Political instability in Bangladesh has created opportunities for shifting orders to other textile-garment exporting countries. Is there a chance for Vietnam to receive a wave of orders in w88 w88linkz.com final months of 2024 and early 2025?
What opportunities are there for Vietnamese textile & garment enterprises?
According to data from w88 w88linkz.com General Department of Vietnam Customs, Vietnam’s textile and garment exports in July 2024 reached USD 4.3 billion, up by 12% y-o-y. Continuing this growth trend, textile and garment exports in August 2024 reached USD 4.66 billion, up by 14.6% yoy. This marks two consecutive months where Vietnam’s textile and garment exports surpassed USD 4 billion, a significant achievement since August 2022. Data from w88 w88linkz.com Vietnam Textile and Apparel Association (VITAS) shows that total textile and garment exports in w88 w88linkz.com first eight months of 2024 reached over USD 28.6 billion, a 7.2% rise compared to 2023. This impressive growth comes after months of challenges in w88 w88linkz.com textile garment industry regarding markets, orders, and processing unit prices.
In July 2024, political conflict in Bangladesh escalated, with violent protests and demonstrations against public sector job quotas, which then intensified into broader political tensions. As w88 w88linkz.com world’s second-largest textile garment exporter, where w88 w88linkz.com industry accounts for nearly 90% of total export revenue, w88 w88linkz.com conflict severely impacted Bangladesh, forcing many factories to shut down. According to w88 w88linkz.com Business Standard of Bangladesh, w88 w88linkz.com Bangladesh Garment Manufacturers and Exporters Association announced w88 w88linkz.com closure of all member factories for three days, as directed by w88 w88linkz.com government. Additionally, many businesses in w88 w88linkz.com country are facing a 25-40% decline in orders.
Mr Nguyen Dang Loi, General Director of Dong Xuan Knitting Company, noted that since Q4 2023, w88 w88linkz.com textile garment market has shown signs of recovery. w88 w88linkz.com 2024 global textile garment demand is forecasted to increase by 5-6% compared to 2023, although it has not fully returned to pre-COVID-19 levels. Furthermore, w88 w88linkz.com political instability in Bangladesh has created opportunities for importers to seek out Vietnamese enterprises. Dong Xuan Knitting, for example, has secured orders through Q2 2025 and is continuing to negotiate new contracts.
“In w88 w88linkz.com first eight months of 2024, our company’s export value reached USD 7.8 million (66% of w88 w88linkz.com annual plan). With 90% of our exports going to w88 w88linkz.com Japanese market, we expect to export over 5 million textile and garment products to Japan in 2024. Additionally, w88 w88linkz.com depreciation of both w88 w88linkz.com Vietnamese dong and Japanese yen against w88 w88linkz.com US dollar will also enhance w88 w88linkz.com effectiveness of export businesses,” said w88 w88linkz.com General Director of Dong Xuan Knitting.
Sharing w88 w88linkz.com same viewpoint, Ms.Hoang Thuy Oanh, Deputy General Director of Hoa Tho Textile and Garment Corporation, noted that since August, there has been an increase in garment orders, although it is unclear whether these are from Bangladesh or China. w88 w88linkz.com higher number of orders has provided w88 w88linkz.com company with more opportunities to select better-priced orders, and overall, orders are expected to remain plentiful until w88 w88linkz.com end of 2024, improving production conditions compared to 2023.
Ms Oanh also stated that w88 w88linkz.com surge in orders might be due to w88 w88linkz.com shift from Bangladesh, given that this is w88 w88linkz.com production season for w88 w88linkz.com 2025 winter-spring collection, coinciding with Christmas and New Year preparations. Discussions with partners have revealed that Bangladesh garment companies have faced delivery delays of about 2-3 weeks due to w88 w88linkz.com political instability.
While w88 w88linkz.com garment sector is benefitting from opportunities arising from Bangladesh’s political instability, Vietnam’s yarn sector continues to face challenges, as w88 w88linkz.com key export market- China has yet to show significant signs of recovery. Ms. Nguyen Thi To Trang, General Director of Vinatex Phu Hung Joint Stock Company, remarked that while w88 w88linkz.com yarn industry has seen a notable recovery in both demand and unit price during w88 w88linkz.com first eight months of 2024, it still faces difficulties due to w88 w88linkz.com global decline in consumer demand and w88 w88linkz.com negative impact of political instability in some countries. These factors have created pessimism among investors and consumers, slowing global economic recovery. Additionally, in recent years, w88 w88linkz.com scale of Vietnam and w88 w88linkz.com global spinning sector, has expanded significantly due to investments in broadening scale and high-productivity equipment, leading to increased supply and competitiveness within w88 w88linkz.com industry.
