Hanoi (VNS/VNA) - Enterprises in the textile,garment and footwear industries are facing a decrease in orders through therest of this year and possibly into the next year.

Pham Xuan Hong, chairman of HCM City Textile and Embroidery Association, saidin the eight months of 2022, Vietnam’s textile and garment export value reached30.1 billion USD, but this value mainly came from the first months of the year.Since July, textile and garment industry enterprises have been facing manydifficulties, including the reduction in export orders.

Many textile and garment enterprises in HCM City are seeing a sharp drop inexport orders, mainly in the US and EU, because inflation pressure in thesenations is large, forcing consumers to tighten spending. Furthermore, textilesare not essential goods, Hong said.

An analysis report on the textile industry published by VNDirect Research hasalso commented that the demand for high-end clothing items such as shirts andt-shirts made from recycled cotton fibres would slow down in the second half of2022.

According to this report, garment companies said that US customers hadshortened the period of ordering exports to three months before the deadlinefor goods delivery instead of six months due to high inventories andinflationary pressures. 

At present, only a few large enterprises, such as Thanh Cong (TCM), CenturyYarn (STK), and Damsan Joint Stock Company (ADS), have enough export orders forthe third quarter of 2022. Still, some customers have cancelled the orders dueto high inventory, while fourth-quarter orders have also slowed due toinflation concerns.

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

In the US and Europe, although the world fuel prices have decreased, inflationin these markets is still high to make people tighten their spending. This hasnegatively impacted the textile and garment exports of Vietnamese enterprisesbecause 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 HandbagAssociation, Vietnamese leather and footwear exports would certainly beaffected by the last months of the year due to inflation and reduced consumerdemand in key markets. Many enterprises in the leather and footwear industrywould 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 reducedconsumer demand.

To cope with this situation, the association said the footwear enterprises hadbeen forced to reduce overtime. At the same time, they have negotiated withpartners to do orders that were signed during the pandemic for maintainingoperations and ensuring employee income.

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

The shortage of raw materials for production is due to strict anti-pandemicmeasures in the Chinese and Japanese markets. Along with that, the difficulteconomy and increasing inflation in the large markets have affectedenterprises' purchasing power, orders and prices.

According to General Director of Dap Cau Garment Corporation Luong Van Thu, thecorporation has seen difficulties in the market and consumption of goods, aswell as a reduction in terms of scale and price of export orders from thebeginning of this third quarter. As a result, orders from major markets in theUS and Europe have fallen by up to 50 %.

Hong said that exports are unlikely to recover soon.

At present, large enterprises with many orders tend to share their orders withother enterprises lacking orders. Meanwhile, some others are looking forshort-term opportunities in the domestic market, Hong said.

Besides that, the enterprises are looking for orders in new markets. Forexample, the HCM City Textile, Embroidery and Knitting Association enterpriseshave recently cooperated with partners in India and Pakistan to get orders fromthese markets.

Truong Van Cam, vice chairman and general secretary of the Vietnam Textile andApparel Association, said that the association is making statistics to havesolutions for supporting the enterprises. It focuses on those having a largedecrease in orders, affecting workers.

To overcome the difficulties, Cam has suggested that overseas Vietnamese tradeoffices continue to share information about the markets, especially the EU.

The Vietnam Trade Office in China coordinates with China's authorities tocreate favourable conditions for transporting material for production promptly.

The Vietnam trade offices in the US and France must provide information aboutthe market and suitable textile and garment fairs for local enterprises.

In addition, the enterprises themselves also need to diversify markets, promotedigital transformation and innovate technology.

According to Le Tien Truong, chairman of the Vietnam National Textile andGarment Group (Vinatex), unpredictable fluctuations will remain due to manyfactors, especially the Russia-Ukraine conflict, price fluctuations of rawmaterials and fuel, and inflation in export markets such as the US and Europe.

Therefore, Vinatex will have solutions to stabilise export orders, jobs andcustomers for the year's production and business results. 

To increase competitiveness, Việt Nam's garment industry needs to prioritisethe production of packages, yarn and fabric, and sewing. It also prioritisesthe development of green and recycled products to promote exports to Europeancountries, Truong said.

The business community expects the Government to soon approve the"Development strategy of the textile, garment and footwear industriesuntil 2030, with a vision to 2035", creating favourable conditions fordeveloping green industrial parks. 

Large enterprises centralise wastewater treatment, advanced technology, andgreen technology to attract investment in textile dyeing. That would solveproblems in fabric, meet origin requirements and take advantage of free tradeagreements.

At the same time, the State is considering removing import tax imposed onmaterials for producing export goods; soon implementing supportive packages forbusiness recovery and employees.

According to VNDirect Research, the domestic textile and garment industry willbe brighter in the first quarter of next year because garment products willreduce 2-4 % in export tax to the EU market in 2023 under the EU-Vietnam FreeTrade Agreement (EVFTA).

In addition, the European Commission forecasts that inflation in the bloc willreach 8.3 % in 2022 and fall to 4.3 % in 2023. 

The research believes lower inflation will stimulate shopping demand forfashion items in 2023. Therefore, it expects some textile enterprises exportingsuits, shirts, pants and skirts to Europe would benefit from EVFTA, includingMay Song Hong, May 10 and Viet Tien./.