The failure to invest in raw materials is the biggest weakness of Vietnam's textile industry. When CPTPP and EVFTA come into effect, the textile industry will gain benefits from entering multiple potential markets, but at the same time, it faces strict requirements of "rules of origin" in various free trade agreements. This is a problem for textile manufacturers in Vietnam.
According to the report of the ministry of industry and commerce, in the first nine months of this year, the export volume of textile products and clothing reached 22.5 billion us dollars and 60 million us dollars. Fabrics reached about $9.93 billion, up 13.5 percent. Yarn and fiber amounted to about $1.78 billion, up 34.6 percent.
Bottlenecks in production processes
Exports are high, but raw materials are still almost dependent on imports, which is a problem for many textile and clothing companies when they take the initiative in production and marketing. As Chen guoqing, vice minister of commerce and industry, said at the opening ceremony of baoming textile co., LTD., the department is expected to export $35 billion in 2018, but the headache is that we have yarn, garment exports are high, but no fabric.
The opportunities for the textile industry will be great, especially when the new free-trade agreements, such as the vietnam-eu free trade agreement (EVFTA) and the comprehensive and progressive trans-pacific partnership (CPTPP), come into force at the end of December. Once the tax rate is zero, the CPTPP will help Vietnam's textile industry expand its market share in some high-tariff countries such as Canada, New Zealand and Australia. However, these two agreements are the most stringent rules of origin. Among them, the rules of origin of yarn by CPTPP and the requirements of origin of fabric by EVFTA are made. This fact has brought many obstacles to the textile industry in Vietnam, as yarn, textile - dyeing - finishing is the bottleneck of the industry.
Fan bisheng, a senior researcher at the ministry of industry and commerce, believes that to develop the clothing capacity of the whole department, 6 billion meters of fabrics are needed every year. However, the textile sector has long been able to supply only 800 million meters, and the remaining 5.2 billion meters have to be imported. It is worth mentioning that the domestic production of 800 million meters has not met the fabric quality, structure of the garment demand, especially the lack of high-quality fabrics to produce special orders. Therefore, in fact, the department still needs to import nearly 70% of garment accessories, and even some enterprises import more than 90% to meet their production demand.
Solve bottleneck problems
To resolve the bottleneck, Vietnam textile and clothing association has developed specific action plans, such as calling on domestic and foreign investors to invest in the supply side that is still in short supply, said wu dejiang, President of the association. In the first eight months of this year, FDI in Vietnam's textile industry reached an attractive figure of more than $2 billion.
At the same time, the association also called for investment in high value-added products. Most countries and regions, such as eu member states, the United States, South Korea, Japan, Thailand and Hong Kong, have invested in the supply source of Vietnam's shortage. German Oman group invested in the embroidery factory project in guangnan province. An Italian group invested in knitted fabrics in xingan province. Israeli factories in pingding province invested in yarn, textile, printing and dyeing.
Not only foreign enterprises but also domestic enterprises have begun to invest heavily in textile, dyeing and finishing to make full use of the advantages of free trade agreements. Rich international companies for denim, khaki products for the process of fabric softening investment 4.0 technology. The laser design machine can replace 60 workers.
Or the recently opened baoming textile factory in nanding province to operate a completely closed, automatic production chain aimed at catching up with free trade agreements. The factory produces 600 tons of yarn and 2 million meters of woven fabric per month, and has the capacity to complete 3 million meters, according to Chen dengxin, chief executive of baoming. All of its production lines are the latest equipment from the world's leading factories to make full use of competitive advantages when exporting to all of Vietnam's trading partners, including the United States.
It is worth mentioning that the factory is located in the baoming industrial zone, which is regarded as the leading ecological industrial zone in the north, and has advanced technology of concentrated waste water treatment system, which ensures that all the treated waste water reaches the first level before being discharged to the environment and is monitored and managed around the clock.
Chairman wudejiang said he believed that the supply source of shortage would be filled by 2025, ensuring the sustainable development of the whole sector.