Alongside capturing the opportunity of increased export orders, wood and textile export companies are making great efforts to stabilize and prolong this growth.
Positive signals returning
In the latest information on the business activities of the Ho Chi Minh City Department of Industry and Trade in the first quarter of 2024, Mr. Bui Ta Hoang Vu, Director of the Department, shared the good news that many wood and textile companies have received orders until the middle of the year. In particular, some companies have stable orders until the end of the year.
Tran Ngoc Liem, Director of the Vietnam Chamber of Commerce and Industry (VCCI) – Ho Chi Minh City Branch, also stated that wood exports are growing strongly with many signs of good recovery. Wood exports and wood products in January 2024 reached nearly $1.5 billion, an increase of over 70% compared to the same period last year.
New emerging markets with good export growth include India with an increase of 288%, Peru with an increase of 111%, Turkey with an increase of 90%, Norway with an increase of 52%, Cambodia with an increase of 45%, China with an increase of 7%…
After a period of production contraction, and even closure due to a lack of orders, some companies have enough export contracts for the entire year of 2024. Mr. Le Ha Trong Chau, representative of Duc Thien Co., Ltd., said that the company’s export orders are sufficient until the end of June 2024. The company’s main wood product export market is the United States, with 10-15 containers per month and revenue ranging from 1-1.2 million USD.
Minh Phat 2 Co., Ltd. has export orders until the end of the first quarter of 2024. Saigon Sadaco Development and Trading Joint Stock Company is also stable in traditional export orders to the United States and Europe…
According to Tran Quoc Manh, Vice President of the Vietnam Handicraft and Art Articles Export Association, inflation in two important markets, the United States and Europe, has decreased, and supply and demand have balanced again. There is a high possibility that these two markets will increase their strong import pace starting from the third quarter of 2024. In 2024, the wood industry aims to achieve $17.5 billion in wood and wood product exports.
Textile and garment companies are making efforts to accelerate export growth. Photo: THANH NHAN
In the textile and garment industry, thanks to stable orders and customers, some companies have made large profits in the first month of 2024. For example, TNG Investment and Trading Joint Stock Company made a post-tax profit of over 15 billion VND in January 2024, three times higher than the same period last year. Since the beginning of 2024, TNG has signed garment export orders with many partners such as Decathlon, Columbia, The Children’s Place, Sportmaster, Costco, Nike, Adidas…
Pham Xuan Hong, Chairman of May Saigon 3 Company, Chairman of the Garment Embroidery and Knitting Association of Ho Chi Minh City (Agtex), confirmed that some textile and garment companies in Ho Chi Minh City have orders until the end of the year. “After the lunar new year, companies have made every effort to have orders to ensure employment for workers while seeking new orders and customers. Hopefully, the situation will be even more positive in the second quarter of 2024,” Mr. Hong expressed.
Vietnam Textile and Apparel Association (Vitas) Chairman Vu Duc Giang informed that in the first two months of 2024, textile and garment exports to markets such as the United States, Japan, South Korea, Africa, and the Middle East have seen better growth; only the European market has seen modest growth.
“The purchasing power is showing signs of recovery in many countries, and inventory levels have decreased. In addition, import duties in some markets have been reduced according to the schedule of new-generation free trade agreements (FTAs),” said Mr. Giang, giving the basis for the recovery of textile and garment exports.
Despite the positive signals at the beginning of the year, many companies view it as unsustainable. They are making efforts to expand into new markets and diversify sales channels to meet the annual targets.
“Exporting wood products is going well, but the market is still challenging. Orders have returned, but many customers require more product samples, higher requirements, smaller orders, and not high prices.
Customers themselves are also exploring new markets and finding products suitable for the target market,” analyzed Tran Quoc Manh. According to him, companies need to be flexible in adapting to the new situation and have a suitable production and business strategy.
From the experience of his company, Dinh Quang Hiep, General Director of Minh Phat 2 Co., Ltd., said that companies should focus on key markets such as the United States, Europe, Japan, South Korea, and emerging markets like China. “Vietnam and the United States have signed a comprehensive strategic partnership agreement. Companies should take advantage of this opportunity to approach US importers,” Mr. Hiep suggested.
Vitas Chairman predicts that textile and garment exports this year have good prospects thanks to three main pillars: 16 FTAs that Vietnam has signed, Vietnam actively obtaining some domestic raw materials, and companies diversifying markets, customers, and products. Before 2021-2022, the Vietnamese textile and garment industry exported to 82 markets; by 2023, it exported to 104 markets, and this year it can explore another 2-3 niche markets.
“Companies no longer rely heavily on a few large customers but instead exploit medium-sized and small customers. In addition, companies produce various types of products instead of specializing as before,” cited Mr. Vu Duc Giang.
From the perspective of state management agencies, Le Hoang Tai, Deputy Director of the Trade Promotion Agency – Ministry of Industry and Trade, perceives that in this period, opening channels for companies to access orders is essential. According to him, manufacturers and supply chains continue to choose Vietnam as a production and ordering location, showing that Vietnam has certain strengths in the textile and garment sector.
Tai believes that opportunities will increase for companies that can take advantage of all the advantages to restore export capacity, maximize the exploitation of distribution chains and supply chains to enhance exports towards order diversification and finding smaller orders…
Strong determination is required
According to Le Hoang Tai, many international textile and garment manufacturers have expanded or are expanding operations in Vietnam, coupled with Vietnam being a member of 16 FTAs, continuing to be favorable platforms for the development of the textile and garment industry in the coming time.
