Vietnam'S Entry Into The Group CPTPP, The Competitiveness Of The World'S Third Largest Exporters Of Textiles And Clothing Has Improved?

The comprehensive and progressive p Pacific Partnership Agreement (CPTPP) came into force in Vietnam in January 14, 2019, and Vietnam became the seventh country to ratification CPTPP. The agreement has already entered into force in 6 countries, namely Japan, Canada, Australia, New Zealand, Mexico and Singapore.

According to statistics, the gross domestic product (GDP) of the CPTPP agreement occupies 13% of the world's gross domestic product, and the population exceeds 500 million.

CPTPP will become the third largest economic union in the world, next to the North American Free Trade Area (NAFTA) and the European Union (EU).

What changes will the CPTPP agreement bring to Vietnam's textile and garment industry?

What new factors will drive Chinese textile enterprises to invest in Vietnam?

How to view objectively the influence of Vietnam's entry into CPTPP on the development of local spinning and weaving industry?

The industry generally believes that joining the CPTPP will make Vietnam make more money.

It is understood that the CPTPP Member States agreed to exempt Vietnam from 97% to 100% tariff accords with the rules of origin.

Hu Zhiming, chairman of the Vietnam Textile Association of Vietnam, said that for the textile and garment industry, after the CPTPP came into effect, Vietnam's products that met the requirements of origin and common technical standards would enjoy zero tariff export preferences. At present, Vietnam has an average tax rate of more than 10% for the market export products that have not signed the free trade agreement with Vietnam.

Fan Chunhong added, more importantly, Vietnam's accession to the CPTPP can promote diversification of the export market, of which Canada and Australia are the two most potential markets for Vietnam's textile and clothing exports.

Before that, buyers from Canada, Australia and New Zealand would hardly pay attention to the textile and clothing produced by Vietnam. However, many buyers of these countries recently went to Vietnam to take the initiative to understand the production situation of local textile and clothing products, and actively signed relevant procurement contracts.

In particular, these 1 months, the member enterprises of the association are launching human resources training as soon as possible, and strive to innovate technology and equipment and optimize production supply chain.

In order to pform opportunities into specific orders and maintain long-term cooperation, local textile enterprises also take the initiative to understand the new environmental and quality standards involved in CPTPP, as well as new sources of product sources.

It can be seen that Vietnam is making full use of the benefits brought by CPTPP to actively enhance product competitiveness and enhance the popularity and reputation of "made in Vietnam".

In recent years, Vietnam's textile and garment industry has developed rapidly and has become a priority market for overseas investors.

Li Jinchang, general manager of Vietnam textile and Garment Group, said in 2018 that Vietnam's textile and clothing exports reached 3 billion 600 million US dollars in 2018, up by 16% over the same period last year.

Vietnam is closely following China and India, becoming the third largest exporter of textiles and clothing in the world.

Li Jin Long commented that in 2018, Vietnam's textile and clothing industry achieved the effect of actively improving the industrial chain for many years, thus gaining the priority of customers.

As we all know, Vietnam is seriously deficient in the supply of raw materials for spinning and weaving.

According to local media in Vietnam, Vietnam's textile and clothing industry attracted foreign direct investment (FDI) of 2 billion 800 million US dollars in the first half of 2018, when the release of CPTPP would be good news for Vietnam, bringing the total foreign direct investment in the industry to nearly US $17 billion 500 million.

For example, Germany invested in the construction of a total of 50 million US dollars in sheep's yarn yarn factory in Dalat, Vietnam.

Among them, the Dalat cashmere yarn factory is a joint venture between Sudwolle group, which is made in Germany and the lotus group of Hu Zhiming city. It covers an area of 61 thousand square meters, with an area of 32 thousand square meters, with an annual output of 4000 tons of yarn and half of its export.

After the plant is put into operation, its annual business income will reach US $100 million, which will create employment opportunities for more than 400 local workers.

It is reported that the main products of the factory are manufacturers of downstream products of cashmere yarns in Vietnam.

Previously, Vietnamese producers were mainly dependent on the import of cashmere yarns from Australia.

In addition to other countries, investment can provide a perfect upstream and downstream production supply chain for "Vietnam made". In the domestic Department of the CPTPP compact, the rules of origin of CPTPP especially encourage the integration of production among member countries in order to promote the formation of a complete supply chain among Member States.

This will make up for the weakness of the local industrial chain and make Vietnam made more competitive.

At present, Southeast Asian countries, represented by Vietnam, are the main force to undertake industrial pfer in China because of their young population, geographical location and infrastructure.

In particular, as one of the member countries of ASEAN, Vietnam can enjoy preferential tariff policies from many countries through several FTA, which is of great help to Vietnam's export oriented economy.

According to incomplete statistics, there are nearly 20 FTA agreements involving Vietnam, including Vietnam's accession to the CPTPP.

At the end of 2018, China's famous color spinning supplier and manufacturer, Hua Fu fashion Limited by Share Ltd, announced the new yarn project to be invested by Huafu in Vietnam's Longan province through its subsidiaries. The project has a capacity of 500 thousand yuan, with a total investment of 2 billion 500 million yuan.

The project is the first phase of the new 1 million item yarn project in the enterprise planning.

Prior to this, the opening ceremony of Vietnam's Huafu Industrial Park and the signing ceremony of "Zhejiang Merchants' Green Town" were held in Vietnam.

Sun Weiting, chairman of Huafu fashion, believes that Vietnam has become a fast reaction production base for Huafu in Southeast Asia. Investing in Vietnam can effectively reduce the impact of the price difference between domestic and international raw materials on cost and make full use of local policies, labor costs and location advantages to reduce international logistics costs, avoid tariff barriers and improve product competitiveness.

