Opportunities and challenges for the textile industry

The 18th round of negotiation of the Trans-Pacific Strategic Economic Partnership (TPP) has recently ended in Malaysia and this important agreement is moving towards the final negotiation rounds to be officially signed. .

TPP is highly expected by enterprises (DN) of Vietnam textile when it opens opportunities for export growth, increase the added value of products … However, many new challenges are posing to with these businesses.

Opportunities for export growth

The United States and Japan are major export markets for Vietnam’s textile and apparel industry. These are also the two TPP members. In 2012, although the demand for importing textiles and garments of these markets decreased, our country’s textile and garment export turnover to the US still increased by 9.2%, to Japan by 19.3%. In the first six months of this year, despite continuing to face with difficulties, Vietnam’s textile and garment industry still grew in export turnover by 14.5% over the same period, reaching $ 8.9 billion. In particular, the export turnover to the US market is the largest, accounting for 44.8% of the total industry turnover, up 12% over the same period; into the Japanese market reached 1.1 billion USD, up 24.5%. The above positive growth signals have affirmed the competitive position of Vietnam’s textiles and garments on the world market, especially in the US, Japan … Export turnover of our country’s textile and apparel industry will continue to increase in these two TPP members after the TPP is signed and comes into effect.

Vice Chairman of Vietnam Textile and Apparel Association (Vitas), Standing Deputy General Director (General Director) of Vietnam National Textile and Garment Group (Vinatex), Le Tien Truong, who directly participated in the negotiation delegation of Vietnam, said: ” The TPP Agreement, if signed, will be a new push for Vietnam’s textile and garment enterprises to develop in both quantity and quality.The quantity here implies the scale of production and export, and quality is more perfect. in the system of production and trading, to improve the added value of Vietnam’s textile and garment products When the TPP comes into effect, basically, the types of exports and imports of TPP member countries will With preferential tariff, in the long term, the tariff can be reduced to 0 %.This is an advantage for Vietnam’s garment and textile to be more competitive compared to some countries such as China, Bangladesh- e …, the world’s leading textile exporters but not a member of the TPP.

One of the conditions to enjoy preferential tariffs to enter the TPP member countries’ markets is that Vietnamese enterprises must prove that the exported consignment has origin of raw materials and sub-materials from yarn onwards (excluding cotton origin. ) is produced in Vietnam or in TPP member countries. According to Vitas, there is now a wave of investment in Vietnam to produce fibers, fabrics and accessories for the textile and garment industry to enjoy tax incentives. This is also an opportunity for our country’s textile and garment industry to take advantage of the domestic production of raw materials and auxiliary materials.

There have been a lot of fast-paced investors coming to Vietnam looking for investment opportunities in the field of textile material production to anticipate TPP such as Texhong corporations (Hong Kong), Mitsui (Japan), Sunrise. (China) … For example, Kyungbang Company (Korea) has just put into operation a yarn manufacturing facility in Binh Duong province, with the first phase investment capital of 40 million USD, this company continues to invest. an additional 160 million USD to increase yarn production capacity with the expectation of becoming the largest yarn mill in Asia. Texhong started to put a 300 million USD-invested textile factory in Quang Ninh into operation, with 370,000 spindles, with a capacity of 139 thousand tons / year. This wave of foreign investment will create conditions for the strong development of Vietnam’s textile and garment support industry, which is both weak and lacking.

Increase competitiveness

Vice Chairman Le Tien Truong stated: For a major export sector such as Vietnam textile, the deep and wide integration with major markets in the world will certainly have a positive impact on the increase. export growth. However, opportunities come with challenges. Vietnamese textile and garment enterprises that want to take advantage of the highest TPP must form an internal supply chain, with organic links between stages. A complete supply chain from design – raw materials, accessories – sewing – distribution must be formed within the community of TPP signatories. Enterprises should also not take advantage of TPP as a means for development in the short term, but more importantly, it is important to make good use of this opportunity to increase competitiveness and build a sustainable development strategy.

The biggest challenge for Vietnam textile enterprises today is how to access TPP countries while raw materials for Vietnam’s export production are mainly imported from countries outside of TPP. In addition, businesses will also face the risk of opening the domestic market to TPP member countries to Vietnam. Inside the textile and garment industry of Vietnam, there are still limitations, not really sustainable, not yet able to implement its supply chain. This situation leads to weaknesses of the industry. That is the industry’s cumulative density is not high; The main textile enterprises can only meet the demand for sewing (low investment, easy to move). Currently, the industry’s raw and auxiliary materials only reach the localization rate of about 50%, the rest still depends on foreign suppliers. Chairman and General Director of Dong Nai Garment Company Bui The Kich said that the Corporation had to import 55% of raw materials from abroad. With auxiliary materials, the import rate is less, only about 30%. Thus, on average, Dong Nai Garment Company has to use 40-45% foreign raw materials and accessories. Therefore, in order to bring the enterprise’s products to the TPP member countries’ markets, enterprises must source and source domestic raw materials and auxiliary materials from TPP countries as well as source supply chain links.

Focusing on investment in developing supporting industries for the textile and garment industry is an important solution to help domestic textile enterprises capture and take advantage of TPP opportunities. In the first six months of this year, Vinatex continuously put into operation Vinatex – Hong Linh Spinning Factory with the scale of 30,000 spindles; Phu Bai 2 yarn project, scale of 15 thousand spindles; Increase the weaving capacity for Yen My Textile Factory; Phong Phu Corporation increases the capacity of weaving, dyeing and finishing … Besides, to meet the localization rate of raw materials and auxiliary materials, the industry prioritizes calling for investors, especially water investors. In addition, there is a shortage of product strengths such as viscose, polyester; investment in raw material crop areas; developing collaborative relationships with manufacturers with advanced textile technology.

Along with the attention to training resources to meet the needs of market development, Vinatex focuses on implementing market planning solutions when the TPP is applied, taking advantage of opportunities to develop core products. Group. Especially, building a strategy for developing intra-regional linkage to create a large production chain to be able to receive large orders; fashioning the textile industry, building and promoting fashion design centers. Training to recruit a team of qualified designers. Offering designs to importers and branding goods and selling Vinatex fashion products abroad. Not only that, Vinatex also focuses on building strategic solutions for management, cost saving, creating a competitive product in terms of quality, delivery time, and social responsibility of the product …

TPP is an opportunity for development so it is necessary to have a planning for domestic textile and garment development, especially in terms of resources because this is a labor-intensive industry. Local publicity and commitment should be made to take advantage of this agreement’s opportunities. As the scale of production increases, the distribution of manufacturing areas also increases, requiring infrastructure connecting the design hubs to the manufacturing area, the ICD center (inland port), and the port. the sea must be perfect. Policies in calling for investment in textiles, both domestic and foreign partners must pay attention to the technological level, the environment for the investment project, to ensure that new investment projects must use the public. technology is good, sustainable, long-term, avoiding the situation of transferring old and outdated technology back to Vietnam.

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