Vietnam’s garment stands before great opportunities
China-made fabrics will be subject to a tax of 25% from the beginning of 2019, and garments are also being proposed to increase tariffs on the market. Vietnam’s textile and garment industry is facing a great opportunity from the trade war between the two largest economies in the world.
Order moved strongly to Vietnam
The tendency of importers (mainly the US) to move orders from China to Vietnam is not new, but notably, the pace of movement is going faster since the beginning of 2018 due to the risk from the risk US-China trade war.
This is evidenced by the positive growth of many enterprises in the industry in the first half of this year, which is rare in the previous years due to not the peak season.
On 17 September, the administration of President Trump announced that it would impose a 10% surcharge on imports of Chinese goods valued at $ 200 billion. The tax rate is expected to increase to 25% from the beginning of 2019. In the list of items subject to additional taxation there are yarn and fabric products.
According to data from the US Department of Commerce (OTEXA), the total import value of yarn and fabric from China in 2017 is $ 2.06 billion. about 200 million USD and fabric about 1.8 billion USD).
Dang Trieu Hoa, chairman of the Board of Directors of Century Fiber Corporation (STK), said that every year, the United States imports about 25,000-28,000 metric tons of polyester filament yarn from China.
The United States mainly imports high quality polyester yarn (used in the automotive industry), so when the import tax rate from China increases sharply, US companies are looking for alternatives from the market. Other schools.
According to Hoa, currently in Vietnam, only a few enterprises such as Century Fiber can meet the requirements of this type of fiber. Although the volume of consumption is not much, but due to high technical requirements, the price of this yarn is quite good.
Century Fiber is working with companies specializing in importing yarn into the US market to promote export to this market.
In recent years, the textile and dyeing industry in Vietnam has made positive changes. In the first eight months of 2018, the total value of textile exports in Vietnam reached about 1.09 billion USD, mainly to Southeast Asian countries.
Chinese fabrics and fibers are subject to additional taxation, Hoa said, opening up opportunities for Vietnam’s fabric industry, indirectly boosting demand for yarn in the domestic market.
Tran Nhan Tung, member of the Board of Directors of Thanh Cong Textile Garment Investment Trading Joint Stock Company (TCM), said that in theory, the application of import tax from China to the US helps textile and garment Vietnam benefit. For TCM, factories are running at full capacity.
The company is planning to increase the capacity of fabric (increase 20-25% of current capacity) and garment (increase 3 million products / year, equivalent to 10%). As for fiber products, TCM has no plans to increase capacity, mainly to meet the production needs of the company.
From the perspective of Mr. Nguyen Hong Giang, vice president of the Vietnam Cotton Association (VCOSA), the shift of production, orders for garments to countries with capacity as Vietnam naturally takes place.
However, it is not excluded that foreign manufacturers, most of which are Chinese enterprises, will set up production chains from yarns and garments in Vietnam to avoid the effect of trade sanctions. of America.
In this case, Vietnamese local firms are not benefiting much. If they only set up yarn-cloth, it would be better for Vietnamese businesses. Because most domestic enterprises now have only strength and experience in sewing.
Accordingly, in order for the Vietnamese garment enterprises to enjoy real benefits, they have to wait for the tax on Chinese garments.
Stand in front of the boom
In a statement released on Aug. 17, 1868, President Trump warned that it will continue to impose additional tariffs on China’s $ 267 billion package of goods if China retaliates and levies on agricultural products. or other US industry. The $ 267 billion package will include garments.
The American Textile Association (NCTO) also proposed to the government the additional tax on garments originating in China, which accounts for 93.5 percent of China’s total textile imports. to the United States (the total value of garment imports from China in 2017 is $ 27 billion).
According to NCTO, the additional tax on garments will have a deeper impact on China, as it affects the yarn industry, textile (raw material supply), as well as Chinese employment. labor-intensive.
NCTO said that the United States will find supplies of garments from other countries in the Western hemisphere that have signed US free trade agreements (mainly countries in the Americas such as Mexico, Honduras, Elsalvado , Nicaragua, Guatelama and Peru).
According to OTEXA figures, total US apparel imports from these countries in 2017 are about $ 13.3 billion.
Giang emphasized that Vietnamese enterprises and FDI enterprises would benefit if this happened. In particular, FDI enterprises have the advantage of closed supply chain, close and traditional relationship with major brands and buyers in the US market.
Meanwhile, Le Quang Hung, Chairman of the Board of Directors of Saigon Garment Manufacturing (GMC)