Textile & garment manufacturers pessimistic about 2017

Textile & garment manufacturers pessimistic about 2017

VietNamNet Bridge – Export growth has been slowing down for textile and garment firms, but the industry has not made a decision to target the domestic market.

Le Tien Truong, general director of Vinatex, the largest domestic textile & garment group,,said 2016 was a very tough year for the industry.

“The growth rate of the industry was 5.2 percent, the lowest rate since 2008 with export turnover of $28.3 billion, or $1.7 billion lower than planned in early 2016,” he said.

Export growth has been slowing down for textile and garment firms, but the industry has not made a decision to target the domestic market.

Truong said this was a problem that all textile & garment exporters are facing as demand from import markets has decreased.

The demand from the US, for example, fell by 4.5 percent, Japan 1 percent, South Korea 4 percent. The EU is the only market which saw growth rate of 5 percent. This led to a sharp decline in export turnover of four out of the seven biggest export countries.

China, for example, saw the turnover down by 4.5 percent, India 5 percent, Indonesia 5.4 percent and Pakistan 4 percent.

Turkey’s export turnover remained unchanged. Only Bangladesh and Vietnam saw the turnover increasing by 4.8 percent and 5.2 percent, respectively.

As such, Vietnam has the highest growth rate among the seven biggest exporters.

Also according to Truong, Vietnam still has high competitiveness which helps attract more customers. However, because of that reason, Vietnam has become the key rival for the other six competitors.

These countries approach clients with Vietnamese business characteristics and offers, but at lower prices,” he said.

Truong doesn’t think the market would be brighter in 2017.

Bizlive also reported that 2016 was a gloomy year for textile & garment companies as the companies’ shares plummeted in prices, losing up to 50 percent of value. The information about the possible failure of TPP really disappointed investors who are holding textile & garment shares and they tried to sell them away.

Vietnamese textile & garment companies have been advised to return to the domestic market once demand from import countries decreases. However, Truong cannot see any bright prospects in the market.

“The Vietnamese domestic market is valued at $4.5 billion, while the total production capacity of all enterprises is $35 billion,” Truong said.

Other big textile & garment export countries have domestic markets equal to or bigger than export markets.

China, for example, has a domestic market worth $270 billion and export market worth $260 billion. Meanwhile, India’s domestic market is three times larger than export market.

“Vietnam is different from India, China and Malaysia,” he said, adding that Vinatex still strives to export 90 percent of its products.