The
textiles and clothing segments in Viet Nam stand little chance for any
meaningful economic growth in international sales over the near term without
substantial reform, says the Textile Outlook International.
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For starters, domestic
companies need to change their method of sales from outsourcing to selling
direct to customer, says Textile Outlook.
This suggestion is
consistent with the global trend in textiles and clothing away from
outsourcing. International brands are increasingly seeing less benefit from
outsourcing and are moving back to the direct to customer model.
More top global brands are
finding that the Viet Nam allure of cheaper overhead, lower labor cost and
reduction in taxes isn’t really a more profitable option for them over the long
term.
According to leading U.S.
experts, the number of manufacturers selling directly to customers is expected
to grow 71% in 2017 to more than 40% of all manufacturers. And over a third of
U.S. consumers report they bought directly from a brand manufacturer’s web site
last year.
The textiles and clothing
segments in Viet Nam could find themselves shrinking over the next decade if
the transformation away from strictly outsourcing to the direct to customer
model isn’t adopted.
International brands no
longer see outsourcing as the panacea they once did and textiles and clothing
in Viet Nam.
Secondly, only a small
portion of clothing produced in the Southeast Asian country is fabricated from
materials sourced in country, says Textile Outlook, noting that this needs to
increase significantly.
Here again, this
recommendation is in line with the recommendation of substantially all the
industry experts— as boosting the localization in the segments is a
prerequisite to benefit from free trade agreements such as the Viet Nam-EU
pact, which comes into force in 2018.
To benefit from the trade
deal, roughly 50% or better of the raw materials and intermediary goods in
textiles and clothing need to be sourced in country, from EU member countries
or from the Republic of Korea.
Thirdly, Textile Outlook
noted there needs to be a monumental shift away from manufacturing lower end
products to creating innovative quality, high value manufactured items and
fashionable clothing.
Lastly, more efficient
sourcing through vertical integration is essential, as well as an improvement
in productivity by enhancing research, training and development.
The segments have already
began acquiring advanced machinery and equipment for items such as ring
spindles and open-end rotors to modernize its manufacturing facilities but much
more extensive investment is needed, Textile Outlook concluded.
Textile Outlook
International is published six times a year by Textiles Intelligence. Each
issue provides an independent and worldwide perspective on the global fiber,
textile and apparel industries.
Source:
VOVNews