Vietnam'S Local Garment Enterprises Are Facing An Extremely Difficult Situation.

Vietnamese native

Enterprises are faced with exceptionally difficult situations: rising costs, declining unit prices and reduced orders.

First, less cost goes up.

Wages have been increasing rapidly for many years.

The Vietnamese government has implemented the annual minimum wage standard increasing mechanism. Over the years, the minimum wage standard for Vietnamese workers has increased by 12-15% per year, while social insurance premiums (22% of basic wages) and trade union fees have risen. At present, the labor cost of Vietnamese clothing enterprises accounts for 65-70% of total cost, which is 10 percentage points higher than that of a few years ago, which has made enterprises breathless.

And the Vietnamese government plans to start from 2018, the total social insurance premium should be paid as the base of payment, and the business will be more difficult to bear.

In addition, the high interest rate of banks (8-10%/) is also a great burden for enterprises.

Two, unit price decreases, orders reduce.

Due to the impact of the global economic downturn, especially by competition from similar commodities from China, India, Bangladesh and Kampuchea, orders are seriously inadequate, many enterprises are underemployed, and some are in the brink of bankruptcy.

In the case of insufficient orders, customers deliberately lowered the price of 10-15%, or even 20%.

But in order to ensure factory operation, enterprises have to swallow orders. Even so, orders are still insufficient.

Three, another factor to reduce the competitiveness of Vietnamese garment enterprises is the Dong Dong's fixed exchange rate.

Reported that the Vietnamese shield and strong dollar binding, while Vietnam's main exports of clothing

The currency has depreciated sharply: the euro depreciated by 18%, the Japanese yen depreciated by 17%, and the renminbi depreciated by 8%.

Meanwhile, Vietnam's competitors, such as other ASEAN members, India, Bangladesh and other currencies also depreciated by 10-20%.

The above factors make Vietnamese costumes more expensive than other competitors 20-30%, and can not compete at all, resulting in the loss of orders.

Vietnam in the first half of this year

Clothing exports totaled US $12 billion 670 million, an increase of 4.72% over the same period last year, the lowest growth rate in the last 10 years. The growth was mainly contributed by foreign-funded enterprises, and local enterprises encountered great difficulties in finding orders.

Vietnam is expected to fail to complete its export target of $31 billion at the beginning of this year.