Vietnam’s textile and garment exports are projected to reach w88 chuẩn nhất export target of $44 billion in 2024. For w88 chuẩn nhất Vietnam NationalTextile and Garment Group (Vinatex), w88 chuẩn nhất export turnover in w88 chuẩn nhất first nine months of 2024 reached nearly $1.5 billion, an increase of over 7% compared to w88 chuẩn nhất same period in 2023. w88 chuẩn nhất business performance in w88 chuẩn nhất first nine months of 2024 also showed more positive signs compared to w88 chuẩn nhất previous year, with revenue achieving 73.6% of w88 chuẩn nhất plan, up 2% year-on-year; profit reaching 90% of w88 chuẩn nhất plan, an increase of over 70% compared to w88 chuẩn nhất same period. However, there are still challenges that each company in w88 chuẩn nhất system must find suitable directions to successfully reach their goals for 2024, as well as prepare w88 chuẩn nhất potential and mindset for w88 chuẩn nhất business plan in 2025.
Prospects for Successful Achievement?
In w88 chuẩn nhất first nine months, w88 chuẩn nhất Garment units within w88 chuẩn nhất Group all performed effectively, with revenue increasing by 10% and profit rising by 24% compared to w88 chuẩn nhất same period in 2023. Some units with strong management and market foundations showed robust recovery, with profits for w88 chuẩn nhất nine months exceeding 75%, even surpassing 100% of w88 chuẩn nhất entire 2024 plan. However, w88 chuẩn nhất yarn sector still reported losses, although losses decreased by 80% compared to w88 chuẩn nhất first nine months of 2023.
Most of Vietnam’s major export markets for textiles and garments showed positive recovery signals. For w88 chuẩn nhất U.S. market, on September 18, w88 chuẩn nhất Fed lowered interest rates for w88 chuẩn nhất first time since March 2020, with GDP in Q2 2024 at 3%; inflation in August 2024 at 2.5% year-on-year, w88 chuẩn nhất lowest since March 2021; and retail sales in August also increased by 2.11% year-on-year. w88 chuẩn nhất European economy is gradually under control, with August inflation at 2.4%, w88 chuẩn nhất lowest since June 2021, and retail sales slightly increasing. Japan’s GDP in Q2 2024 grew by 2.9% year-on-year, up 7% from w88 chuẩn nhất previous quarter, despite high inflation, household spending is showing a slight upward trend.
w88 chuẩn nhất yarn sector is perceived to have slight improvements, but not yet significant. Raw cotton prices have been heavily influenced by speculation and logistics, leading to sudden fluctuations that are difficult to predict. Analyses indicate that w88 chuẩn nhất current increase in cotton prices is only temporary and lacks a solid demand base. It is hoped that by w88 chuẩn nhất end of 2024, cotton prices will stabilize and rise, but significant spikes are unlikely. Meanwhile, falling cotton prices lead to a decrease in yarn prices, with yarn prices increasing primarily depending on demand rather than increasing simultaneously with cotton prices. It is expected that in Q4, yarn demand will generally not recover strongly, coupled with rising shipping costs and intense competition from Chinese domestic yarns, will mean that w88 chuẩn nhất yarn sector’s performance shows no clear improvement.
w88 chuẩn nhất export market for w88 chuẩn nhất garment sector in w88 chuẩn nhất first nine months of w88 chuẩn nhất year has seen recovery due to a shift in orders from China, Bangladesh, and Myanmar to Vietnam. Inventory levels in key markets like w88 chuẩn nhất U.S., Europe, and Japan are gradually decreasing compared to w88 chuẩn nhất same period last year, combined with an upward trend in purchasing power, which has created a recovery in order demand from partners. It is expected that garment orders in Q4 2024 and Q1 2025 will continue to be abundant, although unit prices have not improved significantly. In w88 chuẩn nhất long term, when interest rate reduction policies in major markets genuinely have a positive impact on w88 chuẩn nhất economy, creating stable employment and purchasing power, unit prices will improve.
Thus, it can be seen that Vinatex is likely to successfully achieve its business plan for 2024, but caution is still needed in w88 chuẩn nhất context of a market that does not show many positive signals for us to hope for breakthrough results in w88 chuẩn nhất near future. As has been shared many times, market factors are never constant; those involved in managing business operations must proactively implement solutions to maximize efficiency, prepare resources to seize opportunities and anticipate risks to mitigate them.
Identifying Challenges to Resolve
“To know oneself is true progress” To prepare for a ready mindset for all unpredictable market situations, w88 chuẩn nhất Group and its member units clearly identify their difficulties and disadvantages to proactively focus on improvement, ensuring each company maximizes advantages while minimizing adverse factors. In this way, regardless of how w88 chuẩn nhất market evolves, we can still actively and confidently manage business operations flexibly and sustainably. In w88 chuẩn nhất short term, w88 chuẩn nhất issues we will face and need to resolve immediately in w88 chuẩn nhất final months of 2024 and 2025 are:
- Labor Shortages: A prominent issue that most units are facing is a labor shortage and intense competition for labor. w88 chuẩn nhất rate of employees leaving in w88 chuẩn nhất first half of 2024 at some units has equaled that of w88 chuẩn nhất entire year of 2023, and this trend continues to increase. Solutions to raise wages and financial incentives will drain w88 chuẩn nhất financial resources of enterprises and cannot be sustained indefinitely. More in-depth research and analysis are needed to identify w88 chuẩn nhất main causes; surveys of employee satisfaction within w88 chuẩn nhất company must be conducted to find more focused and appropriate solutions to retain workers and attract new labor from outside. Additionally, human resources departments in enterprises need to implement plans to maximize w88 chuẩn nhất use of existing resources; optimize management models, functional responsibilities of departments, and refine competency frameworks and job descriptions for precise workforce planning; utilize Enterprise Resource Planning (ERP) systems to enhance connectivity between production stages and departments both inside and outside w88 chuẩn nhất enterprise with minimal human resources.
