When Taiwanese fabric factories began to build new production capacity outside the country, orders were also transferred to the local area. An upstream manufacturer revealed that since 2019, it has been obvious that customer orders have gradually shifted to Vietnam, and the small and medium-sized yarn factories that remain in Taiwan may have to wait a few months in the future.
Zhan Zhengtian, chairman of the Textile Association and chairman of Yijin Group, decided at the end of October 2019 to close the Tainan plant, the only production capacity of Yijin’s parent company; an industry official People comment that this is a very decisive decision, because the operations of Taiwan’s yarn mills will only become more and more difficult in the future, with no signs of improvement in sight.
Industry insiders further said that in the past, Taiwan’s yarn mills could continue to survive mainly because they entered into special specification products and avoided the Red Sea competition with China for mass specifications; however, these In 2008, Chinese yarn mills also realized that relying on price competition could not last long, and began to turn to the development of products with special specifications.
In addition, Taiwanese fabric factories originally manufactured in China, but in response to the requirements of brand customers, they gradually moved to Vietnam to set up new production lines, which also led to the gradual construction of local yarn production capacity. Form a complete industrial supply chain. This move directly squeezed out orders from Taiwanese yarn factories. “I will order goods faster from Vietnam than from Taiwan,” which immediately highlighted the advantages and disadvantages of the geographical location.
You can get a glimpse of the clues by looking at the financial reports of listed companies. Observe the companies that only have yarn production capacity in Taiwan. Small and medium-sized companies include Jisheng, Hongyi, Julong, Most of the profit figures of Guangming, Hongzhou, etc. in the first three quarters of last year showed a recession pattern. Only Guangming relied on non-industry gains from the disposal of assets.
The unnamed yarn factory bluntly stated that the U.S.-China trade war has made the market conservative and pessimistic, but this will be short-lived. After all, the two sides cannot continue to fight forever, and the transfer of production capacity has It’s long-term, and once you move away, it’s difficult to come back. As Vietnam’s textile industry clusters become more mature, orders from brand customers will naturally be concentrated there.
New Fiber recently announced the signing of a letter of intent for cooperation with VNPOLY, a subsidiary of Vietnam Oil and Gas Group PVN, under which New Fiber will take over the fiber production capacity of the other party.
New Fiber, which has an annual revenue of nearly NT$40 billion, will cooperate with the other party. General Manager Luo Shiquan said frankly that in response to the requirements of brand customers and the company’s speed in Vietnam, If it is too slow, they will want to contract production capacity through cooperation with local manufacturers, which is one of the shortcuts to quickly enter Vietnam.
He Yaoren, general manager of Demai Industrial Consultants who has long been concerned about the textile industry, believes that when brand customers set their sights on Southeast Asia and bring a series of supply chains to plant their flags there, Large companies have abundant resources to cope with global layout, but small and medium-sized enterprises find it difficult to keep up. Vietnam’s textile industry cluster is gradually taking shape, which will be the most discussed issue among Taiwan’s yarn mills.
