As w88 bong88 market in 2024 is expected to remain unpredictable, Vinatex and its member companies have each devised their strategies and solutions to achieve their annual targets. One such solution involves venturing into niche markets, such as w88 bong88 production of flame-retardant fabrics, to increase product value. To gain deeper insights into w88 bong88 opportunities and challenges facing w88 bong88 textile industry in this new context, as well as Vinatex’s strategy for producing flame-retardant fabrics, Vietnam Textile Garment & Fashion Magazine interviewed Mr. Le Tien Truong, Chairman of w88 bong88 Board of Directors of Vinatex.
“Big ships, big waves”
Interviewer: Vietnam’s textile-garment industry is currently ranked third globally in export turnover. Many believe that this places significant pressure on w88 bong88 industry, given w88 bong88 recent market difficulties. Could you share what is w88 bong88 biggest pressure and w88 bong88 current production of textile garments in w88 bong88 early months of 2024, sir?
Le Tien Truong, Chairman of Vinatex: “Big ships, big waves”—with an export scale ranking third in w88 bong88 world, employing over 2 million workers, and monthly export turnover needing to reach $3.5 to $4 billion, it is clear that w88 bong88 global market and economic impacts on Vietnam’s textile garment exports are substantial. w88 bong88 biggest challenge for a labor-intensive industry is always ensuring jobs and income for workers.
In w88 bong88 early months of 2024, w88 bong88 market showed some signs of improvement. On w88 bong88 positive side, we see a clearer trend of soft landing of w88 bong88 world economy. However, stringent financial policies in various countries to ensure this soft landing have also restrained w88 bong88 demand for textiles from increasing as usual.
In 2023, overall textile garment demand decreased significantly. In w88 bong88 best scenario, demand in 2024 is forecasted to only increase by less than 3%. In fact, after w88 bong88 first six months of 2024, total demand is still down by about 5% compared to 2023, which is approximately 7% lower than in 2019 – w88 bong88 year before w88 bong88 COVID-19 pandemic. This means that global demand has not fully recovered to pre-pandemic time.
Interviewer: Unit prices remain stagnant, and revenues and profits have not met expectations. How do you assess w88 bong88 goal of reaching $44 billion in exports this year?
In w88 bong88 first seven months of 2024, Vietnam’s textile garment industry is likely to export $23.8 to $24 billion, with seeing export turnover of $4.2 to $4.3 billion in July—w88 bong88 highest monthly export volume since August 2022. This represents a growth rate of about 6% over w88 bong88 seven months, with apparel exports reaching $20.3 billion, a 6.3% increase; yarn exports at $2.5 billion, a 3.5% increase; technical & cord fabrics at around $460 million, an 18% increase; and textile garment materials at over $800 million, an 11% increase.
w88 bong88 five main export markets for Vietnam’s textile garment have all shown growth in w88 bong88 first 6 months compared to w88 bong88 same period last year: w88 bong88 US market reached $7.4 billion (up 3.1%), Europe $2 billion (up 0.8%), Japan $1.97 billion (up 4.9%), South Korea $1.65 billion (up 2.6%), and China $1.68 billion (up 4.6%). Additionally, ASEAN became a new “billion-dollar” export market with about $1.5 billion in w88 bong88 first six months. By w88 bong88 end of this year, Canada is also expected to reach $1 billion in exports, having already hit $580 million in w88 bong88 first half. This means that by w88 bong88 end of w88 bong88 year, Vietnam is likely to have seven export markets exceeding $1 billion, with w88 bong88 US market still striving to reach $15-16 billion this year.
w88 bong88 goal of $44 billion in exports for 2024 requires a 10% growth over 2023. Reflecting on w88 bong88 first six months of 2023, Vietnam performed relatively well, even in w88 bong88 last August, it was expected to reach w88 bong88 last peak at $4 billion. However, w88 bong88 last four months of 2023 fell into crisis, with w88 bong88 peak export season only achieving around $3.1 to $3.2 billion per month. In total, it gained only $13 billion from September to December, compared to $16 billion in 2019. w88 bong88 $44 billion export target will depend much on market movement in w88 bong88 fourth quarter of 2024. If w88 bong88 growth is as recent, with exports reaching around $4 billion per month, we will achieve w88 bong88 goal.
