Many garment businesses have received long-term orders until the fourth quarter. (Photo: Duc Duy/Vietnam+)
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2024 continues to be a year of complexities and challenges, with potential risks from the global political and economic environment negatively impacting Vietnam’s economic recovery prospects.
However, despite these difficulties, Vietnam’s garment exports in the first half of 2024 reached approximately $16.28 billion, a 3.1% increase compared to the same period last year.
Mr. Cao Huu Hieu, CEO of the Vietnam Textile and Apparel Association (Vitas), assessed that the garment industry in 2024 has brighter prospects than in 2023. Notably, all laborers in the industry have maintained their employment and income levels from last year. This is excellent news as it means that when there are market opportunities, businesses can immediately mobilize their workforce to seize those opportunities and retain their customers.
– Could you highlight some of the prominent aspects of the garment industry’s performance in the first half of 2024?
Mr. Cao Huu Hieu: In 2023, for the first time in 30 years, the industry experienced an 11.3% decline in export turnover, reaching $39.6 billion. Vitas was not immune to this downward trend. However, the market conditions improved at the beginning of 2024. The garment sector, compared to the same period in 2023, has seen more positive developments in terms of order volume and duration, although prices have not increased yet.
Following the challenges of 2023, suppliers had to adjust to new price levels, and despite the ongoing difficulties, this is still a very positive development. Currently, most of the garment companies in Vitas have orders until September-October and are negotiating orders for subsequent months. In the meantime, the fiber sector has shown improvement in absolute value terms during the first six months, but efficiency remains an issue. This means that while losses have decreased by 70-80% compared to the same period last year, the sector is still making losses.
– Based on these results and the recently released socio-economic figures, what is your outlook for the garment industry in the remaining months of 2024?
Mr. Cao Huu Hieu: In 2024, the garment sector is facing less difficulty in obtaining orders compared to the previous year, with orders secured until September and October and longer negotiation periods. However, prices remain a challenge due to the significant reductions seen in 2022 and 2023, which were caused by various factors, including a 20% decrease in prices and even a 50% drop for certain product codes compared to pre-pandemic levels. There were instances where businesses with thousands of workers had to accept orders for only a few thousand units due to the scarcity of orders.
In reality, the extremely low prices set in 2022 and 2023 had to be accepted, but this does not mean that businesses have to operate at a loss. Instead, they need to focus on efficient management, increasing productivity, and reducing costs to achieve the best possible outcomes.
– How might the new socio-economic factors influence the garment industry in the latter part of the year?
Mr. Cao Huu Hieu: Negotiations for orders in the fourth quarter of 2024 primarily focus on price increases. Nonetheless, there are several factors that could impact the operations of businesses in the coming months. For instance, the minimum wage increase took effect on July 1st, logistics costs have been on the rise since the fourth quarter of 2023 and continued through the first half of 2024, and the conflict in the Red Sea region has led to occasional delays in cotton imports.
Businesses are seizing market opportunities to boost production, business, and exports. (Photo: Duc Duy/Vietnam+)
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Therefore, it is challenging to make predictions for the last months of 2024 due to the rapidly changing market dynamics and geopolitical conflicts in various regions. However, based on the results achieved so far, it is projected that Vietnam’s garment industry will achieve an 8-10% increase in export turnover compared to 2023.
Typically, garment orders increase significantly in the third and fourth quarters. For Vitas, the 5% revenue growth in the first half of the year is a positive signal from the market, especially for the fiber sector. The production and business results in the remaining six months are expected to exceed initial expectations.
– Recently, Vitas partnered with Coacho Group to produce flame-retardant fabric. What are your expectations for the business outcomes of this new product for Vitas?
Mr. Cao Huu Hieu: In the first six months, Vitas successfully collaborated with the UK-based Coacho Group to produce flame-retardant fabric, and the first exports to the US are scheduled for July. This is part of Vitas’ strategy to venture into a niche and specialized segment of flame-resistant and flame-retardant fabrics. These products have a high demand but also require stringent technical specifications. We are also exploring the development of specialized clothing for rescue and firefighting personnel. This program is extensive and long-term, requiring significant investment.
In July, Vitas will launch its Product Development Center, which has been equipped with modern and advanced technology. The center’s focus is on FOB products (where we manage the raw materials and production process), aligning with the strategic development of the knitting industry that has been outlined for the period up to 2025.
Currently, Vitas has a complete supply chain, including yarn, dyeing, and garment manufacturing. We aim to establish a Vietnamese brand in design, offering a comprehensive package to our customers, from design to raw materials and production. This center was established in 2023 and will become operational in July, marking a significant milestone in Vitas’ production and business activities./.
Duc Duy
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