwear industry according to the Government's orientation so that these two industries develop in which direction, where they develop, and where the Vietnamese textile and garment industry develops. How to maintain the sustainability of exports", Mr. Duc Anh said, taking for example that China has strategic goals in each specific period for businesses to follow and develop.
Similar to the leather and footwear industry, Ms. Phan Thi Thanh Xuan, Vice President and General Secretary of the Vietnam Leather, Footwear and Handbag Association, said that the industry's inventory problem is quite large. Currently, inventories due to supply chain disruptions affect goods consumption inventories, causing year-end orders to slow down somewhat. Orders from now to the first quarter of 2023 of leather and footwear enterprises have almost declined.
However, Ms. Xuan expects, with the advantage of FTAs, when the world's aggregate demand decreases, but orders moved to Vietnam will still be maintained as well as the period when we fight the COVID-19 epidemic well, the orders declined significantly.
And the biggest difficulty and challenge of the leather and footwear industry is also sustainable development, when participating in new generation FTAs, it is imperative that we comply with environmental and labor regulations. These are very strict requirements.
Adaptation strategies of business and government
Ms. Xuan further explained: That is, when implementing FTA commitments, tariff barriers will be removed, but non-tariff barriers will be erected. As Vinatex shared, Germany will introduce new laws on due diligence of supply chains; or the EU will impose a tax on CO2 emissions per unit of product.
“In the coming time, the above challenges will arise for countries participating in the supply chain, including Vietnam. Therefore, businesses must capture the information in order to prepare and have a ready and appropriate operational strategy. In my opinion, this is also the biggest difficulty, especially for small and medium-sized enterprises,” said Xuan.
To solve and respond to challenges, on the Association's side, Ms. Xuan suggested that manufacturing enterprises should not focus on a few markets but need to diversify markets from supply to export markets. .
In particular, for the development of raw materials and accessories, the leather and footwear industry needs to focus on developing the flow of materials and accessories towards sustainable development such as a green and clean environment to keep up with the world's trends, while ensuring stability. for the manufacturing industry, while increasing the opportunity to access the supply chain in a sustainable way.
“And I also agree with Vinatex's proposal that the development strategy for the textile, garment and footwear industry is being drafted and needs to be approved soon, through which there are specific instructions for businesses in the two industries to build their own business plan. appropriate production and business development plan in the coming period", Ms. Xuan emphasized.
According to economic expert Le Quoc Phuong, besides advantages when cutting tariffs, FTAs set high standards on technical barriers for products. Accordingly, Vietnamese businesses must meet the high standards of those markets to be able to participate in these "playgrounds".
Specifically, the market for agricultural products must meet food safety requirements. Or rules of origin in the textile sector. Another requirement that FTAs make difficult for businesses is labor standards, like no child labor, while we still have child labor somewhere. Then the products must meet environmental standards such as textile products, which must be recycled and reused. In addition, there is also the issue of intellectual property…
“All of this makes the costs of enterprises increase, investment increases, but it is also an opportunity for enterprises to rise, mature, and improve their competitiveness with foreign enterprises. But with the condition that enterprises must have a development strategy, turning challenges into opportunities, otherwise, it will affect the export growth of enterprises in the coming time", Mr. Phuong emphasized.
Nhat Linh
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