Garment, textile, footwear industries face declining orders

Enterprises in the textile, garment and footwear industries are facing a decrease in orders through the rest of this year and possibly into the next year.

Pham Xuan Hong, chairman of HCM City Textile and Embroidery Association, said in the eight months of 2022, Vietnam’s textile and garment export value reached Us$30.1bil (Rm139bil), but this value mainly came from the first months of the year.

Since July, textile and garment industry enterprises have been facing many difficulties, including the reduction in export orders.

Many textile and garment enterprises in Ho Chi Minh City are seeing a sharp drop in export orders, mainly in the United States and the European Union (EU), because inflation pressure in these nations is large, forcing consumers to tighten spending. Furthermore, textiles are not essential goods, Hong said.

An analysis report on the textile industry published by Vndirect Research has also commented that the demand for high-end clothing items such as shirts and t-shirts made from recycled cotton fibres would slow down in the second half of 2022.

According to this report, garment companies said that US customers had shortened the period of ordering exports to three months before the deadline for goods delivery instead of six months due to high inventories and inflationary pressures.

At present, only a few large enterprises, such as Thanh Cong, Century Yarn, and Damsan Joint Stock Company, have enough export orders for the third quarter of 2022.

Still, some customers have cancelled the orders due to high inventory, while fourth-quarter orders have also slowed due to inflation concerns.

In the EU market, Pham Van Viet, chairman of Viet Thang Jean Co, Ltd, has also admitted that the orders of his firm have decreased by over 30% and they have been forced to cut working hours to maintain jobs.

In the US and Europe, although the world fuel prices have decreased, inflation in these markets is still high to make people tighten their spending. This has negatively impacted the textile and garment exports of Vietnamese enterprises because the two markets account for a large proportion of Vietnam’s textile, garment and footwear exports.

According to a representative of the Vietnam Leather, Footwear and Handbag Association, Vietnamese leather and footwear exports would certainly be affected by the last months of the year due to inflation and reduced consumer demand in key markets.

Many enterprises in the leather and footwear industry would face a reduction in export orders from now until the beginning of 2023.

Meanwhile, the leather and footwear industry is in inventory due to the reduced consumer demand.

To cope with this situation, the association said the footwear enterprises had been forced to reduce overtime.

At the same time, they have negotiated with partners to do orders that were signed during the pandemic for maintaining operations and ensuring employee income.

Textile, garment, leather and footwear are all major export industries of Vietnam and are directly affected by fluctuations in the world market.

The shortage of raw materials for production is due to strict anti-pandemic measures in the Chinese and Japanese markets.

Along with that, the difficult economy and increasing inflation in the large markets have affected enterprises’ purchasing power, orders and prices.

According to general director of Dap Cau Garment Corporation Luong Van Thu, the corporation has seen difficulties in the market and consumption of goods, as well as a reduction in terms of scale and price of export orders from the beginning of this third quarter.

As a result, orders from major markets in the US and Europe have fallen by up to 50%.

Hong said that exports are unlikely to recover soon. — Viet Nam NEWS/ANN