According to Vietnam’s “Vietnam News”, the Vietnam Textile and Apparel Association (Vitas) stated that due to the impact of the epidemic, Vietnam’s textile and apparel industry may not be able to achieve its production and business targets. The association believes that the last three months of this year are an extremely difficult period for the textile industry. Among them, the biggest risk is supply chain disruption due to customers shifting orders to other markets. Secondly, due to the large number of workers returning home to avoid the epidemic, there is a labor shortage. Therefore, it will be difficult for the industry to achieve the same annual export target of US$39 billion as in 2019 before the epidemic.
According to the association, there may be three scenarios for the development prospects of the domestic garment industry this year: The most optimistic scenario is that if Vietnam controls the epidemic and enters the “new normal” from early October, the annual export volume will It may reach around US$37.5-38 billion. The second scenario is that if the epidemic continues and some localities and industrial areas are still under lockdown or quarantine before November, exports are expected to reach approximately US$360-365 billion. In the worst-case scenario, where the epidemic continues until early December 2021, the industry’s exports are expected to be only $33.5-34 billion. Next year, if the production and operation situation returns to normal, the textile and garment industry will strive to achieve an export turnover of US$39-42 billion.
The export turnover of the apparel industry in August fell by 15.9% month-on-month and 2.63% year-on-year. Exports in September were estimated at US$3 billion, continuing to decline by 9.2% month-on-month and 10.5% year-on-year. However, in the first nine months of this year, the industry still achieved a trade surplus of US$11 billion, of which exports totaled US$29 billion, a year-on-year increase of 13.2%. The total import of materials and accessories in the first nine months was approximately US$18 billion, a year-on-year increase of 27.9%.
Nearly 70% of Vietnam’s textile, leather and footwear companies have been fined for contract breaches
On October 8, representatives from the Vietnam Textile and Apparel Association (Vitas) and the Vietnam Leather, Footwear and Luggage Association (Lefaso) stated at a discussion on “Working Together to Promote the Sustainable Recovery of the Textile, Leather and Footwear Industry” that nearly 70% of Vietnam’s textile, leather and footwear industries Leather and footwear companies were hit with contractual penalties from partners for delayed deliveries, and many orders were diverted.
Vietnamese media reports
Vitas, Lefaso and the Public-Private Partnership (PPP) in September A quick survey was conducted on the “health” of companies in the textile, leather and footwear industry.
Nearly half of the textile, leather and footwear companies participating in the survey said that due to the increase in transportation and logistics costs due to each extension of social distancing, sea shipping time has doubled (goods from Asia to the United States take 80 days , whereas previously it only took 40 days), so delivery was delayed.
This has resulted in more than 68% of brands delaying delivery and companies being punished for contract breaches. More than 12% of brands had their orders canceled and required compensation, and about 21% of the brands proactively canceled their orders without compensation. Some companies have also had to switch to very costly air transportation after negotiating with their partners to extend delivery times.
Garment factory workers in Ho Chi Minh City before social distancing was implemented
Labor Relations Research Center Du Qiong Chi added, Enterprises with export sales of billions of dollars in these two industries are also facing orders being transferred, and this situation may continue to happen in the next five months. However, when communicating with various brands, they all believed that this was only a temporary shift, not a long-term shift, mainly to meet the large shopping needs and orders in Europe and America at the end of the year.
Thang Van Kim, vice chairman of the Vietnam Textile and Garment Association, said: “The textile, leather and footwear industries have never faced such serious risks of supply chain disruption and labor shortage.”
The survey results also show that textile, apparel, leather and footwear companies are bearing a heavy cost burden due to extended social distancing and severe labor shortages due to workers returning home.
More than 40% of the companies participating in the survey stated that anti-epidemic costs accounted for approximately 20% of their business operating costs. Du Qiongzhi said that this is the reason why many companies cannot maintain “3 on-site” production.
Vietnam’s return wave
Tran Thanh Hai, deputy director of the Import and Export Department of the Ministry of Industry and Trade of Vietnam, emphasized, At present, various regions still adopt different measures on the movement of workers. It is recommended that the Vietnamese government issue a general document to list the standards. If workers meet the relevant standards, they can move freely.
At the same time, he also suggested that while changing the anti-epidemic policy from “clearing” to “coexisting with the epidemic”, we should also change the anti-epidemic policy from centralized to distributed This method allows enterprises to proactively detect, independently prevent and control epidemics, etc.
In addition, companies should also diversify their supply chains to avoid becoming passive if one link is affected. It is also necessary to develop risk prevention plans and financial response measures, and always maintain a positive attitude towards all situations.
Regional governments should adhere to the policy of “avoiding if possible, slowing down if possible, and reducing if possible” and provide stronger financial support to enterprises so that they can Ability to produce. </p
