Vietnam to enhance the Chinese textile industry through its TPP agreement

Vietnam to only further enhance the Chinese textile industry with the lifting of tariffs on garments made by TPP members from the yarn stage forward expected to come through soon as the Trans-Pacific Partnership negotiation is going on between Vietnam and 11 other countries including big economies like the US, Canada, Japan and Australia.

Most of the Vietnam’s textiles and garments are mostly made from Chinese yarn. Vietnamese textile investors are going to lose out the chance at tariff cuts from the TTP agreement as they lack money and group power to invest in yarn factories as required.

As developing yarn factory remains beyond the means of local producers, and that as a TPP member for Vietnam. According to experts, a yarn, textile and dyeing project costs many times more than a garment project, without factoring in the cost of training the requisite staff.

A single yarn machine costs nearly $2 million and building a supply chain would require lots of them. Textile and dyeing plants require tens of millions of dollars for waste treatment. So foreign investors with deep pockets will have an advantage over local ones

Many textile businesses in mainland China, Taiwan and Hong Kong have built entire textile systems in Vietnam — from yarn factories to textile mills to dye plants to garment factories — to capitalize on TPP.

The treaty will cut import tariffs in the US (the biggest market for Vietnam’s leading export – garment and textiles) from 17-32 percent to zero.

Vinatex looks like the only Vietnamese firm that will benefit from the deal. It plans to invest a further VND5 trillion (US$237.5 million) into the twelve yarn and nine textile projects that began last year.

The clothing giant is developing a textile, dyeing and garment project in an industrial park near Ho Chi Minh City that is expected to debut cloth in August 2015.

Big firms from Japan and South Korea have discussed similar plans in line with China. While, investors at home are hanging on the wall.