Beware of shortages in textile and apparel orders

Vietnam’s textile and apparel export turnover in the first half of 2022 was over 22.3 billion USD, up 23% from the same period in 2017.

>> Textiles and garments face many challenges in major import markets

Due to businesses' swift adaption and efficient manufacturing strategy, Vietnam’s textile and apparel export turnover in the first half of 2022 was over 22.3 billion USD, up 23% from the same period in 2017. However, since the middle of the second quarter, businesses have been grappling with a substantial drop in orders as the inflation rate rises and consumers tighten budgets due to the pandemic effect.

Previously, Factory 8 Cam Thuy Branch of Ho Guom Group signed contracts with partners from the United States for an average of 300,000–400,000 orders of children's fashion pants. Despite the fact that this is a profitable product for the company, orders for less than 200,000 units have been placed since the second quarter of this year.

"Until this year is over, nothing will be good. Formerly excited to receive the goods, our partners are now quite apathetic because there is no demand", said Mr. Khuong Van Tai, Director of Factory 8 Cam Thuy Branch of Ho Guom Group.

Mr. Than Duc Viet, General Director of Garment 10 Joint Stock Company, is concerned about the poor market consumption and rising inventory. In the meantime, as the pandemic's negative effects persist and the cost of gasoline and supplies rises, profit margins for textile and apparel businesses begin to contract.

"We are confronting an unprecedented scenario where the cost of resources, particularly coal, oil, and transportation services, is rising dramatically. As a result, the operational effectiveness of our company may suffer in the final six months of 2022 and possibly even into 2023", said Mr. Than Duc Viet.

The Russia-Ukraine conflict triggered a slow growth of the world economy. Unemployment and a decrease in spending on textiles are caused by rising inflation rates. In the midst of a controlled pandemic, the textile and apparel industry's largest problem is a rapid increase in the cost of fuel and raw materials.

>> Textile enterprises' results mixed in second half of 2022

An analyst said textile and apparel businesses must diversify their supply and look for other sources in order to meet the demand of the importers, while authorities implement support policies to help expand the market. 

Many textile and garment orders are either not confirmed or confirmed with a low price in the final six months of 2022, threatening to shut down manufacturing. In the next few months, textile and apparel firms need support programs or policies to pay their employees.

Vietnam’s textile and apparel markets would fluctuate erratically in the second half of 2022, according to Mr. Vu Duc Giang, President of the Vietnam Textile and Apparel Association (VITAS). He advises firms to address the supply-side issue as well as adapt to importers' requirements.

"FTAs will spur businesses by lowering tariff barriers and triggering answers to the investment problems facing the textile and apparel industry. Besides, we no longer depend on some raw materials, allowing for ongoing investment in the global market. Additionally, we launch adaptable measures with premium and distinctive products, which can considerably encourage technical advancements", said Mr. Giang.

Textile and apparel companies face enormous hurdles due to unpredictable market shifts and rising material prices. A situation like this necessitates adaptable solutions that can swiftly react to market signals, aggressively enhance output, and accelerate market growth.