The 6-month report of the Ministry of Industry and Trade noted a significant decline in the textile and apparel industry due to the influence of Covid-19. Textile production in the first half of the year increased by 2.8%, only by a third compared to the same period in 2019. June clothing production increased by 17.5% compared to May but in the first 6 months, it still decreased by nearly 5% compared to same period last year.
“Difficulties due to the shortage of raw materials and export orders sharply decreased because of delays, cancellations, delay in delivery and payment”, the Ministry of Industry and Trade commented.
The number of textile and garment orders was postponed and canceled mainly in May and June. The report showed that the textile and apparel industry could lose up to 50% of orders in May and the price of textile products dropped by about 20%.
Workers of TNG Garment Company (Thai Nguyen) produce masks during the Covid-19 season. Photo: Ngoc Thanh.
Global demand for apparel and fashion products is greatly reduced, especially in countries like the US and Europe. Many fashion retail businesses have had to cancel existing orders or postpone new ones to cope with this situation.
An earlier report by the Vietnam Textile and Apparel Association (Vitas) also said that about 70% of businesses in the industry reduced jobs for workers in March and 80% reduced labor in April and May. The more exposed the towel more clearly from the end of the second quarter, is expected to continue in the third quarter.
Sharing with the press recently, Mr. Le Tien Truong – General Director of Vietnam Textile and Garment Group (Vinatex) said that the first half of this year was only half of last year’s revenue but still “a great effort.” “in the context of an unpredictable epidemic.
According to Mr. Truong, the two biggest assets of textile enterprises are labor and position in the global supply chain. So businesses are looking for ways to retain workers. Many businesses have managed to shift to production for the domestic market or medical apparel such as masks and protective gear for export. However, this will not be sufficient to offset canceled orders.
General Director of Vinatex admitted that although efforts can only retain workers for 3-6 months. If the translation continues, he “dares not say when to preserve the force”.
Vinatex leaders gave two forecast scenarios for textile exports this year. In a positive scenario, textile exports will reach about 33-34 billion USD, down about 16% compared to 2019. Lower scenario, exports will only reach 30 billion USD if the Covid-19 wave appears.
The Mekong-China Strategic Studies Program (MCSS) in a recent report recommends that the Government should have reasonable policies for the textile industry, promote domestic supply chain linkages, and attract investment shifts. FDI in producing raw materials. MCSS said that “fabric production is still a bottleneck” of Vietnam’s textile and apparel industry, when the cost of importing raw materials accounts for about 30%.
Besides taking advantage of available FTAs, according to MCSS, Vietnam needs to exploit some new and potential markets but has not been properly invested, for example the US and Canada.
MCSS also assessed that during the period of Covid-19, textile enterprises had little investment in research and development of products and technology, while maintaining a high labor-intensive level. MCSS proposes a change in technology-based production organization, in order to improve future adaptability.