Garment exports: The 19 billion dollar target may be unattainable

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VietStock FI English - 27 month(s) ago 1 readings

Garment companies have voiced their worry that the target of 19 billion dollars worth of export turnover in 2012 could be an “impossible mission,” for many reasons.

State management agencies announced that the garment export turnover in 2011 reached 15.6 billion dollars, an increase of 40 percent in comparison with 2010. The achievement has been hailed as a big success of the industry in the context of big difficulties.

However, experts have pointed out that this is not a big success to be proud of. In fact, the export turnover was high because of the high input material costs. According to the General Department of Customs, in 2011, the import turnover of fabric, fiber and cotton for the textile and garment industry reached 9.3 billion dollars. Though the fabric imports worth 6.73 billion dollars have been used not only for the garment industry, one still can see that the imports for the industry were relatively high.

According to Pham Xuan Hong, General Director of the Saigon 3 Garment Company, in 2011, Saigon 3 got the turnover of 1500 billion dong, higher than the 900 billion dong earned in 2010. However, Hong admitted at the meeting of the members of the Vietnam Textile and Garment Association (Vinatas) on March 6 that the growth was partially created by the increases of fabric and material prices.

Meanwhile, garment exporters have warned that the export turnover in 2012 would not be backed by the high input material prices. Deputy President of Garmex Saigon Nguyen An said that the garment export turnover in 2011 climbed to 15 billion dollars, partially because of the cotton price increases to 5 dollars per kilo. However, the cotton price has dropped to 2.8 dollars per kilo.

Meanwhile, General Director of Gia Dinh Garment Company Le Dong Trieu has affirmed that the cotton prices would not fluctuate heavily this year.

Regarding the consumption markets, garment companies have voiced their concern that the whole year 2012, not only the first six months of the year as previously forecast, would be a challenging year for the garment industry. Even big companies have complained that they lack orders for 2012.

Phan Thi Hue, President of Thanh Cong Group, has also said that her company would have to struggle with difficulties in the whole year 2012, though experts once predicted that the difficulties would be eased in the second half of the year.

Hue said that the optimistic forecasts about the last six months of the year might come from the expectation that by that time, enterprises would use up all the materials they imported before at high prices.

However, Hue has affirmed that the difficult period would still last. The number of orders from Europe is on the decrease. Regarding the US market, the company’s representatives had meetings with the US partners, and found out that the situation was not satisfactory.

The representative of a big company with 6000 workers in Go Vap district of HCM City said that he can see bad signals right at the beginning of 2012.

The company once strived to obtain the 25 percent growth rate in 2012. However, after drawing up the business plan, the company has realized that the conditions are too bad to fulfill the plan. The company has received a notice on cutting the orders from Europe by 50 percent.

“A lot of things are on the decrease, including the orders, FOB product percentage, outsourcing prices. It is really difficult for us and the 6000 workers,” the representative said.

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