Forecast amended for textile, garment exports

The 2020 textile and garment export value is forecast to drop 15 percent compared with 2019

The cancellation/delay of orders by purchasers from Europe and the US, especially since March, has resulted in sharp revenue drops. The Vietnam National Textile and Garment Group (Vinatex) faced a seven-percent drop in first-quarter revenue compared with the same period of 2019, and fulfilled only 20 percent of its annual plan.

According to Vinatex Executive Director Cao Huu Hieu, retail shops in Europe and the US are closed at least until May due to travel restrictions and social distancing measures, leading to the delay of orders already placed while almost no new orders have been signed. Most delayed orders were scheduled for delivery in the spring and summer, and they could well be cancelled altogether if the Covid-19 pandemic lasts until the autumn.

The Vietnam Textile and Apparel Association (VITAS) has amended its 2020 export forecast to reflect a 15 percent drop in the value of the domestic textile and garment sector to about US$33 billion.

Global orders for textiles and garments in 2020 are forecast to decrease 29 percent. Due to global manufacturing and supply chain disruptions, businesses cannot optimize production efficiency, leading to increased costs. “For the time being, money flows are the biggest challenge for global textile and garment businesses. Money flows depend on goods. There will be no money flow when the circulation of goods stops,” Cao Huu Hieu said.

Although Covid-19 has adversely affected businesses, it has created opportunities for many garment companies to shift manufacturing to medical use and disease prevention products. Some of them have signed export contracts of considerable value. The Garment 10 Corporation, for example, has signed contracts to export 400 million facemasks worth US$52 million.

Vinatex is promoting the export of three-layer fabric facemasks to the Czech Republic, Hungary, Canada and the US. Capable of producing 90-100 million facemasks per month, Vinatex can fill major export orders. Manufacturing facemasks for export enables the group to maintain jobs for workers until the end of the pandemic.

However, exports to Europe are required to have CE marking, and exports to the US must meet strict requirements of the Food and Drug Administration (FDA). Vinatex has warned its member companies to draw up suitable production plans based on the actual situation because it takes time and money to apply for these certifications.