Vietnam textile and garment companies faces shortage of orders this year

Vietnam garment companies at this time last, around 80 to 90 percent of production plans was fulfilled for 50-60 percent of enterprises, while this year the figure is only 25-30 percent. Very few companies have orders for the fourth quarter of the year.

According to the chair of the HCM City Textile, Garment, Embroidery and Knitting Association, Pham Xuan Hong, many member companies of the association still needed orders.

As the production costs in Vietnam are 50 percent higher than that in Cambodia, Bangladesh and Myanmar, foreign garment importers are placing more orders with those countries instead of Vietnam.

However, importers still seek Vietnamese producers for high-value contracts because Vietnamese can better satisfy their technical demands. However, high-value contracts do not bring high profits to Vietnamese companies as they have to pay high costs for input materials.

The number of orders of some big garment companies for the second half of the year is 30 percent lower than that of the same period last year. The number of orders has been decreasing, especially from Europe.

The lateness in the negotiations for TPP (Trans Pacific Partnership Agreement) is considered as one of the reason behind the decrease in the number of orders.

Pham Xuan Trang, director of Dai Tay Duong Company, also said that the number of orders for the third and fourth quarters had decreased, and as a result, considerable profit reductions in the last months of the year are expected.

Le Quang Hung, chair of Garmex Saigon, said that their number of orders in the first half of the year increased by 20 percent over the same period last year, and the company has enough jobs until May 2015. It has had to organize extra working shifts to fulfill the orders.

They specialize in making jackets and sportswear, therefore, it is easier for them to seek orders.

According to analyst, Vietnam remains a major garment production base, but importers now tend to hire Vietnamese producers for high-value contracts. At the same time, it is reported that Ronhill a UK company is looking for Vietnamese enterprises that can supply sportswear to be retailed in European markets.

Also a British importer has contacted the Vietnam Embassy in the UK to help them find Vietnamese producers who can supply 200,000 suits of western clothes a month. This does show that Vietnam garment industry is still in demand due to quality of its product.