Investment to boost exports of Vietnam clothes manufacturers

Vinatex, the representative of clothing manufacturer in Vietnam has announced an investment of US$2.1 billion with projects to build new production facilities for Vietnam clothing manufacturer as part of the development of plan toward 2020.

This huge investment into Vietnam clothes manufacturers is supposed to generate an annual increase of 12%-14% in production value of clothing manufacturer in Vietnam and a 15% surge in export turnover.

Vinatex will focus firstly on building factories specialized in producing raw materials required for production, secondly on improving technology of equipments used to boost productivity, from which create and expand raw material cultivation areas.

The target is to produce 300,000 tons of fiber by 2020, 675 million square meters of fabric supply the raw materials required of most clothing manufacturer Vietnam to produce 706 million garment products per year and generate export revenue of more than US$ 5 billion.

To fulfill this target, the implementation plan is to develop 31 fiber plants, 21 fabric plants and 164 Vietnam clothes manufacturers in the next 10 years.

The source of capital will come from proceeds from auctioning land in highly-urbanized areas, bank loans, privatization of enterprises and foreign sources.

Also, as part of the regional planning, Vietnam clothes manufacturers which are in inner city will be relocated to the countryside. The raw materials zones will be located in 8 provinces including Dak Lak, Dak Nong, Ninh Thuan, Son La….

Moreover, top priority for clothing manufacturer in Vietnam is to diversify designs and improving quality by increasing the ratio of local content to reduce costs of import. Besides, evolving from sub-contracting to original design manufacturers is also a main target.

Vinatex takes over a Vietnam clothing manufacturer in centre of Vietnam

Dai Cat Tuong is a Vietnam clothing manufacturer located in Quang Ngai Province Vietnam. This clothes factory in Vietnam was founded in March 2005 with capital of 38 billion VND. 

After several years of making loss resulted by many strikes of workers in this clothing manufacturer in Vietnam in 2008, it came up with a suspension in production in 2010.
 
Vinatex, the representative of Vietnam clothes manufacturers has announced on 18th July that they has taken control over this clothing manufacturer in Vietnam by buying nearly VND 39.9 billion shares of the company in the auction. After the take-over, Vinatex would invest over VND 50 billion in renovating this clothes factory in Vietnam with plans to buy machines, build dormitories for workers and increase employment to 3000.

A new protective clothes factory in Vietnam

A new clothing manufacturer in Vietnam which specializes in producing protective suits and uniforms for industrial manufacturing has licensed to operate in Binh Dinh province. This new clothes factory in Vietnam is 100% foreign own, a joint venture between two Japanese companies named Toyotsu Vehitecs and Toyota Tsuho Corporation. The foreign company has invested US$1.5 million to build up this new Vietnam clothing manufacturer in My Phuoc 3 Industrial Park, Ben Cat District.
 

On completion, the protective clothes factory in Vietnam is supposed to create job for over 210 workers with capacity of 360,000 units annually. This clothing manufacturer in Vietnam will focus on the Japanese market only with proposal of manufacturing protective suits and uniforms for car makers in Japan such as Toyota, Mitsubishi, Daihatsu and Suzuki.

A new clothing manufacturer in Vietnam.

A new 100% foreign owned clothing manufacturer in Vietnam has been licensed to be constructed in Tra Vinh city by the local Government.
 

This new clothes factory in Vietnam is the investment of Korean clothing manufacturer called Grace Vina.
 

This clothes factory in Vietnam will produce women's apparel for export with expected annual capacity of 26.9m products.
 

The new clothes factory in Vietnam will due to open in February next year and provide jobs for around 3000 workers.
 

Korean investors is said to be the biggest investors in clothes factory in Vietnam.

Indian textile firms seek corporation with Vietnam clothes manufacturers.

Vietnam garment exporters have listed as a leading exporter of garments in the world. However, the issue which is still the concern of most clothing factories in Vietnam is the raw materials required for producing high quality products including cotton yarns and fabrics. The amount of these raw materials which are from domestic firms are not enough to supply the demand of Vietnam clothes manufacturers.
Understanding this issue of Vietnam garment exporters. Indian textile firms have made an offer to many Vietnam garment factories to supply any kind of raw material used in textile and garment production of Vietnam clothing factories.

