Boosting investment in fabric production and greening the production chain will help Vietnam's textile and garment industry turn weaknesses into strengths to create a strong breakthrough in the coming years.
Vulnerable "giants"
At the international high-end fabric exhibition held recently, the organizers set the theme: "Vietnam Textile and Garment: Stronger, Smarter, Greener". This shows the aspiration towards a strong and sustainable development for Vietnam's textile and garment industry in the coming years. However, Mr. Nguyen Van Tuan, Permanent Vice Chairman of Cat Tuong Group, questioned the current state of the industry today. "Vietnam's textile and garment industry is already strong, smart, green and is aiming to be stronger, smarter, greener, or is it not?" - Mr. Tuan asked.
In fact, in the past 10 years, the growth rate of export turnover of Vietnam's textile and garment industry has always been in 2 digits and reached over 44 billion USD in 2022, among 8 items with a turnover of over 10 billion USD of Vietnam. "Made in Vietnam" garments have made their mark on the world, present in many large retail systems. Vietnamese textile and garment enterprises have also cooperated with more than 35 major brands, with an important position in the global supply chain.
A deep analysis of Vietnam's textile and garment structure is showing many instability problems. It is in both industries at the beginning and end of the chain that yarn and garment with a huge scale of development while weaving and dyeing have remained bottlenecks for many years of textiles.
Mr. Nguyen Van Tuan, Permanent Vice Chairman of Cat Tuong Group at Texfuture Vietnam Gabric Exhibition 2023
Mr. Tuan analyzed, in 2022, the fabric demand of Vietnam's textile and garment industry is up to 11 billion meters, but the country has only made 4 billion meters, so the shortage must be imported. The heavy reliance on imported fabrics makes the textile industry fragile and vulnerable. Because there are still up to 70% of enterprises in the processing industry (CMT) with 100% fabric provided by partners and the profit is very low, only about 1.7 USD for 1 shirt. But as long as the fabric supply is self-sufficient, that is, moving to the OEM method, the profit will increase to $ 8 per shirt. For the ODM method – enterprises that design their samples and are self-sufficient in fabric, the price will increase to 12 USD, while for the OBM method - manufactured from the original brand, the price will be 15 times or more than processing.
Experts in the textile and garment industry all affirmed that to make the textile and garment industry stronger, it is necessary to convert from processing to higher methods, in which, the prerequisite is that enterprises must be proactive in fabric supply. "If the fabric is not produced in Vietnam, the processing method will continue to exist for a long time and Vietnam will continue to be competitive with Bangladesh and India with very cheap labor costs. In addition, fabrics produced in Vietnam will meet the requirements of the origin of goods from major markets such as the EU, Japan, Korea, the US, and other countries in the CPTPP. Investors will also have to stick for a long time because of the large investment money, high profits, close connection to the supply chain, social responsibility, and high environmental protection" - Mr. Tuan emphasized.
To be self-sufficient in fabric supply, many Vietnamese enterprises are promoting research and development of fibers and fabrics of natural origin, and highly appreciated by the world market. Typically, pineapple fiber of ECOSOI, the coffee fiber of Fastlink, green hemp fiber of An Phuoc Group ...
Greener for better competition
In addition to the pressure on self-reliance in domestic fabric supply, Vietnam's textile and garment industry is also facing a series of pressures from the Government as well as brands and import markets to green the production chain. Currently, the packaging of big brands such as Nike, Zara, and Uniqlo ... all have logos geared towards Net Zero by 2050, indicating an irreversible trend taking place globally.
At COP 26, 147 out of 163 countries made Net Zero commitments by 2050. Of these, there are currently 2 countries that have achieved Net Zero: Bhutan and Suriname; 13 countries have been concretized into the law, mainly countries in Europe and the US - where the main export markets of Vietnam's textile and garment are concentrated. In addition, 53 countries have incorporated Net Zero commitments into their policies, including Vietnam, and the remaining 79 are considering other forms of legislation.
Ms. Nguyen Thanh Ngan, Deputy Head of the Investment and Development Department – of Vietnam Textile and Garment Group, said that if Vietnam's textile and garment industry does not move to reduce greenhouse gas emissions, it will not be able to export to Europe as well as countries that have concretized Net Zero commitments into law. "There is software in the world that can calculate the level of greenhouse gas emissions of fabric products. Therefore, compliance is the only way that businesses can do to maintain exports to these markets," Ngan emphasized.
To do this, the textile industry needs to transition to a circular economy instead of the current linear economy to reduce the carbon footprint across the chain. Specifically, it is necessary to extend the product life cycle, and supply chain transparency so that when scanning the QR code, customers can know information such as where the product is produced, how carbon is emitted, whether the factory uses child labor, forced labor, or not... All these things are being considered a lot by European countries and surely Vietnamese textile and garment enterprises will have to comply in the future. Accordingly, the lower the carbon footprint of a commodity, the more competitive advantage it will have.
The transition to green production is being actively taken initiative by textile and garment enterprises as a way to protect themselves. Mr. Nguyen Van Kiem, General Director of Bao Minh Industrial Park, said that currently, 70% of enterprises in Bao Minh Industrial Park operate in the textile and garment sector. All these enterprises are very interested and seriously implement the Government's regulations as well as the requirements of partners and brands in the treatment of wastewater, and waste into the environment as well as energy saving and circular energy use. This shows that Vietnamese textile and garment enterprises are not outside the general global trend in green transformation of production chains.
(Source: Haiquanonline)
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