The Main Reason For Low Profit In Vietnam'S Textile And Garment Industry

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The weave of the net introduces the Vietnamese textile and garment industry's low profit mainly due to the import of raw materials and accessories.

Up to now, Vietnam has become one of the top 10 textile exporting countries in the world, and Vietnam's textile products are often the leading items in the country's export volume.

At present, in the US, Europe or Japan, the average selling price of each prestigious brand such as Zama, H&M, Mango, Uniqlo or Levi "s pants" ranges from 50 US dollars to 80 US dollars, most of which are marked by "Made in Vietnam". However, the Vietnamese domestic manufacturers who produce these trousers only receive about 1.6 to 2.2 US dollars in each piece. If the production wages, water and electricity charges, land and freight charges are deducted, Vietnamese manufacturers can only earn 0.2 US dollars for each pair of trousers.

Vietnam's textile products still rely heavily on imported raw materials because of the fact that Vietnam has been exporting large quantities of textile products for nearly 20 years.

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According to the statistical data, Vietnam has exported about 15 billion 500 million US dollars in textile products (2014) 9 months ago. The amount of imported cotton, fiber, silk yarn, cloth and other raw materials and materials has accounted for us $11 billion. In other words, over 4000 of the textile and garment enterprises in Vietnam now account for 70% of the total number of entrepreneurs engaged in processing textile products, and foreign manufacturers are placing orders for Vietnamese domestic textile enterprises and supplying textile styles, sutures, zippers and fabrics.

Another part of Vietnam's domestic enterprises in the form of FOB (according to the purchase of raw and auxiliary materials under orders) production orders of textile products, also can not take the initiative to grasp the source of raw and secondary materials supply, and its profit is only higher than the only 10% of the income of processing textile manufacturers.

The development of disadvantaged Vietnam's domestic textile and garment enterprises has created opportunities for a large number of foreign businessmen to enter the Vietnamese textile market. Vietnam's foreign-funded textile enterprises have increased to 60% to 65% from the previous 50% of the total export textile products in Vietnam. In recent 2 years, many mainland China, Hongkong and Taiwan manufacturers have invested in Vietnam's textile market or increase their capital and expand their factories, so as to win Vietnam's participation in the bilateral multilateral free trade agreements (EVFTA, TPP, RCEP).

According to Vietnam economic expert Mr. Li Ting Ying, Vietnam's domestic textile manufacturers will not be able to create high economic value by processing foreign orders. At present, the rate of homemade textile industry in Vietnam is only 25%, but if Vietnam participates in TPP in the future, it must raise the self-control rate to 70%. Vietnamese textile manufacturers should formulate relevant long-term plans as soon as possible, strive to improve production standards, design their own styles, and effectively promote marketing and construction.

And so on, so that we can effectively develop the preferential treatment brought by TPP.