Garment exports: the 19 billion dollar target may be unattainable | Look At Vietnam

Garment exports: the 19 billion dollar target may be unattainable
March 9, 2012

LookAtVietnam – Garment companies have voiced their worry that the target of
19 billion dollars worth of export turnover in 2012 could be an “impossible
mission,” for many reasons.


Turnover up in 2011, but this was not a joy

State management agencies announced that the garment export turnover in 2011
reached 15.6 billion dollars, an increase of 40 percent in comparison with 2010.
The achievement has been hailed as a big success of the industry in the context
of big difficulties.

However, experts have pointed out that this is not a big success to be proud of.
In fact, the export turnover was high because of the high input material costs.
According to the General Department of Customs, in 2011, the import turnover of
fabric, fiber and cotton for the textile and garment industry reached 9.3
billion dollars. Though the fabric imports worth 6.73 billion dollars have been
used not only for the garment industry, one still can see that the imports for
the industry were relatively high.

According to Pham Xuan Hong, General Director of the Saigon 3 Garment Company,
in 2011, Saigon 3 got the turnover of 1500 billion dong, higher than the 900
billion dong earned in 2010. However, Hong admitted at the meeting of the
members of the Vietnam Textile and Garment Association (Vinatas) on March 6 that
the growth was partially created by the increases of fabric and material prices.

Meanwhile, garment exporters have warned that the export turnover in 2012 would
not be backed by the high input material prices. Deputy President of Garmex
Saigon Nguyen An said that the garment export turnover in 2011 climbed to 15
billion dollars, partially because of the cotton price increases to 5 dollars
per kilo. However, the cotton price has dropped to 2.8 dollars per kilo.

Meanwhile, General Director of Gia Dinh Garment Company Le Dong Trieu has
affirmed that the cotton prices would not fluctuate heavily this year.

Difficulties ahead

Regarding the consumption markets, garment companies have voiced their concern
that the whole year 2012, not only the first six months of the year as
previously forecast, would be a challenging year for the garment industry. Even
big companies have complained that they lack orders for 2012.

Phan Thi Hue, President of Thanh Cong Group, has also said that her company
would have to struggle with difficulties in the whole year 2012, though experts
once predicted that the difficulties would be eased in the second half of the
year.

Hue said that the optimistic forecasts about the last six months of the year
might come from the expectation that by that time, enterprises would use up all
the materials they imported before at high prices.

However, Hue has affirmed that the difficult period would still last. The number
of orders from Europe is on the decrease. Regarding the US market, the company’s
representatives had meetings with the US partners, and found out that the
situation was not satisfactory.

The representative of a big company with 6000 workers in Go Vap district of HCM
City said that he can see bad signals right at the beginning of 2012.

The company once strived to obtain the 25 percent growth rate in 2012. However,
after drawing up the business plan, the company has realized that the conditions
are too bad to fulfill the plan. The company has received a notice on cutting
the orders from Europe by 50 percent.

“A lot of things are on the decrease, including the orders, FOB product
percentage, outsourcing prices. It is really difficult for us and the 6000
workers,” the representative said.

Source: TBKTSG