Vietnam's textile industry is aiming to achieve export revenue of $22-23 billion in 2014 banking on the positive global economic recovery, rising demand for clothes and continuous efforts to increase production capacity. 

Vietnam’s garment and textile industry in the first two months of this year gained a year-on-year increase of 30.1 per cent in export value to reach $3.2 billion. The industry had a surge of 44.9 per cent in export value in February to reach $1.3 billion. The country’s textile and garment industry firms have started large projects to expand their production and receive new business opportunities this year.

In 2013, Vietnam's textile and garment industry gained $20 billion in export value. A year-on-year increase of 18.6 per cent to reach $17.9 billion for textile and garment exports and a 15.7 per cent surge to reach $2.1 billion for fiber products. The industry boasted of a trade surplus of $5.12 billion dollars last year, with imports of raw materials estimated at $14.88 billion. 

So far, many enterprises have signed export contracts to be completed by the third quarter of this year. Many Vietnamese companies have invested several times in developing their production capacity to become an original design manufacturer. An original design manufacturer (ODM) is a company which designs and manufactures a product which is specified and eventually branded by another firm for sale. Now many foreign customers want partners which can provide ODM services to help them save money and time.

Garco10, a leading garment manufacturing factory, expects to achieve export revenues worth $90 million, 11 per cent more than it managed to earn in 2013. Apart from maintaining exports to traditional markets such as the United States, the EU and Japan, Garco10 is also looking to explore exports to future Trans-Pacific Partnership member states. 

 New investments to boost production

Vietnamese manufacturers are putting in money to increase production capacity this is being done to cater to existing demand and to reach out to newer destinations. The Garco10 company, for example has invested in two new shirt production lines at the Trieu Do Company in Thanh Hoa province, 10 shirt production lines at Ha Quang Factory in Quang Binh province and a premium vest production line at Hung Ha Factory in Thai Binh province. Garco10 is also introducing specialised software to remove redundant operations and increase productivity.

The Dong Nai Garment Corporation, which has already received a good number of large orders till last September, has put into operation seven production lines in Dong Xoai town, Binh Phuoc province. Another 15 production lines at Dong Xuan Loc Company is expected to become operational this June. This year, the company aims for export revenues of $47 million, 10 per cent higher than in 2013. 

The Duc Giang Garment Corporation’s export revenue in January was estimated at $7.5 million, up by 15 per cent compared to January 2013. The corporation has received orders for delivery until the second quarter of the year, and is building a factory in Hoa Binh province to increase its production capacity. It has set a target of $89 million in export for 2014, up by 20 per cent since last year. 

 Rising opportunities

According to industry estimates, most of the companies have orders to fulfil until the end of the first and second quarter of this year. Experts are positive that with economies of large markets such as the US, EU, Japan and the Republic of Korea (Rok) showing signs of recovery, textile export revenues of Vietnam would gain importance.

The forecast is that Vietnam's annual textile export revenues to the US will rise to $10 billion dollars by the end of 2014, up 17 per cent compared to that of 2013. And once the Trans-Pacific Partnership (TPP) is signed, the country will further gain advantage to export to the US, as the textile import tariff will come down to zero per cent. The exports of Vietnam's textiles to the EU will also see a strong increase when the Vietnam–EU Free Trade Agreement is signed.

Japan is another potential market for Vietnam’s textile. Exports to the country are estimated to reach $3 billion in 2014, an increase of 20-25 per cent against 2013. Also, the market share of Vietnam textiles in RoK has increased since the ASEAN–RoK Free Trade Agreement took effect in 2007. The export of textiles from Vietnam to Rok in 2013 witnessed a rise of nearly 54 per cent compared to 2012. 

Despite many hurdles that includes strict commercial barriers, particularly in the US, such as strict requirements for social responsibility, eco-labels etc; orders shifting from Vietnam to Bangladesh, Laos and Cambodia Vietnam’s garment sector has set a target to increase the proportion of FOB model production from 38 to 50 per cent, and ODM model production from 5 to 10 per cent in 2015. The textile industry is expected to achieve a localisation rate of 60 per cent by 2015 and 70 per cent by 2020.

Garco10.vn