- Focus on Increasing Total Factor Productivity: When discussing improving production efficiency, almost everyone first considers increasing labor productivity. However, individual labor productivity can only increase to a certain limit. For w88 chuẩn nhất top enterprises in w88 chuẩn nhất Group, w88 chuẩn nhất room for increasing labor productivity per capita is limited, so to achieve a breakthrough in labor productivity, reasonable management methods and high-level automation investment are required. Instead of simply increasing individual labor productivity, there should be a focus on increasing Total Factor Productivity (TFP), which accurately reflects and summarizes w88 chuẩn nhất effectiveness of capital and labor utilization. Focusing on investing in and improving intangible factors such as technology innovation, production rationalization, management improvements, and enhancing worker skills, helps to improve w88 chuẩn nhất efficiency of tangible factors (such as fixed assets and labor).
- Improving Production Capacity: w88 chuẩn nhất production capacities of units within w88 chuẩn nhất Group are not uniform, with a large percentage of machinery and equipment over ten years old. This is also a barrier to increasing productivity and improving quality, particularly in developing new products that meet market demands. Units need to have investment plans to improve production capacity and analyze effectiveness to make informed decisions on deep investments and technology upgrades.
- Increasing Added Value for Products Instead of Increasing Production Scale: Due to labor shortages, units need to prepare plans to shift to production areas that bring higher added value. Moreover, current order trends indicate that producing basic products in large quantities does not yield high efficiency due to very low processing prices; rather, fashion products in large quantities dominate. Therefore, it is necessary to actively develop w88 chuẩn nhất supply chain, especially in w88 chuẩn nhất design phase (distribution can also yield high efficiency but is challenging to develop at this stage due to w88 chuẩn nhất need for investment in a wide distribution network and market-capable personnel). w88 chuẩn nhất product development center model is being emphasized by many units and will certainly yield effective results in w88 chuẩn nhất short term. Additionally, w88 chuẩn nhất PD&B Center of w88 chuẩn nhất Group will accompany w88 chuẩn nhất units in implementing this strategy.
- Connecting Production Capacity Across w88 chuẩn nhất Supply Chain: Currently, w88 chuẩn nhất connection rate of yarn to weaving and weaving to sewing among w88 chuẩn nhất units in w88 chuẩn nhất Group is low. Additionally, there is a lack of weaving and dyeing production capacity that is not aligned with yarn and sewing, leading to weak chain linkage. w88 chuẩn nhất “ONE STOP” strategy is frequently mentioned in w88 chuẩn nhất Group’s development strategy, but w88 chuẩn nhất solutions for it have yet to show systematic implementation. Even in units with complete yarn-weaving-sewing chains, w88 chuẩn nhất rate of chain products is also low. In contrast, w88 chuẩn nhất recent challenging period showed that units produced in a chain demonstrated clear stability in efficiency. Units with complete production chains need to set specific goals for w88 chuẩn nhất chain product rate and actively pursue them. w88 chuẩn nhất Group also plans to enhance dyeing capacity to align better with yarn and sewing capabilities, initially creating a connection channel for a group of units with compatible products and technologies to form a chain for a few specific products (fire-retardant fabrics, towels, etc.).
- Commitment to Green Supply Chain Goals: w88 chuẩn nhất Group’s development strategy always aims to build a sustainable textile and garment supply chain, focusing on environmental standards and social responsibility, moving towards a circular business model. This is also a mandatory requirement from w88 chuẩn nhất major export markets for Vietnam’s textiles and garments, with increasing and stricter levels. In addition to being bound by government regulations and buyer requirements, enterprises themselves need to be aware of w88 chuẩn nhất necessity and responsibility in this area, seeing it as a vital condition for gaining competitive advantages soon.
Only three months remain until we enter 2025—w88 chuẩn nhất final year of w88 chuẩn nhất 2020-2025 term marked by significant upheavals and many “first-time occurrences” in w88 chuẩn nhất development history of w88 chuẩn nhất textile and garment industry. With w88 chuẩn nhất forecast for w88 chuẩn nhất final months of 2024 showing little brightness, enterprises must exercise utmost caution, tightly manage business operations following established plans, effectively identify and mitigate risks, and avoid any unexpected situations to commit to completing w88 chuẩn nhất annual plan. This is w88 chuẩn nhất necessary preparation for enterprises within w88 chuẩn nhất Vinatex system to have w88 chuẩn nhất “health” to seize w88 chuẩn nhất 2025 business plan without being dependent on market uncertainties.
Article by Vinatex’s CEO Cao Huu Hieu
