A Vietnamese garment factory. Weak demand from the US and EU is expected to have a negative impact on Vietnamese garment export. (Photo: vneconomy.vn) Nguyen Van Thoi,Chairman of the TNG Investment and Trading JSC., was concerned that Fed’sbenchmark hikes amid high inflation would depress consumption demand in the US.
Similar issues would also hamper export to the European Union.
As the US and EU are two major importers of Vietnamese garments, the fallingdemand would drag down their imports, to the detriment of Vietnamese textiles.
“Vietnamese textiles set an export target of 43-44 billion USD this year, but Idon’t think it would achieve the target," he said.
"Garment export is likely to grow around 5% year-on-year."
He also revealed that previously foreign firms placed orders for Vietnamesegarments six months in advance, but now they have to reduce the time window tothree months due to the high stock of unsold products caused by low domesticspending.
Than Duc Viet, General Director of the Garment 10 Corp., claimed that thenumber of placed orders for his company’s products is large enough to keep itbusy until late 2022.
However, there is a risk that foreign firms might reduce or cancel theorders to deal with mounting stock of unsold products. Higher fuel and materialcosts, coupled with weak demand from abroad, are eroding the company's profitmargin.
Factory 8 of the Ho Guom Group revealed that it normally receivedproduction requests of 300,000-400,000 garments in the past, but fromQ2 total production orders reduced to less than 200,000 garments.
"The outlook for garment export is not very bright until year-end.Previously, our partners were always eager to place orders, but now theirdemand has become lukewarm", said Khong Van Tai, Director of the factory.
Tran Nhu Tung, Chairman of the Thanh Cong Textile Garment Investment TradingJSC., shares the concern.
He held that demand for Vietnamese garments would drop further in Q4 since theUS has begun to implement Uyghur Forced Labor Prevention Act, making firmsmore cautious about garment imports.
"Firms are uncertain about the future, so they cut down on garment importto avoid risk", he explained.
Vu Duc Giang, Chairman of the Vietnam Textile and Apparel Association, forecastthat global demand for Vietnamese garments would become more volatile in thesecond half of this year.
High inflation in the US and EU would cause prices to skyrocket, effectivelyeroding consumers' purchasing power. As weak purchasing power reduces consumerdemand, textile firms are likely to feel the pinch over the rest of the year.
To deal with the situation, the chairman recommends that Vietnameseproducers seek customers elsewhere and be less dependent on the US and EUmarkets.
"Vietnamese producers have to find new partners in other markets to fillthe demand gap left by those in the US," he added.
The general director of the Garment 10 revealed that his company has to adjustits production plan more frequently to deal with volatile demand.
"Previously, we adjusted the production plan quarterly or monthly, but nowwe have to do that weekly or daily. We have no other choicebecause it is the only way to adapt to the volatility", he said.
He recommended that Vietnamese producers go greener to gain ground inhighly-demanding markets, thereby offsetting the demand contraction intraditional markets.
He also recommended the producers not shed staff but temporarily shifttheir production to other products to keep the ball rolling while waitingfor demand recovery.
Lastly, he urged the producers to add more value to their existing products tocarve out a niche in traditional markets./.
VNA