In recent years, the imports of cotton textiles form India to Vietnam clothes manufacturers have considerably increased, say $50 million in 2010.

In the first four months of this year, not concerning about the fluctuation in the price of cotton, the trade amount between India and Vietnam in all sectors reached $1.26 billion and predicted to reach $4 billion by year-end.

Currently, India is one of main competitors of Vietnam garment exporters. However, this offer to work in coordination is supposed to help in utilizing the competitive advantages of both India and Vietnam clothes manufacturers towards mutual benefit.

The affect of a sharp fall of cotton price on Vietnam clothes manufacturers

During the last 6 months of 2011, the cotton price was at peak on March worthing 229.67 cents per pound of cotton.
 

Many of Vietnam clothes manufacturers had to endure with this high price at the time because they need to import 80% of this type of materials to be able to make enough yarn for export.
 

However, the price of cotton dropped considerably in April and May. At the end of May the price of a pound of cotton was recorded to be 165.52 cents per pound. This was a hit on Vietnam clothes manufacturers causing a great loss to their production.
 

Besides, “The import price, inclusive of cost, insurance and freight, has dropped from US$4.2 per kilo when the contract was signed to nearly US$3.2 when the cargo arrived in the storehouse in Vietnam that took nearly one month. After production, the yarn currently has the new sales price at only US$3.9 per kilo and that explains why many yarn manufacturers incur losses,”

Workers at a Vietnam clothing manufacturer fighting for a higher monthly salary.

Recently there was a strike of workers in a South Korean-owned clothing manufacturer in Hanoi over low wages. Employees of  the Vietnam garment manufacturer named Ivory Garment Company exposed the reason for the strike is that they could not manage to survive with their current salary that the Vietnam clothes factory Ivory is paying.

Workers in this clothing factory in Viet nam are trying to claim for a rise in bonuses and job perks including overtime working extra payment from 10 dollars to 20 dollars per month and bonusses for senior staff from 1 dollar to 2.5 dollars per month.

At present, the minimum wage for a new worker at that clothes factory in Vietnam is 1.5 million dong (75 dollars) per month. This salary will be increased to 2 million dong (100 dollars) after 5 years of working.

As at the time of high inflation in Vietnam, this wage is not sufficient enough for workers in this Vietnam garment manufacturer to cover their living expenses.

Vietnam clothes manufacturers may reach $13 billion on exports at the end of the year.

With the encouraging results for the first 6 months of operating, every Vietnam clothing manufacturer is on the way to fulfill the export target for the year, namely 13 billion.
 

As recorded in June 2011, there was an 30 percent increase of exports from Vietnam garment factories with a revenue of $6.16 billion. It is said to be the highest first half growth rate in the production of Vietnam clothes manufacturers in the last four years.
 

This is the promising results for clothing factories in Vietnam in the attempt to reduce their energy and management costs while struggling with the rise in raw materials costs and high interest rates.
 

Another solutions are considered by clothing factories in Vietnam in the time of high inflation are to reduce their reliance on bank loans and to manage to allocate their own capital efficiently as well as to give priority to short-term contacts only to recoup their capital as soon as possible.
 

Vietnam clothes manufacturers are competing to remain in the top 5 garment exporters in the world as in 2010 with total turn over of $11.2 billion. 

Bangladesh as one of the main competitors of clothing manufacturer in Vietnam

It is said that a large number of garment exporters are aiming at Bangladesh to do their business opportunities. In some recent years, knitwear and ready-made garments exports have accounted for approximately 80% of Bangladesh exports and made Bangladesh the 3rd in world textile exports. What makes Bangladesh a potential destination to establish a business on garment and textile is that the wages for workers in clothes factory is said to be lowest in the world (2010). On July 28, 2010, the minimum wage was announced to be about $43 a month.
 

