According to the “Customs News” report on November 20, the General Administration of Customs of Vietnam recently announced that as of the end of October, Vietnam’s total imports reached US$210.3 billion, a slight increase of 0.3% year-on-year, equivalent to a net increase of US$661 million.
In the first 10 months, the commodities with large import volumes include: electronic parts, service production, textiles and clothing and raw materials for footwear, as well as machinery and equipment. Among them, the import value of electronic products and parts reached US$51.27 billion, a year-on-year increase of 20.2%, equivalent to a net increase of US$8.61 billion.
The import volume of machinery, equipment, tools and accessories was US$29.77 billion, a year-on-year decrease of 0.6%, but still ranked second. China is the largest import market for such goods, with imports reaching US$13.14 billion, a year-on-year increase of 10%. South Korea followed, with US$4.9 billion, a decrease of 4.1%; Japan ranked third, with US$3.7 billion, a decrease of 6%.
The import volume of textile and clothing raw materials (including cotton, textile fibers and yarns, various types of cloth, and accessories for textiles, clothing, leather and footwear, etc.) reached US$15.46 billion, a year-on-year decrease of 13.5%, net A reduction of US$2.7 billion. China remains the largest import market, accounting for 50% of total imports despite an 8% decline.
Vietnam’s textile and apparel companies still face a domestic shortage of 8 billion meters of fabric
Vietnam’s fabric production is underdeveloped, making it difficult for textile and apparel companies to import products from countries including the EU Earn sufficient benefits from free trade agreements including the Vietnam Free Trade Agreement (EVFTA). The domestic fabric industry produces approximately 2.3 billion meters of fabric annually, meeting only a quarter of the country’s needs.
Vietnam has imported more than 7 billion meters of fabrics from China, Taiwan, and South Korea for production and export. The textile and apparel industry exports nearly $40 billion worth of products annually and requires approximately 10 billion meters of fabric annually.
According to data from the Ministry of Industry and Trade, domestic materials used by Vietnamese textile and garment enterprises only account for 40-45% of all materials. In 2019, Vietnam imported approximately US$13 billion worth of fabrics for the textile and apparel industry. A report in a Vietnamese newspaper said the amount of fabric produced in the country is often used to make low- to medium-quality clothing and often does not meet exporters’ requirements.
According to Industry and Trade Minister Tran Tuan Anh, the country’s cotton, fiber and dye production cannot meet the needs of the textile and garment industry. There is a lack of sufficient attention to dyeing technology and environmental protection to develop the textile dyeing industry, so companies are reluctant to invest in textile production or form clothing design start-ups.
Vietnam’s textile and garment industry is mainly concentrated in manufacturing, with low added value. Truong Van Cam, vice chairman of the Vietnam Textile and Apparel Association, said that due to the lack of fabrics, the FTA’s rules of origin make it more difficult for companies to capitalize on their value. Investment in fabric production faces challenges, including lack of capital and expensive technology. As a result, while exports from the textile and apparel industry have increased over the years, imports of fabric materials have also increased. According to the association, the industry requires an investment of approximately $30 billion to produce the remaining 8 billion meters of fabric.
Encountered export difficulties and the import of raw and auxiliary materials from China was interrupted
Vietnam’s textile and garment industry has been hardest hit by the epidemic
Vietnam’s “Industrial and Trade Electronic News” recently reported that Vietnam’s textile and apparel exports in the first 10 months are expected to be US$24.76 billion, a year-on-year decrease of 9.3%. Full-year exports are expected to be US$33-35 billion, down 10% year-on-year. Even though the textile and apparel export market is recovering, it is still difficult to achieve the goals set at the beginning of the year.
The textile and garment industry is the industry most severely affected by the COVID-19 epidemic in Vietnam. The Vietnam Textile and Apparel Association stated that the new crown epidemic has caused export difficulties to Vietnam’s textile industry and a double blow of interruption of imports of raw materials and auxiliary materials from China.
Now, according to Vietnamese media reports, export orders in several major fields such as Vietnam’s textiles, garments, footwear, and electronics are gradually recovering, and are expected to make up for this year’s sharp drop in exports. According to IHS Markit, a business information analysis and provision company, Vietnam’s Purchasing Managers Index (PMI) reached 51.8 in October, lower than 52.2 in September, but this is a major improvement in the production field for two consecutive months.
Andrew Huck, economic director of IHS Markit, said that the recently released Purchasing Managers Index proves that as long as our country does a good job in epidemic prevention and control in the past, the production field will be on a solid foundation in the last quarter of this year. The curtain has been lifted, and optimism will continue.
According to statistical data, my country’s success in preventing and controlling the epidemic has led to an increase in customer demand. As a result, new orders increased in the second month, and production increased accordingly.
Orders have returned, but the quantity is not large because importers are still cautious and market purchasing power is still weak because Vietnam’s main import market is affected by the epidemic.
In addition, the epidemic has caused payments to slow down, so export companies face more risks. Ruan Zhizhong, chairman of Jiading Group Co., Ltd., said that before the outbreak, it only took 60 days from delivery to payment. However, after the epidemic spread, the payment time was extended, causing the company to encounter difficulties in capital turnover. Chairman Ruan Zhizhong said: “Customer payments are slow, so the company has encountered many difficulties. The epidemic has greatly affected the company’s financial ability.”
Century Fiber Co., Ltd. is aA large company that exports fiber has tried hard but it is inevitable that it will decline. In the first three quarters of this year, the company’s net sales revenue reached nearly 1,197 billion VND, and its net profit reached 75 billion VND, down 28% and 53% year-on-year. Representatives of the company believe that the company’s operations have been affected because the epidemic has reduced demand for textiles and garments.
This year, the company’s planned targets are total turnover of 1,798 billion VND and after-tax profit of 130.5 billion VND, equivalent to 80.7% and 60.8% of last year respectively. In other words, the company’s turnover in the first nine months of this year only reached nearly 67% of the annual plan target, and its profit reached nearly 58%. </p