Since the tightening of Sino-US trade relations, many textile and apparel companies have turned to foreign markets such as Cambodia, Vietnam, and Pakistan. After the United States imposed additional tariffs on Chinese textiles, overseas orders began to flow from China to Southeast Asia, with Vietnam the largest number. Thanks to this, Vietnam has become one of the three largest textile and apparel exporters.
Vietnam’s textile and clothing exports increased by 16.01% in 2018. Among them, the export value of textile and clothing reached US$28.78 billion, a year-on-year increase of 14.45%; the export value of fabrics reached US$1.66 billion, a year-on-year increase of 25.5%; the export value of textile and clothing raw materials reached US$1.23 billion, a year-on-year increase of 14.59%. In the first quarter of 2019, Vietnam’s textile and garment exports amounted to US$7.3 billion, an increase of 13.3%.
Recently, the United States announced an additional 456% tariff on Vietnam! As soon as this news came out, many people were worried: Will the United States start a trade war with Vietnam? In fact, the United States has already imposed additional tariffs on countries such as China, the European Union, Canada, Mexico, and Turkey. So if the United States and Vietnam start a trade war and the United States imposes tariffs on Vietnamese textiles, how much impact will it have on China’s textile and apparel companies?
The impact of the US-Vietnam trade war on Chinese textile companies
1 Lost orders return
Vietnam’s current textile industry There are more and more companies, and Vietnam’s costs are low and fabric quotations are lower than those in China. Therefore, many international terminal garment manufacturers have transferred orders from China to Vietnam. If the United States increases tariffs on Vietnam, Vietnam’s fabric and clothing prices will no longer be advantageous. In contrast, the quality of fabrics and clothing in China is better than that in Vietnam. I believe that many terminal clothing merchants will place orders again to China.
2 Alleviating the overcapacity of gray fabrics
On the other hand, the textile industry in Vietnam mainly produces conventional low-end fabrics, and the prices are lower than those in China, so it gives Domestic conventional low-end products have had an impact. If the United States increases tariffs on Vietnam, Vietnam’s fabric and clothing prices will no longer be advantageous, and the demand for conventional low-end products will inevitably flow back to China, thereby alleviating the problem of domestic gray fabric overcapacity.
3 Accelerate competition in the international textile industry
The relocation of textile and garment enterprises is the norm. China’s domestic textile companies have mainly moved from the Jiangsu and Zhejiang regions to the central and western regions. At the same time, the textile and apparel industry has become internationalized, with production capacity being transferred to Southeast Asia, South Asia, Central Asia, Africa and other regions, and also in developed countries and regions such as Europe, the United States and Japan, through mergers and acquisitions and investments to control the raw materials, design, R&D, and design of both ends of the textile industry chain. Brand and market channel resources. If the United States increases tariffs on Vietnam’s textile imports, it will eventually affect Vietnam’s textile and apparel orders. Therefore, it will accelerate the development of textile and apparel enterprises in Southeast Asia, South Asia, Central Asia, and Africa. More orders will be transferred to the international market, and more orders will be transferred to the international market. Fierce competition has formed in our country.
4 Accelerate the relocation of textile companies investing in Vietnam back home
In the past two years, due to the environmental protection situation, many Chinese textile companies have relocated their factories to Vietnam. In the early stage, because factory rent, worker wages, dyeing fees and other costs were lower than domestic ones, it attracted many domestic textile companies. However, those domestic factories that went to Southeast Asia to set up factories faced too many problems. Factors such as soaring worker costs, frequent rights protection activities, and imperfect infrastructure and supporting facilities restricted the development of enterprises. If the United States increases tariffs on Vietnam, another factor will affect companies that set up factories in Vietnam. When labor costs and policy advantages no longer exist, the company may face bankruptcy or relocate back to the country.
The additional tariffs imposed by the United States on Vietnam will have a great impact on China’s textile industry. Therefore, textile people are very concerned about whether the United States will impose additional tariffs on Vietnam. If so, whether What about textiles? We don’t know the answer, and we can’t predict it. Let’s take a look at the current situation of China’s textile companies. Only by doing well in the domestic market can we do well in the foreign market.
Current situation of domestic textile companies
Since July, the off-season has deepened. Fabric merchants in Wujiang area lack large-volume orders and mostly focus on small orders. Weaving manufacturers are shipping goods slowly, and the inventory of gray fabrics is still at a high level. The person in charge of a textile company in the Wujiang area revealed that domestic sales orders have been acceptable this year, but foreign trade orders have been very few, with the order volume reduced by 80% compared with previous years. The Guangzhou area is a gathering place for finished goods companies, but the situation of those companies is not optimistic either. It is understood that since the summer off-season, many stores with ready-made products have been closed for the holidays due to lack of customers. At present, it is difficult for textile enterprises to receive foreign trade orders and there is great inventory pressure. At the same time, they are restricted by many factors such as rising labor costs, fluctuations in raw material prices, and increases in loan interest rates.
In terms of upstream polyester manufacturers, mainstream production and sales have occasionally exceeded 100, but the good times do not last long. Recently, the mainstream production and sales of the downstream polyester market have plummeted, with production and sales basically maintaining only 10% to 20% for three consecutive trading days. Weaving companies stopped replenishing goods, and traders also started cautiously. Judging from the statistics of China Silk Capital Network, the overall inventory of polyester yarn in the polyester market has increased slightly to 10-19 days. Polyester raw material manufacturers are affected byAffected by the purchase of goods, some polyester manufacturers have begun to suspend production for maintenance, and subsequent production reduction operations in the polyester market may further increase.
THE END
Regardless of whether the United States and Vietnam start a trade war, China may suffer from reduced demand for clothing fabric orders. However, as China has the largest and most complete industrial system in the world from raw material supply, design and R&D to textile dyeing and processing, it will still be the world’s largest exporter of textiles and clothing, and its basic demand remains. Therefore, no matter what the international trade situation is, my country’s textile enterprises need to transform and upgrade, improve their products and improve their competitiveness in order to achieve better long-term development.
</p
