Vietnam'S Textile Industry Has Not Benefited From The Sino US Trade War?

Vietnam textile and Apparel Association (VITAS) said that the export volume of Vietnam's textiles, fabrics and fabrics reached 25 billion 700 million US dollars in the first 8 months of this year, up 8.6% from the same period last year, of which foreign direct investment accounted for 60.6%.

Textile and garment industries imported raw materials for textile and clothing up to US $14 billion 900 million, an increase of 2.3% over the same period, of which foreign direct investment accounted for 62%.

The industry's trade surplus reached US $10 billion 800 million in the first 8 months.

Vietnam's Ministry of Commerce and industry said that Vietnamese textile enterprises are facing many challenges in their production and operation activities.

The Sino US trade war has affected the exchange rate, resulting in higher prices of Vietnamese processed products than those of Korea and China, which also affected the number of export orders of local enterprises in Vietnam.

In the first 8 months of this year, textile production and exports grew year-on-year, but due to changes in orders, local businesses needed solutions for production and operation.

Industry experts say Vietnam's export orders have declined. Compared with the same period in 2018, some enterprises received only 70% of new orders.

As Vietnam's main export market, China (60%) has reduced imports, and consumption of fiber and raw materials has been difficult. Orders for clothing companies also declined.

In 2018, many large enterprises in the industry had export orders throughout the year, but this year, they can only sign small monthly export contracts. But there are buyers worried that if the Sino US trade war is escalated, orders will be split up instead of batches.

Ho Guom clothing group general manager Phi Viet Trinh said that the company's orders declined compared with the same period last year. The company expects that due to the higher demand in the last few months of this year, orders will increase by the end of the year.

With the end of the third quarter, Vietnamese textile enterprises are unlikely to increase exports as a result of Sino US trade war.

In the textile and garment industry, the Korean and Chinese Taiwan enterprises in Vietnam have gained the advantage in the trade war because they own the production factories under the value chain.

According to insiders, Vietnam's South Korean textile and clothing companies are the beneficiaries of this trade war, and 143 enterprises account for about 50% of Vietnam's textile and clothing exports to the United States.

Vietnam's textile and Apparel Group (Vinatex) said that Vietnam did not see investment flows to the textile and garment industry in the Sino US trade war, and production did not shift significantly from China to Vietnam.

A person in charge of Vinatex said that the investment from one country to another depends on many factors. Nguyen Thi Thu Trang, director of the VCCI WTO center, said that Vietnam did not benefit from the trade war as many people predicted, including the transfer of investment from Vietnam to Vietnam.

Another problem is that although the export volume is large, Vietnam's domestic textile and garment industry still lacks input. Nguyen Thi Thu Trang said Vietnam had to import cotton, 80% fabrics and other materials from China and India, so the cost of Vietnam's products was much higher than that of foreign direct investment firm.

If Vietnamese companies increase clothing exports, textile companies in China and India will benefit, as Vietnamese companies must increase imports of raw materials.