Vietnam’s garment sector

  1. Overview

Vietnam’s garment sector for years has always been one of the major export sectors of Vietnam. With the development of innovations in technology, the workforce becomes more skilled and the high proportion of preferential policies from the government, the textile industry has achieved many encouraging results, has created commodity value, while ensuring the needs of domestic consumption and export


  1. Strengths


Vietnam’s garment sector can take advantage of a number of strengths.


First, the equipment of the apparel industry has been innovating and modernizing to 90%. The products have a better quality of day, and to be more demanding markets such as USA, EU, and Japan accepted.


Besides, the textile enterprises have built relationships inextricably linked with many importers, many large corporations in the world consumption. Themselves Vietnam businesses are also evaluated as the cost advantage of labor, skills and good sewing skills.


Finally, Vietnam was praised by political stability and social security, attractive for traders and foreign investors. Vietnam itself actively participate in regional economic integration and world expansion of market access for exports in general and garment exports in particular. Foreign direct investment in Vietnam has shown the increasing trend in the period 2000-2007, despite a sharp decline in 2008.


  1. Limit


However, Vietnam’s garment sector is still faced with many limitations and challenges.


First: Garment exports largely in the form of processing, design work, one undeveloped proportion FOB cargo by mode low, low production efficiency. Meanwhile, the textile industry and weak supporting industries, development is not commensurate with the garment industry, not enough qualified amounts of raw materials to supply export garment industry, so the added value is not high. As indicated above, calculated at constant prices, the value of textile products has been increasing more slowly than the value of garment products, showing the dependence of the garment industry to import raw materials export.


Second: Most of the textile business is small, the ability to mobilize investment capital low, limiting technological innovation and equipment. Government has made small-scale enterprises not achieve economies of scale, and can only be supplied to a certain market. Therefore, when markets are having problems, the garment enterprises will have difficulty in adjusting to market method and / or conversion to other markets. These difficulties, at least initially, in the transition oriented to the domestic market at a time of major export markets such as the US and EU are experiencing economic slowdown is the typical evidence.


Thirdly, management skills and technical production is poor, no formal training, low productivity, goods are common, yet diverse. Marketing capacities limited, most of the textile enterprises saw build his brand, not build long-term strategy for the business.


  1. Opportunities


The garment industry can take advantage of some opportunities to develop exports in the current period. Production of textiles is tending to shift to developing countries, including Vietnam, thereby creating more opportunities and new resources for the textile and garment enterprises of both access to capital, equipment, technology manufacturing, advanced management experience, skilled workers from developing countries.


Besides, Vietnam’s deeper integration than on regional economies and the world economy also facilitate better market access for textiles. Vietnam is now a member of the WTO, also participated signed and executed many free trade agreements in all important bilateral level (eg commercial partnership agreements Vietnam – Japan) and multilateral methods (such as agreements within the framework of ASEAN as ACFTA, AKFTA, ASEAN-Australia-New Zealand, etc.).


Vietnam’s commitment to reform and economic development has created very attractive for investors, and open up new markets and new partnerships. Moreover, the domestic market itself has a population of 84 million people with living standards improved increasingly attracting the attention of investors and entrepreneurs.


However, Vietnam’s textile industry is also confronted with the challenge. On the one hand, the starting point of the textile in Vietnam is low, supporting industries have not really developed, mainly raw material imports, higher processing rate, weak competitiveness than other countries in the region and in the world … the challenges of global economic integration.


On the other hand, the policy environment was not favorable. Themselves the legal documents of Vietnam is still in the process completed, while the capacity of the construction workers and policy implementation, as well as the staff to promote trade remains weak, particularly is limited expertise, foreign languages, and skills.


Themselves major markets also employ many technical barriers, sanitary and safety, the environment, social responsibility, anti-subsidy aimed at protecting domestic producers. Vietnam still many businesses are small and medium, not enough resources to pursue the anti-dumping lawsuits, resulting in losses in the trade dispute. The trade barriers have been applying increasingly more versatile and sophisticated, especially in the context of the financial crisis and global recession.news1


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