It’s trending! Recently, there has been heated discussion about whether Vietnam can become the “world’s factory”! There is a lot of news that has blown Vietnam to the sky. At the same time, Vietnam handed over their latest economic data report card for May. Let’s take a look at this report card first!
According to news recently released by the General Bureau of Statistics of the Ministry of Planning and Investment of Vietnam, Vietnam’s total import and export of goods in May 2022 is expected to reach US$62.69 billion, a month-on-month decrease of 4.7% and a year-on-year increase of 14.5%. In the first five months of 2022, the cumulative import and export volume of goods reached US$305.1 billion, a year-on-year increase of 15.6%, of which exports increased by 16.3%, imports increased by 14.9%, and the trade surplus was US$516 million.
Is there really such optimism behind economic growth?
Vietnam’s economic growth falls short of expectations
You should know that this year-on-year data comparison is from the time of the worst epidemic last year. It is understood that Vietnam’s exports are expected to increase by 25.6% in May; imports are expected to increase by 15.0%. It can be seen that the world’s major financial institutions previously estimated that Vietnam would make a lot of money this time based on Vietnam’s normal production capacity. Now the results have come out, but they are far less than expected.
From the data, we can see that Vietnam’s import growth is not much different from expectations, but the export growth is far from export expectations. Previously, an article on this public account said that Vietnam’s orders have been so large that there is a “labor shortage”, which shows that Although there are many orders from Vietnam, they are all unprofitable businesses. The sound is loud and the rain is small, and all the money earned is used to buy raw materials.
Relying on imported raw materials
Secondly, where do Vietnam import these raw materials? The answer is China! Although many orders flow to countries such as Vietnam, many are still undertaken by domestic companies. Looking at the data, regarding the import and export market in the first five months of 2022, the United States is Vietnam’s largest export market, with exports expected to reach US$46.7 billion. China has become Vietnam’s largest import market with an import volume of US$49.6 billion.
That is to say, it seems that the production goes to factories in Southeast Asia and does not stay in China, but in fact the upstream orders for these products still stay with our own company. Compared with countries such as Vietnam, the complete and efficient supply chain system established by my country’s textile industry reform and opening up is obviously beyond the reach of Vietnam in the short term. Therefore, although clothing companies have moved to Southeast Asia, there is still room for development in upstream industries such as raw materials and fabrics. However, we have to admit that whether it is the heavy damage caused by the epidemic or the impact of war tensions, the global The textile and apparel industry has been greatly impacted, and the industry’s low operating conditions will continue!
Vietnam’s textile industry lacks stability
Finally, let’s take a look at China’s trade balance in the past twelve months. As a true manufacturing powerhouse, there has been no negative value throughout the year. Even during the Spring Festival holiday, it still remained positive! Let’s see that in the past 12 months, Vietnam’s trade balance has been uneven, and even negative in many months. This shows that the stability of Vietnam’s manufacturing industry is far less than that of China!
This kind of fluctuation is mainly due to the fact that Vietnam does not have the same complete industrial chain as ours. Therefore, Vietnam currently has a very small chance of establishing a world factory. Low-end products may be partially migrated, but there is only one gap between Vietnam and China. There is absolutely no possibility of competition in a complementary industrial relationship!
(Data source: Internet)
(Data source: Internet)
At present, the situation of “flying southeast” on the clothing side of the textile industry does exist. The number of clothing companies has also declined compared with previous years, and the industry is reshuffling faster and faster! However, in the short term, the contradiction between supply and demand in the textile industry is the main problem, and the recovery of the industry requires textile people to wait patiently.
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