As the third pillar of Vietnam’s exports, the textile industry has always been a top priority for Vietnam’s development. According to Vietnamese statistics, in 2019, the United States and the European Union became the two largest buyers of Vietnamese textiles, with a share of 45% and 13% respectively. However, as the epidemic gradually worsens in Europe and the United States, the market for Vietnamese textiles in Europe and the United States has plummeted. Recently, there has been news of successive chargebacks for Vietnamese textile exports.
Vietnam’s textile industry has been hit by a series of suspensions of orders from the United States and France, or 20 million U.S. dollars of goods are facing unsalability
According to Vietnamese media reports, Truong Van Cam, vice chairman of the Vietnam Textile and Apparel Association (VITAS), revealed that recently , the European Union and the United States, the largest export destinations for Vietnam’s textile industry, have successively called to notify them to stop ordering products from Vietnam. According to Vietnam, due to a significant reduction in demand from the EU, Vietnam’s exports to the EU will decline by 8% in the first and second quarters of 2020.
Take TNG, a clothing manufacturer in Tai Nguyen Province, Vietnam, as an example. According to the company, a French company has canceled its clothing order with the company. In addition, its American buyers also informed that they would cancel or postpone their orders, and the cumulative number of these canceled or postponed orders is a staggering number. According to TNG statistics, the company’s containers with a total value of up to 20 million US dollars that were originally supposed to be shipped to the European Union and the United States are still stuck in Vietnam and cannot be exported.
Not only TNG, another Ho Chi Minh textile company in Vietnam that mainly focuses on exporting to the United States has also recently Received continuous stop-purchase calls from American buyers and stopped ordering for at least three weeks. In addition, Vietnamese companies are generally very worried. Many companies in Europe and the United States currently claim to be delaying orders, but as the epidemic develops, it is likely to evolve into stopping orders.
This has forced Vietnamese textile companies to consider reducing production lines, reducing employee working hours, and cutting employee wages to reduce costs in order to cope with the possible outbreak of large-scale refunds. event. This was unimaginable a month ago. At the beginning of March, Vietnam’s textile industry was still complacent. It had purchased enough textile raw materials from China to meet its production needs in March and April. Now, it has encountered a wave of order cancellations. It is true that misfortune never comes singly.
Just after solving the supply problem, the United States and France encountered order cancellations
Vietnam Textile’s US$42.5 billion target May fail
The successive suspension of orders by European and American companies has dealt a huge blow to Vietnam. According to Vietnam’s goal, Vietnam’s textile industry exports will reach US$42.5 billion in 2020. In fact, in the first two months of 2020, due to the increasing difficulty in purchasing Chinese raw materials, Vietnam’s textile and clothing exports did not achieve expected growth. Instead, they fell by 3.5% to only US$5.3 billion, which was far from the average monthly target of US$7.1 billion. , there is still quite a long way to go.
Vietnam is very dependent on China’s textile raw materials. According to Vietnamese statistics, in 2019, 60% and 55% of Vietnam’s imported fabric and fiber markets respectively came from China. At the end of February, China restored the supply of most raw materials, and the Vietnamese textile industry finally successfully obtained a large amount of raw materials exported by Chinese companies, which can roughly meet the production needs in March and April, and there is no need for the crisis of shutdown due to shortage of raw materials. Europe and the United States Other companies came to cancel orders again.
This makes it likely that Vietnam will not be able to complete the export target set for 2020. Because if Vietnam wants to successfully achieve this goal, the average export of the textile industry must be US$3.72 billion per month in the future. The current continuous cancellation of orders by European and American companies, as well as the possible cancellation of orders as the epidemic gradually worsens in the future, make it very difficult for Vietnam to successfully achieve its export target of US$42.5 billion. In fact, Vietnam’s export target of US$40 billion in 2019 has been missed, with the actual value being only US$39 billion.
The EU and the United States have not taken restrictive measures on Vietnamese textiles and clothing. According to the Vietnam News Agency: Vietnam’s Ministry of Industry and Trade Tran Tuan Anh stated at the meeting of the Vietnam Ministry of Industry and Trade’s COVID-19 Prevention and Control Steering Committee on March 20 that currently, EU and US authorities have not taken any restrictive measures on textiles and clothing from Vietnam.
Chen Junying said that the “closed” measures adopted by European countries have affected businesses. The main reason is that importers in this market have also been affected by the epidemic. At present, the EU and US authorities have not taken any measures against textiles and clothing from Vietnam. Restrictive measures. However, orders from the two major markets of the EU and the United States are being delayed and canceled, prompting relevant Vietnamese authorities to immediately formulate solutions to help companies reduce losses.
Xie Huangling, Director of the European and American Market Department of the Ministry of Industry and Trade, said that after receiving information from some partners in Europe and the United States that they would stop importing textiles and clothing from Vietnam,��The department has communicated with the EU Delegation to Vietnam and the US Embassy in Vietnam.
The representative of the EU Delegation to Vietnam stated that the EU’s border closure is only a quarantine measure to ensure people’s health and safety. Goods and services to the EU, especially necessities such as food and medicine, continue to flow normally as the measure does not directly affect the import and export of goods between Vietnam and the EU.
Xie Huangling believes that this measure will only affect personal and transportation activities, while trade activities will not be restricted. However, from an economic perspective, the impact on the circulation speed of transportation, customs clearance, warehousing, loading and unloading, and sales will also affect economic and trade and service activities.
On the other hand, goods exported to the EU by air are the most severely affected, because Vietnam currently exports 30% of goods by sea and 39% by air. Delays and cuts in various flights may affect the flow of goods.
Similarly, a representative of the U.S. Embassy in Vietnam also stated that the United States has not taken any measures to prevent Vietnamese goods from being exported to this market.
However, Xie Huangling believes that due to the impact of the new crown pneumonia epidemic, a series of retail systems in Europe and the United States have been closed. Therefore, non-essential products such as footwear and textiles will be affected.
Zhang Qinghuai, director of the Industrial Bureau of the Ministry of Industry and Trade, believes that the Import and Export Bureau needs to find new markets for the textile industry, especially to promote the export of textiles, clothing and footwear to China, South Korea and Japan after the epidemic is controlled.
Ruan Jinzhuang, deputy director of the Import and Export Bureau, said that next week, the department will hold working discussions with enterprises to help them resolve their difficulties.
The EU and the United States are Vietnam’s two main export markets. In 2019, Vietnam’s trade surplus with the EU market was nearly US$26.6 billion, of which exports worth billions of US dollars include textiles, footwear, agricultural products, machinery, etc. In 2019, Vietnam’s textile and apparel exports to the United States were nearly US$15 billion.
Data from the General Administration of Customs show that despite the impact of the COVID-19 epidemic, textile and apparel exports to the United States in the first two months of this year still reached approximately US$2.3 billion. </p
