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From being "almost desperate" due to the prolonged lockdown in the southern provinces, the textile and garment industry quickly recovered and regained its growth momentum at the end of the year.
General Director of Vietnam National Textile and Garment Group (Vinatex) Cao Huu Hieu called 2021 an "unprecedented year in history", when never before a series of key units of the group, including Viet Tien Garment, have had Sometimes, 94% (34,000 employees) had to quit their jobs, and then a series of businesses had to stop production due to the southern provinces social distancing because of the epidemic.
"There were times when we thought we were desperate. The Vietnam Textile and Garment Union has never faced such a large number of workers leaving their jobs and needing support because of the epidemic," he said.
Experiencing many different emotions is the common mood of textile business owners this year. In the first quarter, businesses were very excited because they signed the contract until the end of the third quarter. But since May, when the fourth wave of epidemic broke out strongly in the southern provinces, at this time, textile and garment enterprises are really worried.
The third quarter is the time when the epidemic has the most worrying impact on the textile and garment industry. Covid-19 broke out in Ho Chi Minh City and spread to the southern provinces, businesses were forced to produce " 3 on the spot " with half of the employees working directly at the factory.
Produced at Thanh Cong Textile and Garment, Ho Chi Minh City. Photo: An Phuong
During the period of social distancing in 19 southern provinces and cities, 8 factories of Viet Tien Garment are located in the red zone. Particularly, the factory in Tien Giang with more than 10,000 workers had to temporarily close or stop operating because the local government tightened epidemic prevention. "The damage is enormous," said Mr. Bui Van Tien, General Director of Garment Viet Tien, recalling the difficult time he had just experienced.
Usually the profit margin for processing goods is not more than 10%, but 4 months the factory is temporarily closed, the damage is 2-3 times higher than the profit level, so "all development targets of the business have been dropped". A unit under May Viettien had to be restructured, which Mr. Bui Van Tien called "in short, bankruptcy" after a long period of social distancing.
The social distance lasted for 4 months in the second and third quarters, then there was a shortage of raw materials and orders, shifting orders; the cost of maintaining "3 on-site" production, the cost of testing, the cost of transportation and logistics increased by 4-5 times compared to previous years... have put tremendous pressure on textile and garment enterprises, especially is in the South. Localities implemented the anti-epidemic resolutions and directives in the first time " one at a time ", making it difficult for businesses, especially travel.
More than 40% of the production capacity of the textile and garment industry comes from businesses located in the South, which has undergone 4 months of social distancing because of the epidemic. Therefore, when the number of businesses here only operated at half capacity, or had to temporarily close because of the epidemic, it immediately reflected in the growth picture of the industry from August. Textile export turnover decreased to nearly 16 % compared to July and the downward trend continued, above 9% in September.
A paradox, as shared by a leader in the textile industry, is that when the world stops, Vietnamese apparel can do it but doesn't know what to do because orders decrease. Until the main textile export markets recovered, the epidemic in Vietnam broke out, businesses could not fulfill orders. Some businesses spend about 2 billion dong a week to ensure progress, retain customers, and not to disrupt the supply chain during this period.
But then the most difficult period is over. From October, the Government loosened measures to prevent and control the epidemic, changing the "zero Covid" policy to a safe adaptation to the epidemic. Businesses returned to work, combined with a number of large markets such as the US, EU, Japan... opening up, along with the return of workers, helping the industry grow again.
Mr. Cao Huu Hieu said that in the first month after the prolonged distance, 90% of employees at companies under the group had returned to work, while many other businesses in the same industry and in the same locality had the same rate. return is not high, only 50-60%.” Up to now, almost 100% of employees in the group have returned to normal work.
Production recovered, the high growth rate in the fourth quarter helped the textile and garment industry reach the export target of $39 billion for the whole year, an increase of nearly 12% compared to 2020 and returned to the same level as before the appearance of Covid-19. Vu Duc Giang, President of Vitas, called this a "great effort" in the context that the recovery speed of the world economy tends to slow down.