However, there are still concerns about the ongoing energy crisis, security situation and unfriendly Government of Bangladesh which prevents exporters from making their final decisions to do business in Bangladesh.
 

Compared to concerns related to Bangladesh, clothing manufacturer in Vietnam is better because there are no riots in the factories and the workmanship is in the inherent talent for producing quality goods.

List of Stated-owned Vietnam clothing manufacturer.

Every Vietnam clothing manufacturer is on the way to transform into private and joint stock Vietnam clothing manufacturer. 

A research recently showed that there is only 0.5 percent left of Vietnam clothing manufacturer remains State-owned while in the process of carrying out their equitisation.

The list of Vietnam clothing manufacturer which still belongs to the Government is as follow: 

1. 28 Corporation - Agtex

3 Nguyen Oanh Str., Ward 10, Govap Dist, Hochiminh City, Vietnam

http://www.agtex.com.vn

Main activities: manufacturing, trading textiles, apparel products, purchasing and selling material, equipment, spare parts, chemical for textiles and apparel industry.

2. Hanoi May 19 Textile Company - Hatexco

203 - Nguyen Huy Tuong Str., Thanh Xuan Dist, Hanoi, Vietnam.

Main activities: Yarn, Embroidery

3. Dong Xuan Knitting Company - Doximex

524 Minh Khai St., Hai Ba Trung Dist., Hanoi

http://www.doximex.com.vn

Main activities: Textile: Knitting - Dyeing and Finishing - 

Garment: Knitwear

4. Dong Long Company 

21 Huynh Ba Chanh - W. Hoa Hai - Dist. Ngu Hanh Son - Danang

http://www.donglongco.vn

Main activities: Fabrics and Garments

5. Binh Duong Garment One Member Co., Ltd - Protrade Binh Duong

National Highway 13, Binh Duc Hamlet, Binh Hoa Commune, Thu Dau Mot town, Binh Duong  

http://www.protradegarment.com

Main activities: jackets, jeans, shirts, khaki, sleeping wears, skirts.

6. Nam Dinh Textile One Member of State Responsibility Ltd - Natexco

43 To Hieu St., Nam Dinh City, Nam Dinh Province

Main activities: Yarn, Fabric

7. Dong Phuong Knitting Company - Dopimex

10 Au Co - W. Tan Thanh - Dist. Tan Phu - Hochiminh City

http://www.dongphuong.com.vn

Main activities: Fabric, Garment

8. Saigon Wool and Trading Corporation - Saigon Wool

252 Hoang Van Thu St., W.2., Dist. Tan Binh, Hochiminh City

Main activities: Woolen

A guide on Law for clothes factory in Vietnam

To help clothes factory Vietnam with necessary information on Laws of garment industry, recently the International Labour Organization (ILO) and the Ministry of Labour, Invalids and Social Affairs announced a book named "Guide to Vietnamese Labour Law for the Garment Industry". The book mainly aims at managers and workers of clothes factory in Vietnam, also legal officers in the garment industry.

The book comprised of 10 chapters, with the following content about minimum working age in a clothes factory in Vietnam, the trade union, collective bargaining agreements, labor disputes, discrimination, forced labor, wages and benefits, contracts and human resources, occupational health & safety, working hours and rest time suggested for each clothes factory in Vietnam.

With the presentation of this book, every manager and worker in every clothes factory in Vietnam will be prepared with more understandings about their responsibilities as well as their benefits in their current working conditions. Understanding the law is one of the essential criteria which could enhance the production capacity of a clothes factory in Vietnam since every worker should be clear about what they are supposed to do, what job perks they are given to, what are their responsibilities and what is against the law they are facing with.

A special point of this book is that it is written in simple language and provided with case studies that makes it easier for the targeted reader, namely workers in clothes factory in Vietnam to grasp the main idea and apply it in the right situation.

