"Vietnam Textile" PK "China Textile"! Who Wins? Who Can You Guess?

Recently (October 5th) Yue Tong Hanoi reported:

According to the report of the Economic Zone Management Division of the Ministry of investment and planning of Vietnam, up to now, Vietnam has attracted 8970 foreign investment projects, with a total registered capital of about 187 billion 400 million US dollars. At present, the total number of industrial parks in Vietnam is 327, with a total area of 96 thousand and 100 hectares and industrial land of 65 thousand and 700 hectares, accounting for 68.4%.

Among them, 256 industrial areas have been put into use, and 71 industrial zones are being compensated for demolition. The occupancy rate of the enterprises is nearly 75%. Vietnam's manufacturing industry is developing vigorously, and the textile industry also takes a place in the international market. Can Vietnamese textile replace China's textile status?

Vietnam's textile industry has risen, and exports amounted to US $24 billion 800 million in the first half of September this year.

At present, Vietnam's garment and textile industry has taken a place in the international market.

In the past, the purchasing strategy of clothing companies in Europe and the United States was China and many other countries. Now it has changed to 30% to 50% in China and 10% to 30% in Vietnam, plus other countries.

Vietnam has become a beneficiary as trade friction between China and the United States has increased. In the first 9 months of 2019, Sino US trade decreased by 9% compared with the same period last year, and the United States has fallen to China's third largest trading partner.

Vietnam's Ministry of industry and trade announced in September 30th that Vietnam's exports of 26 categories of commodities exceeded 1 billion US dollars in September this year, accounting for 89.8% of total exports. Among them, the export volume of textile and clothing showed an increasing trend, reaching 24 billion 800 million US dollars, an increase of 10.4%.

Around the city of Hu Zhiming, textile enterprises from China are also increasing investment. They even use the "golden year of Vietnam's textile industry for ten years" to describe this development process. Huafu fashion, Tianhong textile, Ru Tai and Bailong Eastern large textile enterprises have greatly expanded their capacity in Vietnam.

Imperfect matching and rising cost... Vietnam's textile dominance weakened

Matching is not perfect, raw materials still need to import.

Most Vietnamese textile and garment producers are processors, and their raw materials need to be imported from abroad. Vietnam's overall support is not perfect enough. About 80% of its raw materials depend on imports from China, India and ASEAN.

"Vietnam can not completely replace manufacturing in China, and it can only replace some parts of an industry." A business Chinese pointed out that "over the past five years, although China's labor costs have risen a lot, it still enjoys export advantages, and the high technology level has not been removed from China. Even the earliest textile industry transferred from China is hard to replace completely, and some zippers have to be imported from China.

The labor shortage appeared, the labor cost increased, and the workers were robbed.

Under the trend of global manufacturing and manufacturing transfer, Vietnam's pride is vanishing and manpower costs are rising. There is a shortage of managerial personnel and technicians, and recruitment is difficult in some areas.

Vietnam's minimum wage standard has been rising. In July 2019, the regional minimum wage standard will be further raised by 5.5% in 2020. The minimum wage standard in one category will increase to 4 million 420 thousand Vietnamese shield (about 1351 yuan); the two category will increase to 3 million 920 thousand Vietnamese shield (about 1198 yuan); three areas will increase to 3 million 430 thousand Vietnamese shield (about 1056 yuan); four area will increase to 3 million 70 thousand Vietnamese shield (about four yuan).

The Vietnamese labor market report shows that in the second quarter of 2019, the number of Vietnamese employment reached 54 million 600 thousand, while the unemployment rate in the whole country was only 2%, and the demand for labor in manufacturing, construction, wholesale and retail sectors continued to increase.

With the influx of a large number of foreign enterprises, labor shortage has appeared in many places. The new enterprises can only rob people from the original enterprises, even vicious competition, you robbed my workers, I rob your workers.

"Recently, recruitment is not like before. Early recruitment is that we choose workers. Now we want to recruit people and even go through intermediaries." A manufacturing company official complained, "the employment standards have also been relaxed. They used to be more than 20 years old, and now they are 35 or even 40 years old."

It is widely expected that Vietnam's labour costs will remain unchanged within 7 years.

Labor efficiency of workers needs to be improved.

The productivity of Vietnamese workers is lower than that of Chinese workers. According to the analysis, the production efficiency of Kampuchea garment factories is only about 60% of that of China, while Vietnam and Indonesia are slightly better, about 80% of China's.

Vietnamese workers with a monthly income of 7 million 500 thousand Dong Dong (about 2300 yuan) said that their incomes increased, but he did not want to work long hours. "Working pressure on Taiwan funded enterprises is too high, and employers are demanding, and then they want to go back to South Korean enterprises".

In 2017, a shoe factory in Vietnam from Dongguan tried to give up after a year. The problem was the efficiency of the workers. Many Vietnamese workers lack mature work experience, plus no overtime habit, resulting in low production efficiency and delayed delivery time. Finally, enterprises are unable to make ends meet.

Land prices, factory rents and so on rose too fast.

In addition to labor shortage, the influx of a large number of enterprises has also raised the price of land. The rental price of industrial land rose from 60 in 2017 to 70 dollars per square meter in the GiangDien Industrial Park, 70 kilometers away from Hu Zhiming City, to 90 dollars per square meter in early 2019. In some areas, the rent rose to 130 US dollars per square meter, which is equivalent to the industrial parks in China's big cities.

The rental of factory buildings is also rising rapidly. The head of a textile factory said: "the rent price here is basically not much different from that of the first tier cities in the country, basically maintained at 4 US dollars per square meter."

Vietnam needs to be improved in terms of commodity market efficiency, infrastructure construction, business maturity and financial market development.

Based on the relatively low administrative efficiency, relatively backward infrastructure construction, and incomplete development of industrial system and financial market, Vietnam ranked the top 50% of the 138 countries in the world in terms of commodity market efficiency, infrastructure construction, business maturity and financial market development, and the competitiveness of other countries in Southeast Asia is relatively weak.

Vietnamese textile is hard to replace China's textile status.

Although the news of "wolf coming" has springing up, Vietnam textile is still difficult to replace China's textile status.

Then, where is our traditional textile and clothing industry? How to maintain or even strengthen the existing advantages in the new trade pattern? Only from the "big" to "strong" transformation, from "manufacturing" to "quality / intelligence" upgrading, "low end capacity transfer" + "high-end technology innovation" simultaneously, which is not only consistent with international industrial development experience, but also the direction of our textile and garment industry's efforts. Standing in early 2019 and facing the future, we are not pessimistic.