Declining demand, high inventory, rising labor costs, and exchange rate losses... are the difficulties that enterprises in the textile and garment industry have been facing.
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Declining demand, high inventory, rising labor costs, and exchange rate losses... are the difficulties that enterprises in the textile and garment industry have been facing.
In fact, the production and export activities of textile and garment enterprises are showing signs of slowing down.
Nhat Viet Securities Joint Stock Company (VFS) pointed out the difficulties of the textile industry. VFS said that the price of input materials decreased, but the selling price decreased accordingly, so the gross profit margin did not improve, while the exchange rate loss increased sharply. Rising labor costs in a competitive environment make businesses lose their advantages.
Demand in the two largest markets, the US (inflation) and the EU (energy crisis) declined while inventories were high and many orders were canceled. Purchasing power is difficult to recover within the next 1 year.
Many orders from Vietnamese textile and garment enterprises were canceled in the third and fourth quarters. Along with that, orders continued to decline, and the main markets of Vietnam saw a marked decrease in the number of orders. Specifically, the number of orders in Europe decreased by 60%, the US decreased by 30-40%. The reason is due to the increase in inventory, accounting for 20-25%. Meanwhile, many customers forced prices due to high inventory, so businesses were forced to accept low prices.
According to the generation of Vietdata in the recent Textile and Garment & Footwear Industry Report, "The export outlook of the Textile and Garment & Footwear industry is not very positive until the first half of 2023 due to slowing demand in most major export markets, while inventories remain high".
According to Mirae Asset Securities (Vietnam), the garment segment, despite the growth in production and export, has shown signs of slowing down. In November and 11 months of 2022, Vietnam's garment export value was estimated at $2.85 billion, down 6.4% over the same period, and $34.6 billion, up 18.7% over the same period.
Garment manufacturing activity continued to slow down in November when the industrial production index (IIP) in November and 11 months of 2022 increased by 2.2% and 16.4% respectively over the same period.
For the yarn segment, exports and production continued to decline. Yarn export value in November and 11 months of 2022 was estimated at US$227 million, down 45.9% over the same period, and US$4.4 billion, down 14.1% over the same period.
Inner textile production also declined. Specifically, the IIP of the textile segment in 11 months of 2022 is estimated at a decrease of 1.9% over the same period.
Source: VNA
TEXTILE AND GARMENT & FOOTWEAR INDUSTRY REPORT - 12/2022
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