To compensate for the shortage of export orders, Vietnamese textile and garment companies are trying to expand into the EU market. Vietnam’s textile exports turnover declined 11.6 per cent during the first eight months of 2020. It is expected to further decline by 15 per cent until the end of the year, says Vietnam Textile and Apparel Association (VITAS). The textile industry currently has up to 118.7 per cent of goods in inventory as 20 per cent companies were forced to shut down while others cut labor and restructure production activities.
As many global fashion brands like New York & Company, J C Penney and Brook Brothers declared bankruptcy, Vietnamese textile manufacturers turned towards the domestic market, with main products including masks, work wear, medical outfits and fast fashion, targeting the cheap or mid-range segment. Though domestic consumption is expected to increase 5 per cent until the end of 2020, it cannot make up for the shortage of export orders, said Le Tein Truong, General Director, Vietnam National Textile and Garment Group (Vinatex). According to him, the Vietnam-Europe Free Trade Agreement (EVFTA) will allow companies to reach an export turnover of $7 billion which was that of 2019.
Having competitive pricing and fast delivery times will enable Vietnam to take full advantage of EVFTA and increase market share in the EU as well as compete with the Bangladeshi providers, Truong said. Businesses ought to improve logistical capacity to achieve shorter delivery time, and the government should simplify administrative procedures, reduce clearance and inspection time, he added.
Manufacturers should also start importing materials from countries that have signed FTAs with Vietnam and the EU to take advantage of cumulative rules of origin. Additionally, they should dabble in specialized, hi-tech, multi-detailed textile products or workwear, sports and medical products, while changing production technology, improving management capacity and investing in social and environmental factors.