The US is still the largest export market of Vietnam's textile and garment with nearly 16 billion USD, up 12% compared to 2020; EU reached 3.7 billion USD, up 14%; Korea reached 3.6 billion USD and China 4.4 billion USD mainly exported yarn.
Domestically, there is a divergence in profits among manufacturing enterprises between regions due to the impact of the epidemic and prolonged periods of isolation, but many businesses still reach the finish line with impressive growth.
Talking about the growth of consolidated profit doubled compared to 2020, reaching VND 1,200 billion and 70% higher than in 2019, Mr. Cao Huu Hieu repeatedly mentioned the word "spectacular and unexpected". The three reasons for this group to record impressive profits were the restructuring, increasing the proportion of the yarn industry contributing to revenue and profit, from 20% to 50-55%.
Besides, taking advantage of opportunities from competitors and corporations are gradually completing the closed supply chain of yarn - textile dyeing - garment in the context of global supply disruption. Thanks to good business results, this group still maintains a Tet bonus of 1.5-2 months, especially with a good business unit, a bonus of 3 months of Tet salary.
Another enterprise in the North, TNG Investment and Trading Joint Stock Company (Thai Nguyen), is also expected to increase its profit this year, reaching about VND 230 billion. Mr. Nguyen Van Thoi, Chairman of TNG Joint Stock Company (Thai Nguyen), said that TNG's factories are concentrated in Thai Nguyen province, a locality that is less affected by social distancing, so the company's operations are stable. more determined. Enterprises also benefit from the trend of shifting textile and garment orders to production plants in the North when Southern businesses face difficulties due to the Covid-19 epidemic.
However, there are still concerns. The uncertainty of the disease when a new strain - Omicron appears, if the factory continues to generate F0 cases, it will greatly affect the production progress and business goals of the entire textile industry.
In addition, logistics costs are high, 4-5 times higher than before; shortage of empty containers, congestion in sea transportation, difficult to deliver goods on time or fluctuations from main export markets such as the US, EU or competitors India, Bangladesh, China... are still Great pressure on businesses.
At the end of this 2021, Mr. Tran Nhu Tung, Chairman of Thanh Cong Textile and Garment, said that many textile and garment enterprises have received orders for the first quarter, even the end of the second quarter of next year, but do not dare to receive many because they are afraid of not being proactive. produced due to lack of labor. If the production schedule is not guaranteed, the enterprise will have to deliver the goods by air, the cost will be huge, but not all brands can sympathize and share this cost.
Currently, the cost of transporting goods by air has increased fourfold, from $4,000 to $4,500 a ton, to $17,000, but there is no flight route. "This is a huge challenge for textile enterprises at the moment," commented Mr. Vu Duc Giang, President of Vitas.
A survey by the Labor Relations Research Center (ERC) also shows that only 16.7% of buyers agree to share air freight costs with businesses with long-term contracts. With factories as intermediaries, it is very difficult for them to communicate with buyers.
On the other hand, analyzing the 12% growth rate of the textile and garment industry this year, Mr. Le Tien Truong, Chairman of Vinatex, admitted that this figure does not show an improvement in market share. The reason is that when the world stops and there are orders, Vietnamese textile and garment enterprises "don't know what to do". And when the world trades again, we can't do it due to social distancing, factories are forced to close to prevent epidemics.
The US market alone grew well last year, with an export turnover forecast of 120 billion USD. As for other traditional markets such as Japan, Korea or the EU, they all decreased or if they increased, they were low.
In 2022, the forecast of the epidemic situation in the world and Vietnam is still complicated and unpredictable, but the market also has positive signals, so exports are considered to still have growth opportunities.
The Vietnam Textile and Apparel Association offers three growth scenarios next year. According to Vinatex's calculations, next year's textile and garment exports will fluctuate between 36-40 billion USD, based on the rate of workers returning to work 60-80% from the fourth quarter of 2021 to the first quarter of 2022.
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