You can download the English Version of the book from the following link:

Guide to Vietnamese Labor Law for the Garment Industry

Tariff Schedule for apparel products of garment manufacturer in Vietnam to be imported into Australia

According to the Agreement Establishing the Association of Southeast Asian Nations (ASEAN) - Australia - New Zealand Free Trade Area (AANZFTA), In order for apparel products of a garment manufacturer in Vietnam to be imported into Australia, the tariff schedule to the year 2020 will be as following.

 

The rule of orgin which benefits Vietnam garment manufacturer the most - cut and sew rule

On the set of rules of origin, which benefits Vietnam garment manufacturer the most and also is favored by apparel importers is "cut and sew" rule. Under this rule, textiles could be sourced from any country, as long as they are cut and sewn into apparel by a Vietnam garment manufacturer and Vietnam will be listed as the country of origin for those garment products.

This "cut and sew" rule has proved to facilitate the exports of most Vietnam garment manufacturer. As a result of the aprovement on "cut and sew" rule applied for trading between Korea/ASEAN, the export growth rate to the Korean market reached over 70% in 2010 and of course, every Vietnam garment manufacturer gained benefit from this FTA.

This is the reason why in the recent negotiation of TPP, one of the main points that Mr Vice President of Vietnam Textile and Apparel Association, the representative of Vietnam garment manufacturer was trying to persuade is the application of "cut and sew" rule if Vietnam is included in the TPP. This attempt is to improve the competitiveness of Vietnam garment manufacturer in exporting textile and apparel products.

Vietnam clothes manufacturers with a concern called "rules of orgin" - fabric-forward rule

Apart from yarn-forward rule of origin, another rule called "fabric forward" also should be taken into account by Vietnam clothes manufacturers.

Considered as the less strict rule amongst those rules of origin that Vietnam clothes manufacturers have to bear with before their products are legal to be exported, Fabric-forward rule means the fabric that Viet nam clothes manufacturers used in their production must be processed (i.e woven or knit) in the countries belonging to the trade agreement. Which makes it less strict is that the yarns used for making fabric are not required to be originated in the countries in partnership.
 

Before, this rule of origin was applied in the agreement Japan-ASEAN FTA and Japan-Vietnam Economic Partnership (JVEPA), in fact, the benefit from the rule for Vietnam clothes manufacturers is not that much because the fabrics that are produced in Vietnam are not enough to satisfy all the demand for production of Vietnam clothes manufacturers. They still have to rely much on importing fabrics from overseas especially China.
 

Having looked beyond the situation, Vietnam Government is paying more attention in the development of textile companies focusing on supplying Vietnam clothes manufacturers with required materials for their production.

Vietnam clothing manufacturer with a concern called "rules of orgin" - yarn-forward rule

One of the rules of origin that each Vietnam clothing manufacturer should take into account before considering for exports opportunities is the "yarn-forward" rule which is listed as the basic origin rule for textile and apparel articles.
This means the yarn Vietnam clothing manufacturer used to form the fabric (which may later be used to produce wearing apparel or other textile products) must originate in a country which is on the list. In the circumstance of TPP Agreements, to apply "yarn-forward" rule, Vietnam clothing manufacturer has to make sure that the yarns are originated from those countries in the Partnership, i.e: USA, Australia, NZ...

To be more clear, assume that Vietnam is included in the TPP, a wool shirt made by Vietnam clothing manufacturer from fabric woven in Vietnam of wool yarn produced in China (not including in TPP) would not be considerer originating as the fact that the origin of the yarn is not within TPP countries.
In other case, if China wool fiber was imported by Vietnam clothing manufacturer and they spun it into wool yarn, which was then used to produce the wool fabric, the shirt would be considered originating.

In fact, Vietnam clothing manufacturer has no experience in dealing with "yarn-forward" rule of origin in any trade agreement before.

New development projects to boost production of Viet nam clothing factories.

As stated in the development plan for textile and apparel industry of Vietnam for the 2011-2020 period, diversity of garment factories as well as the launch of textile and garment industrial clusters are two of the main development;s points in order to lead Vietnam clothes manufacturers towards specialization, modernization.

