Thanks to foreign importers, more than enough orders have been placed, creating several jobs at the Vietnamese apparel firms, till the end of the third quarter of 2010 and probably beyond. But sometimes, too good might also turn too bad.
During the first six months of 2010, apparel exports earned $4.87 billion, which is a rise of 17.2 percent over the corresponding period of 2009. Similarly, exports to US surged by 15 percent, while that to Japan rose by 10 percent.
As per the Vietnam Textile and Apparel Association (VITAS), order books are getting filled, with rising exports prices, which are already up by 10-15 percent over the same period of the year 2009.
While bigger corporations like Viet Tien, An Phuoc, Nha Be and Garment Company No 10 have revealed that, they have contracts till the end of 2010, other firms have announced that their orders are sufficient till the third quarter.
A senior official of Vietnam Textile and Garment Group (Vinatex), Nguyen Thi Hong Tin, has cited that, global consumption of apparels has risen again. More so, foreign importers are placing more orders with Vietnam instead of China, owing to reduced prices which are being offered by Vietnamese manufacturers.
But, the cost of raw material has increased sharply, with prices of cotton increasing by 40 percent as compared to the same period in 2009, thereby, pushing production costs up. More over, Vietnam has to yet depend on imports of materials, which account for 80-95 percent of the overall materials.
Even around all this, Vietnamese firms are unable to increase their export prices, as this would drive away the foreign importers to other nations offering low costs, such as Bangladesh or Pakistan, informed Pham Thi Lieu, General Director of MSA-Hapro Joint Venture.
Other problems apparel firms are facing, which is also raising the cost of manufacturing is the consistent electricity cut. Such power cuts have forced quite a many apparel industries to operate on generators, thereby, increasing their cost by six-times.
They work with the help of generators and don't dare deliver their goods late as then the company is forced to dispatch their orders by air, forcing them to pay increased rates of 100 million dong for a 40 foot container.
Further down in the list of worries for apparel firms is the dearth of labourers. Lieu stated that, if firms have to go through so many problems all at one go, then they might have to pull down their shutters.
As of now, the aggregate wage of northern apparel workers has increased to 1.8-2.2 million dong a month, but yet, more than 10 percent have changed their jobs. Vitas have urged the garment firms to relocate their manufacturing units to rural areas, in order to avoid labour shortage.
ALCHEMPro News Desk - India
marketing@alchempro.com
