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27 Sep 2022


Vietnam: Garment, textile & footwear industries face order decline from US & EU

"Garment, textile, footwear industries face declining in orders", 27 September 2022

Enterprises in the textile, garment and footwear industries are facing a decrease in orders through the rest of this year and possibly into the next year.

Phạm Xuân Hồng, chairman of HCM City Textile and Embroidery Association, said in the eight months of 2022, Việt Nam's textile and garment export value reached US$30.1 billion, but this value mainly came from the first months of the year. Since July, textile and garment industry enterprises have been facing many difficulties, including the reduction in export orders.

Many textile and garment enterprises in HCM City are seeing a sharp drop in export orders, mainly in the US and EU, because inflation pressure in these nations is large, forcing consumers to tighten spending. Furthermore, textiles are not essential goods, Hồng said.

An analysis report on the textile industry published by VNDirect Research has also commented that the demand for high-end clothing items such as shirts and t-shirts made from recycled cotton fibres would slow down in the second half of 2022.

According to this report, garment companies said that US customers had shortened the period of ordering exports to three months before the deadline for goods delivery instead of six months due to high inventories and inflationary pressures. 

At present, only a few large enterprises, such as Thanh Cong (TCM), Century Yarn (STK), and Damsan Joint Stock Company (ADS), have enough export orders for the third quarter of 2022. Still, some customers have cancelled the orders due to high inventory, while fourth-quarter orders have also slowed due to inflation concerns.

In the EU market, Phạm Văn Việt, chairman of Việt Thắng Jean Co, Ltd, has also admitted that the orders of his firm have decreased by over 30 per cent and they have been forced to cut working hours to maintain jobs...

According to a representative of the Vietnam Leather, Footwear and Handbag Association, Vietnamese leather and footwear exports would certainly be affected by the last months of the year due to inflation and reduced consumer demand in key markets. Many enterprises in the leather and footwear industry would face a reduction in export orders from now until the beginning of 2023. Meanwhile, the leather and footwear industry is in inventory due to the reduced consumer demand.

To cope with this situation, the association said the footwear enterprises had been forced to reduce overtime. At the same time, they have negotiated with partners to do orders that were signed during the pandemic for maintaining operations and ensuring employee income...

The shortage of raw materials for production is due to strict anti-pandemic measures in the Chinese and Japanese markets. Along with that, the difficult economy and increasing inflation in the large markets have affected enterprises' purchasing power, orders and prices.

According to General Director of Đáp Cầu Garment Corporation Lương Văn Thư, the corporation has seen difficulties in the market and consumption of goods, as well as a reduction in terms of scale and price of export orders from the beginning of this third quarter. As a result, orders from major markets in the US and Europe have fallen by up to 50 per cent...

According to Lê Tiến Trường, chairman of the Vietnam National Textile and Garment Group (Vinatex), unpredictable fluctuations will remain due to many factors, especially the Russia-Ukraine conflict, price fluctuations of raw materials and fuel, and inflation in export markets such as the US and Europe...