With concentration on provinces with high potential for the establishment of garment factories in Vietnam as part of the regional planning, A development project concerning Nam Dan textile garment cluster in central Nghe An province in the North of Vietnam has recently started by Hanoisimex with capital around VND 1.3 trillion ($62.8 million).

On completion which is supposed to be in 2013, this textile garment cluster will be the combination of Nam Dan I spinning mill with 30,000 spindles focusing on producing PE yarn, a new open-end (OE) spinning mill and Nam Dan 2 spinning mill with 30,000 spindles focusing on producing T/C yarn.

Hanoisimex also proposed to a new construction of Nam Dan 3 spinning mill specializing on producing T/C and quality TCD yarns together with two knitwear garment factories with an annual capacity of 2.4 million products after those 3 sub- projects mentioned above are put into operations.

In addition, Phong Phu Corporation in partnership with Nha Trang Textile Garment Joint Stock Company which is located in the South of Vietnam has also launched a new project on raw materials production in order to reduce expenses and improve quantity as well as quality for their garment factory. Their new 40,000 spindle mill is supposed to create outcome of quality PE, TA yarns and threat for fabric production, fulfilling the market demand for fabric supply of Vietnam garment exporters.

From the Center, Hoa Tho Textile Garment Joint Stock Corporation in Danang has started the construction of the first Vietnam garment factory specializing in producing suits in the region with target annual production capacity of 400,000 quality suits for exports purpose.

In fact, the step of paying attention to material and accessories production is considered as a crucial and wise decision of Vietnam clothes manufacturers in order to be competitive in a broader market ( in the viewpoint of Vietnam garment exporters) and to ensure growth, stability, sustainability and efficiency.

Results of 7th round negotiation of TPP in the view of Vietnam garment exporters.

After a week of negotiation in HCM City which grabbed full attention of Vietnam garment manufacturers, the Trans-Pacific Partnership Negotiations (TPP) yields promising results for Vietnam  garment factories while being expected to attain several improvement by year-end.
 

Vietnam Textile and Apparel Association, on behalf of Vietnam clothes manufactures presented at the TPP event to persuade the negotiators in the attempt to claim for benefit from a TPP Agreement, from which improve the competitiveness of Vietnam clothing factories. It is said that in order to reduce the risks to the Vietnam garment industry in joining TPP and benefit from that the rules of origin should be applied as they are in the "cut and sew" process. In fact, if the "yarn forward" rules are applied to the TPP as condition for Vietnam to join, Vietnam garment factories will hardly have the chance to expand their production.
 

Therefore, one of the main target of Vietnam garment manufacturers is to fight for "cut and sew" rules in TPP. Currently, It is estimated that in a finished garment product, the cost of fabrics accounts for maximum 50%, however garment factories in Vietnam still heavily depends on imports of materials especially from China. In reality, clothes manufacturers of Viet Nam are too underdeveloped to make fabrics that are used in products exported and thus could not satisfy the "fabric forward" rule to be able to claim priority tariffs according to those FTAs. This also means tariffs applied for apparel exports from Viet Nam (a TPP partner) will be the same as those for non-TPP partners, including China.
Some fear a "cut and sew" rule would lead to a flood of Vietnam garment products in the markets of TPP partner markets.  In fact, the "cut and sew" rule was accepted by Korea and other countries, including TPP countries such as Australia and New Zealand, in previous FTAs but the trade volume for Vietnam garment exporters didn't gain a great boost. That's proof that imported countries should not worry about any sudden surge of apparel products from Viet Nam after a TPP.
 

Some optimists think that if "yarn forward" rule is the final decision of TPP countries, at least it would help to attract more foreign investment in the clothing factory of Viet Nam to serve national development.
 

However, In the context of globalisation and the free trade tendency, Vietnam clothes manufacturers are trying to persuade  all partners that they should understand the position and situation of each country and make reasonable concessions for a TPP beneficial to all partners.
 

For textile and apparel issues, Garment factories in Vietnam urge the TPP negotiators to adopt the "cut and sew" rules for the benefits of Vietnamese clothes manufacturers and all TPP consumers.