Apparel / Textiles & Accessories

According to the Huacheng Import and Export Data Observation Report, due to the high global inflation, weak consumption, and the rapid decline in the purchasing power of consumers in Europe, the export orders received by Vietnam in the first half of this year, which was originally hot, fell sharply.

Vietnam's manufacturing industry has experienced massive unemployment

According to the Huacheng Import and Export Data Observation Report, as an export-oriented economy, Vietnam's local manufacturing industry continues to suffer the chill from the European and American markets.

According to the Vietnam Federation of Workers, since September, more than 1200 export companies have cut their working hours or been forced to lay off workers. These companies are mainly engaged in manufacturing and exporting clothing, footwear and furniture industries.

According to the data of the trade union, compared with last year, export orders from the United States have dropped by 30-40% this year, while orders from Europe have dropped by 60%.

According to Huacheng Import and Export Data Observation, since September, more than 470000 workers' working hours have been cut, while about 40000 workers have been laid off, of which 30000 are women.

The workers told the media that it was worse than the worst period of the COVID-19 epidemic. At that time, they could get food donations from the government at home. After the COVID-19 quarantine policy was released at the end of 2021, the surge in export demand brought a lot of work.

Nguyen Thi Thom, a local worker producing clothes for Wal Mart, sighed that he could quickly find a new job after the pandemic, but it was not easy to find a job now, as it was then.

According to the observation report of Huacheng import and export data, Vietnam's manufacturing PMI fell rapidly to 47.4 in November from 50.6 in October, the first time in 14 months that it was lower than the 50 rise and fall line.

In addition, the sales price of Vietnam's export products has fallen for the first time since August 2020, which means that Vietnam's manufacturing industry is facing a double blow of falling prices of finished products while rising costs, and profit margins are further squeezed.

Decline of Indonesian textile industry

May last until 2023

Indonesia, also located in Southeast Asia, is not optimistic about the development of its textile industry this year.

From September to October 2022, the export performance of Indonesia's textile industry declined by 30% compared with the same period in 2021, and the decline is likely to last until 2023.

According to the Indonesian Textile Association (API), Indonesian textile companies have laid off 45000 employees, and some companies have reduced the operating hours of their factories to reduce costs. The Indonesian Employers Association (APINDO) has proposed to the government to strengthen industrial policies, or take trade remedies and other measures to protect domestic industries.

The recent decline of Indonesia's textile industry is affected by many factors, including the sharp drop in demand in Europe and the United States, and the purchasing power of Indonesia's domestic demand is not yet stable;

The textile industry believes that Indonesia is full of imported products, which affects the sales performance of domestic products; Indonesian textile industry still relies on imported raw materials; The price of electricity for production in Indonesia is less competitive than Vietnam and Bangladesh.

Another important factor is that Indonesia's textile industry still relies on imported raw materials. In 2021, for example, Indonesia's cotton imports amounted to 1.86 billion US dollars, but its textile exports amounted to only 860 million US dollars. The recent international inflation and the devaluation of the Indonesian rupiah against the US dollar have led to an increase in the cost of imported raw materials for the Indonesian textile industry.

For a long time, the textile and clothing industry has played an important role in the economic development of Southeast Asian countries. However, the recent expectations of the International Textile Federation are not optimistic about the future.

According to the seventeenth survey of the International Textile Federation (ITMF), the average business situation of the global textile industry in November 2022 is becoming worse. At the same time, the global textile industry's expectations for the next six months are still negative, but they have not declined further. The index of new orders, the index of outstanding orders and the operating rate decreased worldwide.

The survey shows that the textile business in three Asian regions and Europe is still very poor. Business in North and Central America has recovered significantly. Except for the textile machinery business, which continues to enjoy a large number of undelivered orders in general, all other textile businesses are in a negative situation, especially fiber manufacturers and yarn manufacturers.

The global textile business is still expected to be negative, but it has remained at - 10 percentage points since July. The business expectation in South Asia has improved significantly, reaching+10 percentage points, and that in Europe is - 30 percentage points. All categories of textile business are still expected to be negative, and four of the seven categories show signs of improvement. Huacheng Import and Export Data Observation reported.

In November, the index of new textile orders fell, reflecting the fact that the textile business continued to decline and demand continued to decline. Only in North America and Central America, the overall order situation is good, while in all other regions, the order situation is not ideal.

Weakening demand is the biggest problem in the global textile industry at present, followed by the root cause of the decline in demand, that is, high energy prices and raw material prices lead to high inflation. The good news is that the cost of logistics and transportation is no longer a worrying problem, but the geopolitical problem has worsened in the past two months.