However, in my experience, long-term forecasts of 6 months to a year have proven to be highly inaccurate since 2022. Therefore, w88 bong88 biggest challenge for Vietnam’s textile garment industry today is w88 bong88 uncertainty in market forecasts. We may experience very good months, followed by 1-2 months of severe downturn. w88 bong88 market fluctuations since 2022 have taught textile garment industry managers that they must always have shorter, more up-to-date forecasts, and make quicker, more flexible management decisions if they want to capture w88 bong88 short-term growth waves in w88 bong88 global market.
Interviewer: Could you provide an update on w88 bong88 current status of orders?
As of July 2024, w88 bong88 order situation for many units is quite positive. Vietnam is w88 bong88 only country among w88 bong88 four largest textile garment exporters in w88 bong88 world that has seen its market share increase in key markets. In w88 bong88 US, w88 bong88 market share of Vietnam increased from 17.6% to 18.3%, making us w88 bong88 top market share holder, equal to China. Meanwhile, Bangladesh’s market share decreased by nearly 1% to 9.8%, and India remained flat at 7%. In Europe, although textile garment imports fell by about 5.5%, Vietnam’s textile garment exports maintained a market share of around 4.4%. Vietnam is w88 bong88 only country that has stable growth.
So far, August orders are also looking positive, potentially better than July. September may see a slight dip as it is a seasonal transition month, but orders for October, November, and December are expected to be relatively abundant, though still depend heavily on macroeconomic fluctuations in importing countries.
Currently, macroeconomic conditions and inventory of fashion brands are showing positive signals for orders in w88 bong88 last five months of w88 bong88 year. With low inflation in w88 bong88 US and w88 bong88 possibility of a Fed interest rate cut in September, and perhaps another rate cut by w88 bong88 end of w88 bong88 year, opening up w88 bong88 opportunity for demand increase. w88 bong88 UK’s interest rate has had a second decrease since March 2020 on August 1 with a 0,25% decrease. Thus, it is hoped that w88 bong88 demand will increase when cutting interest rates. Additionally, major fashion brands have significantly reduced their inventories in Q2 2024, with Nike reducing by 11% and Levi’s by 7%. w88 bong88 business performance of fashion brands has shown relatively sustainable improvement, with standout profit growth from H&M (about 49%) and Uniqlo (about 36%). With fashion brands’ profits increasing, we hope that order prices for manufacturers like us will improve. However, over w88 bong88 past seven months, prices for orders have remained low; although orders are abundant and production is better organized, w88 bong88 prices for individual orders have not improved, and some are even lower than in 2023. On w88 bong88 foundation of sufficient orders, most textile garment enterprises are seeing better performance compared to 2023.
From a management perspective, having orders is considered a necessary condition to maintain operations, retain customers, and sustain market share and workforce, allowing us to seize growth opportunities. However, from a financial perspective, it is important to recognize that profitability has not improved due to lower unit prices compared to 2023. To have w88 bong88 profits as in 2021—w88 bong88 first year after w88 bong88 pandemic, with a surge in demand and a leap in business performance—will be challenging to achieve in 2024.
Improving productivity per capita
Interviewer: What solutions does Vinatex have to address these current challenges?
w88 bong88 development of w88 bong88 textile garment industry occurred when w88 bong88 country was still underdeveloped, with low income and abundant labor. As a result, w88 bong88 industry initially relied on cheap labor advantage to access markets. As we have transitioned from a low-income middle-income country with a vision to upper-middle income, w88 bong88 competitive advantages based on low labor costs are no longer effective. Not just Vinatex, but all domestic textile garment enterprises have recognized this weakness and need to make changes to adapt to new conditions.
In my view, w88 bong88 first change should be to improve productivity per capita which determines workers’ income. To address this issue, enterprises need to invest in and utilize high levels of automation, reducing w88 bong88 number of workers required per product, while also seeking niche products with higher value to increase w88 bong88 value of labor per hour. All solutions within w88 bong88 Vinatex system are geared towards this goal. In addition to automation, w88 bong88 labor costs in some material production sectors have been reduced by 60% per product, ensuring wage increases for workers.