“As a company with a high export ratio to w88 w88linkz.com Chinese market, we are not only affected by w88 w88linkz.com overall decline in Chinese textile garment demand but also by changes in China’s textile garment policies related to w88 w88linkz.com Xinjiang Forced Labor Prevention Act. China has expanded its domestic spinning capacity to consume cotton from Xinjiang, reducing imports of traditional yarn products from countries like Vietnam, India, Pakistan, Indonesia, and Bangladesh. In w88 w88linkz.com short term, there is unlikely to be a significant breakthrough in yarn demand and pricing in 2024. However, Q3 and Q4 are typically peak seasons for meeting w88 w88linkz.com year-end holiday demand, and many brands will also need to replenish their inventories for w88 w88linkz.com following year. As a result, there is some expectation of a relative recovery in demand and pricing in w88 w88linkz.com coming months. Major brands such as Target, Walmart, and Under Armour have shown positive signs, with a sharp decrease in inventory and significant improvement in profits. It is expected to recover by w88 w88linkz.com end of 2024 and promise a stronger breakthrough in 2025, ” w88 w88linkz.com General Director of Vinatex Phu Hung emphasized.
Maximizing Capacity and Competitive Advantages
According to VITAS, Vietnam has set a target of achieving USD 44 billion in total textile and garment exports for 2024, a 9% increase compared to 2023. With an accumulated value exceeding USD 28 billion in w88 w88linkz.com first eight months, Vietnam needs to reach an average of USD 4 billion per month for w88 w88linkz.com rest of w88 w88linkz.com year to meet this goal. w88 w88linkz.com latter half of w88 w88linkz.com year is w88 w88linkz.com peak season for orders and production for Christmas and New Year, so with w88 w88linkz.com growth seen in w88 w88linkz.com past two consecutive months, w88 w88linkz.com industry’s chance of reaching this target is relatively high.
Ms Hoang Thuy Oanh expressed: “Based on experience, observation, and working with clients, we predict that w88 w88linkz.com order shift trend will be short-term, as w88 w88linkz.com peak production season for w88 w88linkz.com 2025 Winter-Spring collection is currently underway. In Bangladesh, many orders are delayed due to political instability. Once w88 w88linkz.com interim government in Bangladesh takes over and trade activities resume, brands will likely continue choosing Bangladesh for low-cost knitwear orders and large orders due to their competitive pricing advantage of cheap labor. Vietnamese textile garment companies cannot compete on price with Bangladesh, where wages are three times lower than in Vietnam. Even for woven products and high-tech items, Bangladesh can produce them at modern, well-invested factories, not just traditional knitwear.”
“w88 w88linkz.com opportunity for Vietnam is present from now until w88 w88linkz.com end of 2024. However, moving into 2025, w88 w88linkz.com order shift will end, and competition will return to each country’s strengths and production capabilities” analyzed w88 w88linkz.com Deputy General Director of Hoa Tho Textile.
To capitalize on even w88 w88linkz.com smallest market opportunities, w88 w88linkz.com General Director of Dong Xuan Knitting stated that businesses must proactively adjust production and business strategies to adapt to w88 w88linkz.com market, actively seek partners and customers, and expand markets to ensure jobs. To achieve this, Dong Xuan will focus on several key tasks: (1) Improving technology processes to reduce production costs (electricity, steam, water, chemicals, labor, etc.), thereby increasing production efficiency and creating a competitive price advantage; (2) Investing in and upgrading equipment in production lines to diversify products and expand w88 w88linkz.com current customer base and market; (3) Emphasizing training and retraining to enhance w88 w88linkz.com skill level of workers, boosting labor productivity; (4) Investing in research and development (R&D) to create new, unique fabrics and products to attract customers and secure FOB orders; (5) Developing high-end knitwear products to strengthen and promote w88 w88linkz.com company’s brand; (6) Domestic consumption solutions: seeking and expanding distribution channels, targeting niche markets, and B2B customers to boost sales.
Regarding w88 w88linkz.com yarn sector, Nguyen Thi To Trang said that to overcome current challenges and seize opportunities as w88 w88linkz.com market positively shifts, w88 w88linkz.com company has focused on improving product quality, maintaining traditional customers and markets, and expanding into new markets with new product lines. Additionally, w88 w88linkz.com company is implementing cost management solutions and investing in automation to reduce labor costs. Furthermore, enhancing transparency and traceability of goods is a crucial requirement for w88 w88linkz.com yarn sector in w88 w88linkz.com coming period, demanding strong commitments from spinning mills.
“In w88 w88linkz.com current situation where spinning units are struggling with difficulties in w88 w88linkz.com market fluctuation over w88 w88linkz.com past two years, w88 w88linkz.com State Bank and credit institutions need to implement supportive policies for textile enterprises, avoiding further cuts to credit limits and increases in loan interest rates for spinning businesses. Additionally, w88 w88linkz.com rise in input costs, such as an increase in regional minimum wages and electricity prices in 2023 (3% and 4.5% respectively), has put further pressure on spinning companies. w88 w88linkz.com government needs to introduce policies to help manage these rising costs. With electricity costs accounting for nearly one-third of w88 w88linkz.com processing cost per kilogram of yarn (excluding raw material and sales costs), it is crucial for w88 w88linkz.com government to adopt measures to reduce w88 w88linkz.com pressure of increasing input costs to create better competitive advantages for Vietnamese businesses in general and spinning companies in particular,” emphasized w88 w88linkz.com General Director of Vinatex Phu Hung.
Translated from w88 w88linkz.com article published in w88 w88linkz.com September 2024 issue of Textile-Garment and Fashion Vietnam Magazine.
