Textile manufacturer Ruhong will build a new production base in Indonesia. He originally thought that the enthusiasm for textile factories to invest in Vietnam might subside. However, according to statistics from the Investment Review Commission, the total investment amount of the textile industry in Vietnam in 2019 83.834 million U.S. dollars, the fourth highest record in history, and the capital structure was changed to cloth factories to “take over” the garment factories, taking the lead in Taiwanese investment in Vietnam.
Industry insiders analyze that before the U.S.-China trade war started, Taiwanese textile factories had already taken the lead in setting up locations in Vietnam, not because of their ability to predict, but because of their focus on the local population. Dividends and cheap wages have attracted textile companies Ruhong, Juyang and Quangyue to continue investing in Vietnam over the past five years, increasing the proportion of production produced in Vietnam.
However, Ruhong suddenly announced in September 2019 that it would transfer resources to Indonesia and prepare to build a new production base in three years. It was originally thought that the investment boom in Vietnam would change the direction of investment due to Ruhong, but according to statistics from the Investment Review Committee of the Ministry of Economic Affairs, the total amount of “textile industry” and “ready-made clothing and accessories manufacturing” in the two categories, Taiwanese factories invested in the textile industry in Vietnam was 8383.4 Although the annual decrease was 16.8%, it still ranked the fourth highest in history, second only to US$139 million in 2016, US$100 million in 2018, and US$87.797 million in 2008.
Looking carefully at the investment portfolio, the investment amount in the garment and apparel manufacturing industry last year was only US$13.322 million, accounting for only 15.8% of the overall textile investment.
Displaying historical data shows that from 2012 to 2016, garment factory investment in Vietnam accounted for 30% to 40% of the textile industry, and in 2013 it was as high as 70%. In the past, the downstream garment industry was the main force in Vietnam, but now it has shifted to the midstream and upstream textile supply chain. The list of investment companies under observation includes Far East New, Mianchun, Deli, Xingcai, etc., and there are many well-known manufacturers.
Among them, Far East Xin relies on its consistent model. Last year, the knitted fabric factory prepared to open the second phase of production capacity. Deli’s cumulative investment in Vietnam last year reached US$13.6 million, and Xingcai also announced an additional investment of US$10 million.
Guo Fengnian, general manager of Mianchun, one of the top five knitted fabric factories in Taiwan, announced that he plans to invest US$30 million in the next two years to expand production lines in Vietnam. Guo Fengnian further said that the current production capacity ratio of Mianchun in Taiwan and Vietnam is 7:3, and the target will be adjusted to 1:1 in 2021, which means that Vietnam will significantly increase its production capacity.
Most of the above-mentioned manufacturers are adding fabrics. The industry has analyzed this wave of investment boom in Vietnam. Fabric factories have taken over the stick from garment factories and continue to compete for land in Vietnam.
Ruhong Chairman Hong Zhenhai commented on the investment conditions in Vietnam in the past. He described that if you go to Vietnam in a labor-intensive industry, you “can only wait to die” because of the lack of local workers. The problem is serious, and at the same time, wage increases are much higher than those announced by the local government.
In other words, the two major pressures of labor shortage and wages are urging garment factories to expand their production capacity. However, at this moment, cloth factories are willing When he went to Vietnam, Guo Fengnian analyzed that in fact, cloth factories do not require as many people as garment factories. Downstream garment manufacturing is a labor-intensive industry. A garment factory often requires thousands of people, while a cloth factory can only have a few hundred people at most. There is a shortage of workers or rising wages. The negative impact is relatively small.
A fabric factory owner pointed out that the consumer market is constantly changing, and brand customers must rush to get products on the shelves quickly or change styles to reduce the risk of unsalable goods or inventory costs. Since Vietnam has There are huge garment OEM clusters. If the cloth factory ships to the garment factory nearby, it can achieve the goal of short delivery time. This is the main reason why cloth factories have invested in Vietnam.
