Vietnam's reformed garment industry joins global supply chain

HANOI (Viet Nam News/Asia News Network) - The local garment industry has joined the processing stages of cutting and sewing in the global supply chain.

Vietnam’s local garment industry, which until now did not have much of a role to play, has revamped its production process to join the global supply chain, experts said.

Vu Duc Giang, chairman of the Viet Nam Textile and Apparel Association (Vitas), said the local garment industry has been one of the leading industries in export value but the industry has just joined the processing stages of cutting and sewing in the global supply chain.

The industry depends on imported material from abroad, especially from China, which accounts for 50 per cent of the material for the industry’s production, he said.

However, if the markets providing material for Vietnam’s garment industry showed any abnormal fluctuations it impacts the local industry adversely.

In addition, the local textile and garment sector has not seen much co-operation between manufacturers to create a production chain and a sustainable development strategy in the long term, he said.

Tran Thu Hien, director of Nha Be Garment Corporation’s branch in Hanoi, said Vietnam’s garment enterprises have focussed on developing only their strengths.

They have not paid attention to demand or the lack of raw materials and have not sought ways to ensure the supply of raw materials, and have instead depended on imports, she said.

The Nha Be Garment imports 70 per cent of its material for production while it sources 30 per cent of the material from the local market.

Truong Thi Thanh Ha, general director of Dong Xuan Knitting Ltd Company, said Vietnam requires 400,000 tonnes of cotton each year, but the local market has supplied 3,000 tonnes, and the remaining has to be imported from other countries.

Most of the machines, chemicals and textile dyes that Vietnam’s garment industry uses needs to be imported. That means the supply chain remains the weak point in Vietnam's garment sector.

Phan Chi Dung, head of the Light Industry Department under the Ministry of Industry and Trade, said the development of the world garment industry would result in the development of supply chain and e-commerce transactions.

These were challenges for the local garment sector so it must reform itself in future, he said. However, 21 per cent of small- and medium-sized enterprises (SMEs) in Vietnam have joined the global supply chain, which is lower than Thailand and Malaysia, where 30 per cent and 46 per cent, respectively, of its SMEs are part of the chain.

Vietnamese enterprises have joined the lowest stages of the supply chain of processing and supply of alternative parts but have not joined major production stages such as production of materials and design, he said.

Giang said that to increase added value of the garment industry, its enterprises must focus on developing production of material and changing production methods.

These solutions would improve the quality of exported textile and garment products and encourage co-operation among garment enterprises to create a domestic supply chain, he said.

Le Tien Truong, general director of the Viet Nam National Textile and Garment Group (Vinatex), said the local textile and garment firms should change its strategies in production and management and develop skilled workers to create favourable conditions for firms shifting the production modality from Cut-Make-and-Trim (CMT) to free-on-board (FOB) practice and Original Design Manufacturer (ODM), reported vietnamplus.

Vinatex has planned investments in a series of plants in central Ha Tinh province to form a competent production chain serving domestic and foreign markets.

At a total capital of nearly 1 trillion dong (US$45.14 million), four factories, wastewater treatment, and water supply centres will be built in the local Nam Hong industrial park, covering 19 hectares.

The construction of two sewing plants, Hong Linh 1 and 2, costing 190 billion dong ($8.6 million), will start in February 2016 and early 2017.

In late 2017, the Hong Linh plant for scarf weaving, with designed capacity of 1,500 tonnes per year, will be built under a 314-billion dong ($14.17 million) investment.

The last of the four is a factory for dyeing and knitting worth 410 billion dong ($18.5 million), which is capable of turning out 1,400 tonnes of products annually.

Vinatex has launched a drive to increase productivity which is vital when the country accelerates international integration.

(22,525 dong = US$1)

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  • VN’s reformed garment industry joins global supply chain

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