The Shenzhou Knitting Co., Ltd., headquartered in Ningbo, Zhejiang, is a knitwear manufacturer with vertical supply chain. It mainly provides knitwear for downstream customers in the form of OEM. Its main customers include international brands such as UNIQLO, Adidas, Nike, Puma and so on. Its products are far from Asia Pacific and European and American markets.

Shenzhou has a fabric and garment production plant in Vietnam. It is estimated that the number of overseas employees (Kampuchea, Vietnam) will exceed 1/3.

However, the per capita output of Vietnam's factories is still lower than that of Shenzhou's Chinese factories, so there is still room for improvement in the future.

In the second half of 2019, Shenzhou plans to increase 5000 workers in Vietnam (the total number of local workers is over 11000) in the second half of 2019.

As for the risk that Sino US trade frictions are still uncertain, Shenzhou related international business executives said they hoped to avoid risks through overseas capacity.

He disclosed that at present, the market share of the United States occupies the third largest single market position in Shenzhou, while Vietnam's capacity can be directly supplied by the United States.

In the first half of 2018, Jian Sheng group, a knitting enterprise of Zhejiang knitting industry, which also invested in Vietnam market to avoid Sino US trade frictions, completed the full scale production of Vietnam's socks production base, an increase of 80.7% over the same period last year, and the output reached about 120 million pairs in 2018.

In addition, Jian Sheng also focused on the expansion of upstream matching facilities in Vietnam. In April 2018, the spandex rubber factory in Vietnam's Haiphong city expanded again, mainly covering the yarn production.

The dyeing factories in Xingan, Vietnam, can finish 4000 tons of dyed products in one year.

The upstream supply chain, which integrates the downstream production and manufacturing links, can effectively ensure the efficiency of local textile production in Vietnam.

In a recent announcement, Jian Sheng announced that the project was funded by Jian Sheng Vietnam (hosiery) Co., Ltd. to build up 90 million pairs of medium and top grade cotton socks production line, and the total investment was 200 million yuan.

The new project of 18 million seamless knitted sportswear produced by Jian Sheng (Vietnam) textile printing and dyeing Co., Ltd. has a total investment of 250 million yuan.

According to China Customs statistics, Jian Sheng stockings have been ranking the leading exporters of similar products for many years.

According to its latest financial report, in 2018, the number of customers and customers' orders increased significantly by the favorable policies of Vietnam's local release.

According to insiders, CPTPP and the TPP signed in 2015 before the withdrawal of the United States were significantly reduced in size and standard.

After the withdrawal of the United States, Japan has assumed the burden of leading the CPTPP. However, in the case of weak domestic economic recovery and declining international competitiveness, it is questionable whether the 11 countries can play a leading role in coordination.

In addition, Vietnam's economy has many worries in the process of rapid development.

At present, Vietnam's economic development relies mainly on expanding the total investment and relying heavily on foreign capital. Once the global economic crisis occurs, the decline of investment will lead to the economic decay of Vietnam.

For example, after the world financial crisis in 2008, foreign capital pulled out of Vietnam, leading to a decline in local GDP growth.

In addition, Vietnam's production efficiency needs to be improved.

According to the international labor organization, Vietnam's labor efficiency is only 1/3 of China's.

Although Vietnam's local government and industry organizations are paying more and more attention to the quality of labor force, Vietnam's economic risk is weak because of its small economic volume.

Therefore, once the global economic situation has undergone major changes, the Vietnamese economy will be hit hard.

It should be noted that foreign investment in Vietnam is still mainly used in investment and construction factories, and the price of industrial land has increased greatly, which is not enough for investment enterprises.

According to local media, production costs in some parts of Vietnam, such as Hu Zhiming, Pingyang, Longan and Nai provinces, are no longer low.

Although these areas have good pport facilities and pportation channels, cost pressures have become the burden of investment enterprises.

According to the head of a textile enterprise in Shanghai, the cost of land, labor and building materials in Vietnam has risen sharply in recent years due to this investment boom.

In an industrial park in Nai Province, about 70 kilometers away from Hu Zhiming, the price of long term leased industrial land has risen from $60 to $70 per square metre last year, rising to 90 dollars.

The textile enterprise invested in a garment processing plant in Hanoi, Vietnam, and only invested more funds in the enterprise.

He said that in recent months, especially in recent months, the cost of building factories in Vietnam has soared, and many enterprises are unable to afford it. Only moving the initial stage, such as changing factory buildings, pferring automated production lines from China, and paying the subsidized Chinese skilled workers, cost a lot of money, which is even higher than that built in China.

Although the company has recently received many orders, the profit is not high due to the pressure of cost input.

Therefore, the company is not prepared to expand its investment in Vietnam.

Some economists have said that there is still a long way to go for Vietnam to replace China as a "world factory".

In 2018, the total amount of GDP in Vietnam was 240 billion 500 million US dollars, while the total amount of GDP in China amounted to more than 10 trillion US dollars.

Moreover, Vietnam's import and export volume recorded a record in 2018, but it is only equivalent to the import and export volume of a coastal province in China.

In addition, the management level of Vietnam's enterprises is relatively lagging behind, the land area is limited, and the shortage of some raw materials also restricts the development of manufacturing industry.

According to the economist, in Vietnam's own terms, it is almost impossible to become a world factory, especially to replace China.

Therefore, despite Vietnam's accession to the CPTPP, China's textile enterprises should correctly assess their financial situation, market share, raw material production capacity, labor and equipment, and so on. They should not be overheated and blindly invest in Vietnam.