Getting rid of dependence on Chinese raw materials will reduce the advantages of Vietnam’s textile industry

According to Taiwan’s “Central News Agency”, due to the tense relations between Vietnam and China, the Vietnam Textile Association recently sent a letter to notify the association’s member manufacturers, requesting them to provide information on purchasing cotton, fiber, yarn, cloth, thread, etc. from mainland China in 2013-2014. Data on textile raw materials such as cotton linings, buttons, zippers, etc. Based on these data, we will establish an investment plan for Vietnam’s domestic raw material supply, minimize imports from mainland China, and find new sources of external supply. Among them, Thailand, South Korea, Indonesia, Malaysia and India are listed as the best substitutes for the Chinese market by the Vietnam Textile Association. ​
A senior reporter from Vietnam’s “Saigon Liberation Daily” said in an interview on the 23rd that 60% of the raw materials for Vietnam’s textile industry are imported from the Chinese market. Out of concerns about relations between the two countries, the Vietnamese government provides necessary assistance and encouragement to textile manufacturers. It does not rely on China for production.
At present, there are more than 4,000 textile and garment enterprises in Vietnam, with annual operating income of US$20 billion, providing employment opportunities for more than 2.5 million people, and contributing 10% to Vietnam’s GDP. The reporter once visited joint venture garment companies in Vietnam Industrial Development Zone. Some of them are OEMs for the famous Japanese brand Uniqlo, and some shirt products are exported to Eastern European countries.
Hu Jinlin, vice president of the Chinese Chamber of Commerce in Cambodia and president of the Wenzhou Association, said in an interview with reporters that after the anti-China violence in Vietnam last month, some Chinese textile owners who evacuated from Vietnam to Cambodia told him that the market determines the development of Vietnam’s textile industry. Mainland China products are the first choice for raw materials, and it is unrealistic for Vietnam to want to change all of a sudden. Compared with countries such as South Korea and India, the Chinese mainland market has the advantages of strong supply capacity, variety of designs, relatively low prices, and fast delivery. The price of textile and clothing raw materials imported from China is 10%-15% cheaper than in Vietnam. Vietnam’s “Saigon Economic Times” reported in March this year that in order to increase the proportion of localized products, Vietnam’s TNG Trading and Investment Company invested several million US dollars in cotton production in 2012. However, due to the increasing demand for textile and apparel raw materials in the world, the supply of domestic and imported raw materials is facing difficulties, and sufficient supply will not be provided in the short term.
Hu Jinlin said that not only businesses from mainland China but also many Hong Kong and Taiwan companies are investing in the textile industry in Vietnam. It is difficult for them to choose textile raw materials from other countries or Vietnam. Other foreign-funded enterprises such as Japan, South Korea and France will not ignore cost factors when investing in Vietnam. The increase in raw material prices means higher production costs, which will reduce Vietnam’s newly formed advantage in the garment manufacturing industry.