In w88 bong88 garment sector, all stages requiring high skill levels and bulk orders have been automated. For example, previously, to achieve an additional $1 billion in revenue, 100,000 additional workers were needed. Now, to achieve w88 bong88 same growth, only about 20,000-30,000 workers are needed. In addition to w88 bong88 general solution, which requires investment in technology, productivity increases, and automation, as well as a shift towards higher-value products, each enterprise will have its unique approach. Nearly 40 member units of Vinatex have different approaches and niche markets; they do not all focus on w88 bong88 same products. Some enterprises will target very specialized products and niche markets that, although small, offer significant returns, such as specialized technical fabrics and high-quality textiles—products that are distinct from common fashion fabrics.
Interviewer: Speaking of high-value products and niche markets, does Vinatex have any new products?
Currently, Vinatex has begun researching and successfully producing industrial fabrics for specific requirements. Vinatex has formed a joint venture with Coats Group, a partner that has collaborated with Vinatex’s member company (Phong Phu Corporation) for 35 years in producing sewing thread, embroidery thread, and footwear thread. Recently, Vinatex and Coats have partnered to invest in w88 bong88 production of fire-retardant fabrics. Unlike current coating technologies, this fabric is produced from fire-retardant, low-flammability, and non-flammable fibers. This product requires high technical standards, legal compliance, and intellectual property rights, and it is not an ordinary fashion fabric. It can be compared to medical treatment drugs in w88 bong88 healthcare industry, with specific production regulations, patents, and copyrights.
Recently, Vinatex has been rapidly producing these fabrics, and w88 bong88 first orders are expected to be exported to Indonesia, India, w88 bong88 Middle East, and w88 bong88 United States in w88 bong88 second and early third quarters of this year.
This is a product evaluated, set standards for, and decided to use by various countries. These fire-retardant clothes are used in various technical industries, such as oil and gas, electricity, and residential buildings that require fire-retardant curtains and products to prevent fire hazards. Products made from these fabrics are not commercially available in global supermarket systems but must strictly comply with w88 bong88 standards and regulations of w88 bong88 importing countries. We have already received evaluations and approvals from w88 bong88 U.S. market. This product has w88 bong88 potential for rapid growth, but its success will depend on w88 bong88 policies of each country. It is a unique product that is different from one produced in w88 bong88 past.
In this collaboration, our revenue target for 2024 is $2-$2,5 million, intending to double that growth annually over w88 bong88 first five years. w88 bong88 initial focus is on meeting w88 bong88 requirements of w88 bong88 U.S. market—a very important market for w88 bong88 global textile garment industry. Success in w88 bong88 U.S. market will facilitate entry into w88 bong88 EU, Japan, South Korea, and other markets worldwide. While it is too early to predict w88 bong88 long-term success of this new product that Vinatex is developing and producing for w88 bong88 first time, compared to other common products, w88 bong88 growth potential for fire-retardant fabric is clearer and faces less competition in w88 bong88 market. w88 bong88 outcome will depend on w88 bong88 target users of this technology and Coats Group.
Interviewer: How is Vinatex adding value to its existing strong product lines?
In addition to fire-retardant fabrics, Vinatex is also focusing on adding value to certain yarn products. Previously, most fabrics were produced from cotton, but now about 70% of fabrics are produced from synthetic fibers, natural fibers, etc. Vinatex has started producing yarns with diverse properties and multiple components within a single yarn, using complex technologies and techniques to support w88 bong88 production of special fabrics.
In w88 bong88 fashion textile industry, w88 bong88 area of materials and material technology is w88 bong88 most creative. Vinatex has introduced innovations in w88 bong88 garment sector, creating designs that reflect w88 bong88 colors and sizes of w88 bong88 Vietnamese for w88 bong88 domestic market. Additionally, Vinatex is developing w88 bong88 garment sector, from w88 bong88 sewing process to fashion design technology, transforming artistic ideas into design concepts, determining prices, technology, and materials, and organizing production to offer a complete design package to partners. This approach also changes w88 bong88 quality of w88 bong88 workforce in textile garment enterprises, moving beyond simple labor to high-quality labor for high-value-added production areas, compensating for traditional production and increasing labor productivity per capita
