Vietnam, the world’s second-biggest garment exporter, is facing the risk of losing orders to competitors amid the complicated Covid-19 situation in August.
Gia Dinh Group JSC in the southern province of Binh Duong has secured orders till the end of December, but face higher material prices plus late shipments, along with higher logistics costs. The company’s management board said if the pandemic prolongs, it would fail to fulfill its orders.
Over 80 percent of garment and textile enterprises in the southern region have had to either lower labor productivity or suspend operations to combat the disease.
Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association (VITAS), said production in August is “extremely difficult”, especially for firms in southern localities imposing social distancing. Up to 90 percent of production chains in the south have been broken.
Meanwhile, only 70-80 percent of garment and textile companies in the northern region are still operating.
Delivery pressure amid outbreaks is a big challenge for garment and textile enterprises now, he said, stating that if they fail to meet delivery deadlines, their customers would cancel orders, which will affect production both this year and the next.
“If the Vietnamese market is not stable, partners will shift orders (to other countries). Garments are seasonal. Nobody wants to buy outdated clothes though they are on sale,” the VITAS chairman said.
The Ministry of Industry and Trade also stated garment and textile enterprises in Vietnam are facing the risk of international clients postponing or canceling orders, and shifting their focus to other countries. “When the pandemic is controlled, it will be very difficult to resume business relations, and that will take time,” the ministry said.
The VITAS chairman also mentioned the risk of labor shortages. Many workers have left Ho Chi Mih City for their hometowns to avoid being infected with the coronavirus, and only 60-65 percent may return to the city when the Covid-19 outbreak is pushed back, according to Giang. “There will be rather severe labor shortages in the coming time,” he predicted.
Vietnam exported $18.6 billion worth of textile and garment products in the first seven months of this year, a year-on-year increase of 14.1 percent, according to the General Statistics Office.