Apparel / Textiles & Accessories

Recently, Vietnam’s "Investor News" published an article: Despite the continuous raging impact of the new crown epidemic, Vietnam’s textile industry, leather luggage and footwear industry, and wood products industry are still growing positively, contributing nearly 55 billion U.S. dollars in exports to Vietnam as a whole. .

Since the outbreak of the fourth wave of the new crown epidemic in Vietnam on April 27, 2021, three industries have been severely affected by the new crown epidemic. They are the textile industry, the leather luggage and footwear industry, and the wood products industry. However, in the first nine months of 2021, these three industries still brought nearly 55 billion U.S. dollars in exports to Vietnam.

Statistics from the General Administration of Customs of Vietnam show that in September 2021, the export value of Vietnamese textiles was only 2.28 billion U.S. dollars, a decrease of 377 million U.S. dollars compared with August 2021; and a decrease of 855 million U.S. dollars compared with July 2021. This is the second consecutive month of negative growth in the Vietnamese textile industry; it is also the month with the second lowest export value in the first nine months of this year (the lowest is February 2021, which is affected by the relatively long holiday).

As of the third quarter of 2021, the export value of Vietnam's textile industry was US$23.41 billion, an increase of 5.6% over the same period in 2020, and the increase was US$1.23 billion. Among them, the value of textile exports to the United States was 11.62 billion U.S. dollars, an increase of 11.1%; the value of exports to the EU market was 2.75 billion U.S. dollars, an increase of 2.4%; the value of exports to the Japanese market was 2.28 billion U.S. dollars, a decrease of 11.6%. An important reason for the export growth of Vietnam's textile industry is the export of yarn. In the first nine months of 2021, Vietnam’s yarn exports amounted to US$4.1 billion, an increase of 60.2% over the same period last year. The export of various fabrics was nearly 600 million U.S. dollars, an increase of 83.4% over the same period last year.

Nearly 70% of textile, leather and footwear companies in Vietnam were fined for breach of contract

Recently, representatives of the Vietnam Textile and Apparel Association (Vitas) and the Vietnam Leather, Footwear and Bags Association (Lefaso) stated in a symposium on “Joining Hands to Promote the Sustainable Recovery of the Textile and Leather Footwear Industry” that nearly 70% of Vietnam’s textile, leather, and Footwear companies were punished by their partners' contracts for delayed delivery, and many orders were also transferred.

Vitas, Lefaso and the Public-Private Partnership (PPP) conducted a quick survey on the "health" of companies in the textile, leather and footwear industry in September. Nearly half of the textile, leather and footwear companies that participated in the survey said that due to each extended implementation of social distancing and increased transportation and logistics costs, shipping time has doubled (it takes 80 days for goods to travel from Asia to the United States, compared to 40 days before) , So delivery was delayed. This resulted in over 68% of brand delays in delivery, and companies were punished for breach of contract. More than 12% of the brands have cancelled orders and were asked for compensation, and about 21% of the brands voluntarily canceled their orders without compensation. After some companies negotiated with their partners to extend the delivery time, they had to switch to very expensive air transportation.

Zhang Wenjin, vice chairman of the Vietnam Textile and Apparel Association, said: "The two industries of textiles, leather and footwear have never faced such severe risks as supply chain disruption and labor shortages."

In addition, according to "Vietnam News", the Vietnam Textile and Apparel Association (Vitas) stated that affected by the epidemic, the Vietnamese textile and apparel industry may not be able to achieve its production and business goals. The association believes that the last three months of this year is an extremely difficult period for the textile industry. Among them, the biggest risk is the interruption of the supply chain caused by customers transferring orders to other markets. Secondly, due to the large number of workers returning to their hometowns to avoid the epidemic, there is a labor shortage. Therefore, it is difficult for the industry to reach the annual export target of 39 billion U.S. dollars, which is the same as in 2019 before the epidemic.

Textile and garment enterprises "difficulties are even more difficult"

Or suffer a shutdown crisis due to labor shortages

Since the outbreak of the fourth wave of new crown pneumonia, many textile and apparel companies in Vietnam have been in a situation of "difficulties even more difficult", and even faced the risk of bankruptcy due to forced closure or suspension of production. This led to increased inventories and stagnant production activities. When many workers returned to their hometowns due to the impact of the new crown pneumonia epidemic, the supply of labor was also affected.

There are still many orders from the first few months of this year, and the demand for production and operation from now to the end of the year is very large. However, if localities do not lift the blockade, travel restrictions, and implement measures to promote economic development as soon as possible, the goal of this year's textile and clothing industry exports reaching 39 billion US dollars will be difficult to achieve.

With the lifting of the months-long blockade in Ho Chi Minh City, Vietnam, thousands of factory workers chose to flee and return home at this moment. The large-scale exodus of workers has brought direct difficulties to Vietnam's economic recovery, and has made many multinational companies such as Nike and Apple "unavailable." According to statistics, Nike footwear production will drop by as much as 180 million pairs. Apple said that due to production problems in Vietnam, the release of its new iPhone 13 will be slow. Samsung was forced to close several factories in Vietnam.

The latest data released by the General Statistics Office of Vietnam shows that in the third quarter of this year, Vietnam’s GDP contracted by 6.1% year-on-year. This is the first quarterly decline that Vietnam has experienced since 2000.

On one side is the stagnant economy and factories, on the other side is the raging epidemic.

With the rampant delta variant, Vietnam has added nearly 770,000 new confirmed cases in the past three months, of which 19,000 have died from the new crown virus, and the deaths are basically concentrated in Ho Chi Minh City, where the manufacturing industry is developed. . According to the latest news from the Ministry of Health of Vietnam, from 17:00 on October 17 to 17:00 on 18th, 3168 new confirmed cases of new coronary pneumonia have been reported across Vietnam, including 9 imported cases and 3159 confirmed local cases (found in the community) There are 1261 cases).

According to the Economic and Commercial Office of the Embassy of the Socialist Republic of Vietnam: The textile and leather shoe industries are the two industries with the largest labor volume in Vietnam. The textile industry employs approximately 2 million workers and the leather shoe industry employs approximately 1.4 million. Nearly 1.5 million people are engaged in trade operations related to the textile and leather shoe industries. Since April 2021, the new crown pneumonia epidemic in Vietnam has continued to undergo complex changes. As a result, 28 provinces and cities have adopted different levels of isolation and blockade measures. Many textile and leather companies have suspended production or have been forced to reduce their production scales, and many employees are unemployed.

The results of a survey conducted by the Vietnam Labor Relations Research Center on 256 companies in the textile and leather shoe industries show that nearly 60% of workers have lost income due to intermittent work stoppages, 62% of workers have no financial resources due to continuous work stoppages, and 77% of workers have a negative mental state . At present, insufficient income and pandemic psychology have caused physical and mental exhaustion to employees of textile and leather shoe companies. Millions of workers have returned to their hometowns in Ho Chi Minh City, Binh Duong and Dong Nai. Suffered from a shutdown crisis due to labor shortages.