Vietnamese textiles, garments market see wave of mergers, acquisitions rising

Vietnam has issued investment licences for 30 textile and garment projects in 2015 while foreign investment in industry was expected to continue increasing in the near future. A wave of mergers and acquisition has increased in the local garment and textile industry in a bid to take advantage of free trade agreements, especially the Trans Pacific Partnership (TPP), as the local enterprises are aware that they would not fulfill requested orders due to their limitations in capital, according to the HCM City Association of Garment – Textile – Embroidery – Knitting (AGTEK).

Pham Xuan Hong, deputy chairman of the Vietnam Textile and Apparel Association (Vitas), said that medium- and large-sized enterprises have maintained stable production and business, but small-sized firms have faced many difficulties in their business. Therefore, recently, many small textile and garment companies have sold their workshops and machines and entered other sectors.

In addition, some local enterprises have sold part of their factories to foreign investors, including Chinese investors who have developed a system of processing and production for export products in Vietnam to take advantage of the TPP deal.

Also as part of cooperation between the Indian and Vietnam government wherein US$300 million was provided by the Indian government, a part from it would include investments in projects to manufacture textile and garment materials in Vietnam next year.

Nguyen Van Hoan, former head of Ha Noi Industrial, Textile, Garment and Fashion College, said that foreign investors had difficulties in expanding their production in Viet Nam because some provinces and cities have limited foreign investment in the garment and textile sectors due to concerns about environmental pollution. This has prompted foreign investors to purchase local textile and garment companies that already have production lines and employees.

However, according to the Ministry of Planning and Investment, the management offices have carefully weighed requests before issuing investment licences for large textile and garment projects, since textile, fiber production and dyeing projects often cause environmental problems, reported vnexpress.net. So, some investors have bought factories from local partners.