For UNIQLO OEM Textile, Ho Rented $12 Million For Vietnam'S 310 Thousand Ping Industrial Land.

The local knitting giant, mutual Textiles Holdings Limited (hereinafter referred to as "mutual textiles") announced in December 30th that the company's wholly-owned Affiliated Companies intends to lease 31.2 square kilometers of land in Nam Dinh Industrial Park in Vietnam for a price of US $11 million and not more than US $12 million, which will be used by Vietnamese Dong.

However, mutual textiles also indicated that the company could not guarantee that the above plan would be implemented as scheduled, because conditions still needed to be fulfilled before the lease was completed.

First textile network has previously reported that in order to meet future expansion and risk diversification, it is estimated that in North Vietnam, a suitable location for the new production base will be established. The total investment is expected to be about 600 million to 1 billion 300 million yuan. After the new plant is put into production, the total production capacity can be increased by about 3 million pounds to 8 million pounds per month.

Mutual textiles is a local high-end knitting giant. Besides building factories in the mainland, it also builds factories in Southeast Asian countries such as Vietnam, Sri Lanka and Bangladesh.

It is understood that the Vietnam Textile Vietnam factory was put into operation in September 2015, mainly serving the company's largest customer, UNIQLO. According to the 80000 pounds / day capacity in April 2016, Vietnam accounted for 12% of the total capacity. Before Vietnam's factory was shut down, its output was 60000 to 70000 pounds per day, and its capacity utilization was 80%.

However, due to the impact of warm winter, too much inventory resulted in fewer orders from UNIQLO than expected. In the first half of this year, mutual textile achieved operating income of HK $3 billion 25 million, a decrease of 11.1% over the same period last year. Gross profit was HK $540 million, a year-on-year decrease of 14.36%. The profit attributable to the company's equity holders was HK $412 million, a decrease of 17.9% over the same period last year.

As at September 30, 2019, mutual cash and bank balances amounted to HK $984 million 900 thousand, and group net cash level was HK $336 million 400 thousand.

From the sales point of view, during the reporting period, the sales of cold resistant fabrics (average selling price and higher contribution to sales) of Pacific textiles fell by more than 20%, mainly due to the backlog of Heattech products in UNIQLO, and the sales of sportswear fabrics increased by more than 30% over the same period last year, accounting for 11% of the total sales volume of Pacific textiles (8% in the same period last year).

From the regional perspective, sales in mainland China, Southeast Asia and Hongkong in China fell by 11.6%, 7.2% and 26.1%, respectively.

From the perspective of profitability, the gross profit margin dropped by 0.7 percentage points to 17.9% due to the decline in the average selling price, but partly offset by the favorable foreign exchange environment (the renminbi depreciated at the beginning of this year). The operating expenses rate increased by 0.2 percentage points to 4.1%.

According to the insiders, the layout of globalization can not only guarantee the cost advantages of Chinese textile production enterprises in the global scope, but also ensure that production enterprises use the fastest speed to serve the global market. The preliminary analysis of the layout of Southeast Asia shows that the manufacturing leader has broken through the geographical restrictions in the layout of production capacity, and has the basic ability to become a global leading enterprise. Now, the textile producers based on China are going to Vietnam to expand production capacity in response to the rising domestic labor costs and increasingly stringent environmental regulations.

Li Chao, a researcher at Huatai Securities, said that in recent years, Vietnam's industrial structure has been undergoing rapid transformation, especially in the manufacturing sector. The rapid growth of electronic processing, textile and garment industries has been mainly due to Vietnam's integration into the global industrial chain, attracting a series of labor-intensive manufacturing industries to Vietnam by virtue of low factor costs, location advantages and institutional incentives. The Vietnamese government has actively deployed in energy, electricity, transportation and other aspects, and a series of industrial planning policies have come down in succession. The aim is to promote the rapid development of Vietnam and realize the goal of industrialization and national modernization in 2020. For example, in the field of energy, the seventh power development plan of Vietnam national power is implemented for 2011-2030 years. In the field of transportation, it is necessary to build the supporting system of infrastructure, make Vietnam basically become a modern industrial country by 2020, and to the 2020 highway construction plan. The coal and textile industries respectively have "2020 to 2030", "the 2030 coal development plan" and "2020 2020, look forward to the development plan of textile industry in 2030".

What we need to see is that low factor cost and high return on industrial investment are important comparative advantages of Vietnam's manufacturing industry. As a developing country, Vietnam's economic development is still at a low level, but it has a certain element cost advantage. As of 2017, per capita GDP was only 2342 US dollars. The lower per capita GDP reflected that Vietnam had lower labor costs, and it was also at a low level compared with Southeast Asian countries such as Philippines, Malaysia and Thailand. At the same time, it considered that the total labor force growth trend was relatively fast, and the scale effect would also play an active role. Low factor cost has become an important advantage for Vietnam to undertake industrial transfer. In particular, labor-intensive industries can increase profit margins by reducing costs. With the help of the "Introduction" of enterprises and the "going out" of products, Vietnam's manufacturing industry has a good development prospect.

It is understood that in Vietnam's reform and opening up, opening up to foreign investment is an important institutional foundation for promoting Vietnam's economic growth. From the point of view of regional encouragement policy, the administrative regions encouraged by the Vietnamese government are divided into two categories: the economically and social hardship area (A District) and the hard area (B area), enjoying special encouragement and preferential policies. Specific preferential policies include:

1, corporate income tax concessions: A District enjoy 4 years tax exemption (from the net profit to calculate the latest, not more than 3 years), tax exemption 9 years after the expiration of 5%, 6 years after 10%, and then according to the general project levy; B area enjoy 2 years tax exemption (calculated from the net profit, the latest not more than 3 years), after tax exemption expires 4 years 7.5%, immediately after the acquisition of 7.5%, and then tax in accordance with ordinary items.

2, import and export tariff preferences: A zone free of fixed assets import tariffs and from the date of production to exempt raw materials, materials or semi products tariffs 5 years ago; export products processing and export can be exempted from export duties or tax rebates.

3, land rent reduction: rent A area is the longest exemption and exemption for 15 years, and B district is the longest exemption and exemption 11 years.

According to the economic sector classification of the Statistics Bureau of Vietnam, the various economic activities in Vietnam can be roughly divided into 20 categories. Vietnam's primary industry, agriculture, fisheries and forestry accounted for a slight decrease in the national economy. By 2017, the proportion of the primary industry in GDP was 15.3%. The second industry accounts for about 30% of the national economy. Processing and manufacturing industry and mining industry are the main sectors of the second industry in Vietnam, accounting for 15.33% and 7.47% of GDP respectively. Among them, the processing and manufacturing industry is developing rapidly, and the output value and the proportion are increasing. Mining industry has shown a downward trend in recent years. Among the third industries, the highest proportion is wholesale and retail trade, maintenance of automobiles, motorcycles and other vehicles, finance, banking and insurance, real estate, housing and catering services, and education and training activities. Among them, the wholesale, retail, automobile, motorcycle and other vehicle maintenance, education and training activities showed a larger growth, while the proportion of real estate declined. Overall, Vietnam's primary industry is relatively small, and the second industry and the third industry still have room for improvement.