According to Vietnam’s “Investment News” report on August 4, Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association, said that due to the severe impact of the new crown epidemic, Vietnam’s textile and apparel industry is facing severe challenges. In the southern region where the epidemic is most severe, a large number of textile and garment companies have suspended production. After many companies implemented the “three locals” (local production, local dining, local accommodation) model for a period of time, they were unable to persist because the cost of maintaining production was too high, production efficiency was low, and workers had to be arranged for food and accommodation. The pressure was so great that many factories were forced to suspend production. Some companies’ 19 factories were forced to suspend production completely because they were unable to implement the “three local policies.” Currently, only spinning, weaving, and printing and dyeing enterprises can maintain the “three local” model. The common feature of these enterprises is that they use a large amount of machinery and equipment, employ less labor, and it is relatively easy to arrange for workers to have on-site accommodation and meals. However, clothing production enterprises employ a large amount of labor, and some enterprises have tens of thousands of employees. It is not feasible to implement the “three local” model.
Wu Dejiang said that textile and garment companies in the southern region are generally facing delivery pressure. Clothing production belongs to the fashion industry, and if it cannot be delivered on time, the clothing design will lose its fashion value. At present, demand from major clothing importing countries such as the United States and Europe is picking up rapidly. Order volume has increased by 16-17% year-on-year, and some varieties have increased by 30%. However, if Vietnamese companies cannot deliver goods on time, they will face the risk of breach of contract penalties and breach of trust, which will also lead to orders drain. Vietnam accounts for 30-40% of global exports of brands such as Nike and Adidas, and is currently facing the risk of losing share.
Vietnam’s Ministry of Industry and Trade stated that a large number of enterprises in southern Vietnam have suspended operations and production, which has caused a slowdown in industrial production in relevant provinces and cities. In July, Ho Chi Minh City’s industrial production index fell by 19.4% year-on-year. , Long An Province dropped by 14.6%, and Ca Mau Province dropped by 13.7%. While enterprises in the south are facing severe difficulties, the epidemic situation in the north has been alleviated. Enterprises in Bac Giang and Bac Ninh provinces are resuming production, but the return rate of workers is only 80% at the highest. Since the outbreak of the fourth wave of the epidemic, many workers have returned to their hometowns to avoid the epidemic, and it is unlikely that they will return to the factory in the future. The Vietnam Textile and Garment Association believes that even if the epidemic is controlled in the future and provinces and cities reopen, the return rate of workers is expected to be only 60-65%. When the supply chain breaks and Vietnam is no longer a stable market, customers will transfer orders to other countries, which will seriously affect the mid- and long-term development of the textile and apparel industry. </p
