Where have our foreign trade orders gone this year? This report gives the answer!
Vietnam’s “Saigon Economic Times” reported on June 6 that clothing orders are pouring in, but some manufacturers are afraid to accept new orders due to insufficient production capacity. The biggest difficulty currently faced by Vietnamese garment enterprises is the shortage of labor and raw materials. right! It’s Southeast Asia! Through research, the editor learned that orders from Vietnam have been scheduled until the end of the year! And orders placed before October will no longer be accepted. In comparison, the operating rate in Jiangsu and Zhejiang is only 66.5%, which is at a low operating rate.
The industrial chain is rapidly and complete
An editor previously said in an article that most of Vietnam’s economic development is in the downstream manufacturing industry, such as the clothing industry. Its main raw materials, such as chemical fibers and fabrics, must be imported from my country to meet the needs of production and become “Vietnam Weaving”. Finished product, but just recently the editor learned that Vietnam’s textile industry has begun to develop upstream!
You must know that in almost all industries, the integrity of the industrial chain is from bottom to top, because the higher you go up, the greater the difficulties you face. Now, Vietnamese companies have begun to expand their production capacity in gray fabrics. For example, Vietnam Textile and Garment Group has transferred to Natexco Rented 96 modern air-jet looms to increase the scale and fabric output from 1.2 million meters per month to 1.9 million meters per month. A complete industrial chain will allow Vietnam and other Southeast Asian countries to grab more orders!
What does it mean to have a complete industrial chain in Vietnam?
First of all, there is already excess domestic production capacity. According to data monitoring from Silk City.com, the current weaving inventory in Jiangsu and Zhejiang is 35.5 days. We can see from the chart that our weaving inventory generally showed an upward trend in the first half of this year. The gradual completion of Vietnam’s industrial chain means that a new batch of production capacity is about to appear. By then, due to the changes in the international environment The lack of orders caused by factors may lead weaving companies to enter a normal high inventory era.
Secondly, the influx of orders into Southeast Asia may become the norm. Southeast Asian countries have low labor costs and can avoid certain trade barriers. Although Vietnam, Thailand and other countries lag behind China in overall economic development, their textile and garment industries are prosperous and their industrial base is basically relatively high. Well, it can undertake industrial transfers. Now that the industrial chain is further complete, it is more likely that intermediary agents will give priority to Southeast Asia, which has lower costs. As one boss said in his own words: “We have just started to do foreign trade. The customer is a big agent in Hong Kong. Now, on the one hand, because of the epidemic, agents who want to come and visit our factory are also hindered and cannot come. On the other hand, the cost in Southeast Asia is much lower than ours, and most of their orders are now placed there.”
Many orders usher in a “labor shortage”!
The total population of Vietnam in 2022 will be 97.3386 million. However, due to Vietnam’s imperfect infrastructure and transportation, it will be difficult to recruit workers. Investors set up factories in Vietnam because the local labor force is cheap, the social order is relatively stable, and the tariffs are very favorable. But now Vietnam’s labor costs are increasing at 10% per year, most raw materials are imported from China, which is higher than China, and land use costs are also increasing significantly. In terms of labor costs, the wage conditions continue to be favorable due to the inability to recruit workers.
The conditions offered by the factory were about 2,400 to 3,600 yuan, and food and accommodation were included, but after three months, only 20 employees were found.
Taken together, the biggest advantage of our competitors in Southeast Asia is labor cost. If labor costs will rise in the future due to “difficulty in recruiting”, the advantage of low cost will gradually be lost in Vietnam. In recent times, the United States has repeatedly reported that it will The voice of canceling the additional tariffs. Once the additional tariffs are cancelled, the cost disadvantage of my country’s textile exports will be offset to a great extent, and some orders will be returned in a short period of time. Will the possibility of these orders “returning” increase again?
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