The 9th Pan-Beibu Gulf Economic Cooperation Forum was held in Guangxi on the 26th. The forum provided opportunities for China and ASEAN to further deepen cooperation. In recent years, Vietnam, as an important textile and clothing exporter in ASEAN, has achieved positive results in textile industry capacity cooperation with China, becoming a highlight of China-Vietnam cooperation.
“We have invested more than 30 million yuan in this machine. It is the first liquid ammonia mercerizing machine in Vietnam,” Wang Libing, head of the Vietnam industry group of Shengtai Group, a Chinese textile and garment enterprise, pointed to the huge machine that occupies the entire factory. told reporters.
Liquid ammonia mercerization is a method to improve fiber function, characteristics and feel. Fabrics treated with liquid ammonia are more elastic and shiny. Compared with the lye used in the past, liquid ammonia is not only more effective, but also more environmentally friendly.
This liquid ammonia mercerizing machine and its supporting technology were introduced to Vietnam by Shengtai Group. In Wang Liping’s view, this is the significance of China-Vietnam production capacity cooperation: on the one hand, Chinese manufacturing companies will promote advanced experience and technology to Vietnam to help Vietnam accelerate its industrialization and urbanization process; on the other hand, this will also promote China’s Transform and upgrade manufacturing companies and help them participate in global market competition and value chain reconstruction.
In recent years, with the rise in China’s production costs and the rise of European and American trade protectionism, the growth rate of China’s textile industry’s production scale, export volume and total investment has declined. More and more Chinese textile companies are seeking to invest and build factories overseas to improve operating efficiency through the globalization of procurement, production and sales.
Shengtai Group is a member of Chinese textile companies accelerating the deployment of overseas productivity. According to Wang Libing, the group’s garment sector entered Vietnam as early as 2009, and then extended the industrial chain upstream. In 2012, it established a cotton spinning factory in Vietnam.
After having an in-depth understanding of the Vietnamese market, Shengtai Group found that the development of Vietnam’s textile and garment industries is uneven. It has large garment production capacity and large exports to Europe and the United States, but its upstream fabrics mainly rely on imports, especially imports from China. In view of this, Shengtai Group began to prepare to build a fabric factory in Vietnam in 2012 and put it into production in June 2014. Wang Libing said that this is the first large-scale yarn-dyed fabric factory in Vietnam.
Talking about the reasons for investing in Vietnam, Wang Libing said that in addition to the labor cost advantage, Shengtai Group mainly focused on Vietnam’s location advantages. Vietnam joined the World Trade Organization (WTO) at the end of 2006 and is also a member of the China-ASEAN Free Trade Area. Vietnam also seeks to sign free trade agreements with the European Union and Japan, and has joined the Trans-Pacific Partnership (TPP) negotiations.
Currently, Vietnam has attracted textile companies from China, South Korea, Japan, France and other countries. The export volume of foreign-invested enterprises accounts for about 60% of Vietnam’s annual textile and clothing exports. Leading Chinese textile companies such as Texhong, Blum Oriental and Shenzhou International have invested in and built factories in Vietnam and even built textile industrial parks to seek linkage between domestic and foreign production capacity.
Shengtai has developed rapidly after entering Vietnam. Currently, it has set up factories in multiple industrial parks in Nam Dinh Province, Hung Yen Province, Bac Giang Province and other places in Vietnam. The factory area covers an area of nearly 450,000 square meters and employs 12,000 people, forming a large-scale enterprise. A complete vertically integrated industrial chain from cotton spinning to fabrics to ready-made garments.
Shengtai’s first garment factory in Vietnam is located in Nam Dinh Province. The reporter saw here that there were more than 700 workers working on the assembly line in a workshop. According to production manager Ma Lan, this workshop can produce 30,000 pieces of garments every day. The workshop management team is very international, with members from the Philippines, Sri Lanka, Singapore, Malaysia, China, Peru and other countries.
Wang Libing said that Shengtai’s rapid development in Vietnam not only benefited from the group’s senior management’s accurate judgment of the market situation, but also benefited from the full support of local industry associations in Vietnam. “During the preliminary research, we received a lot of help from the Vietnam Textile and Garment Association. They provided many geographical locations for us to compare, and also introduced us to the trends and five-year development plan of the entire Vietnamese textile market.”
Wang Libing also mentioned some difficulties encountered when building the factory. He said: “Vietnam lacks fabric factories because it is not driven by equipment only like cotton yarn mills, nor is it labor-intensive like garment factories. It takes into account both, requiring both high-end equipment and skilled workers, as well as Technical know-how and management skills are required.” In addition, Vietnam also has great room for improvement in the supply and after-sales service of textile equipment and spare parts.
Talking about the future, Wang Libing said that the group is considering further improving the industrial chain in Vietnam, such as the production of auxiliary materials. This is not only a useful supplement to the current main industry, but also a production method strongly promoted and supported by the Vietnamese government.
The production of auxiliary materials includes a series of industries such as buttons, trademarks, and packaging material production. Wang Libing gave an example. Since Vietnam does not have a complete auxiliary materials industry, Shengtai currently needs to purchase washing water labels for ready-made garments from China. Nowadays, many customers in the clothing industry require quick response, but the washing water labels are produced in China and then airlifted to Vietnam. In addition to customs clearance procedures, it takes three or four days. Not only is it not fast enough, but the cost is also high.
The expansion of Sino-Vietnamese textile industry capacity cooperation is inseparable from Pan-Beibu Gulf economic cooperation, and Pan-Beibu Gulf economic cooperation is an important part of the construction of the “Belt and Road”. Wang Libing said, “One of the important contents of the connection between the Belt and Road Initiative and Vietnam’s “Two Corridors and One Circle” plan is interconnection. If China and Vietnam’s roads and railways are connected, the supply of textile accessories will be more convenient, which is a major benefit for enterprises.
