Take note of positive signs

On June 6, within the framework of the event series "Connecting the international supply chain of goods 2024" (Viet Nam International Sourcing 2024), the Department of European - American Markets (Ministry of Industry and Trade) organized an international workshop with the theme "Promoting export recovery momentum to key markets - Opportunities to bring Vietnamese fashion, furniture and household goods into the international distribution system".

According to data from the General Department of Customs, the export turnover of the fashion and interior industry of Ho Chi Minh City in the first 5 months of the year was quite high, reaching 18.5 billion USD and increasing by 45% over the same period in 2023.

The textile and garment industry alone achieved export turnover of over 1.2 billion USD, an increase of 40%; the export turnover of the wood and wood products industry reached over 175.6 million USD, an increase of more than 80% over the same period in 2023.

For the household industry, the export turnover of Ho Chi Minh City in the first 4 months of 2024 for the computer, electronic products and components industry group is estimated at 5.4 billion USD, double that of the same period in 2023; the handbag, wallet, suitcase, hat and umbrella industry group reached nearly 142 million USD, up 47% over the same period in 2023.

Mr. Ta Hoang Linh, Director of the European - American Market Department, Ministry of Industry and Trade, said that overall, the export turnover of fashion, furniture and household goods has recorded impressive growth in recent years.

Despite unprecedented difficulties after Covid-19, which caused a decline in export turnover, this industry group has had a positive start since the beginning of 2024 when demand in key export markets gradually recovered, thereby signaling a positive outlook in the coming time.

The market is increasingly demanding

However, many internal difficulties and increasingly strict regulations from export markets, related to greening the production and supply chain, sustainable development criteria, circular production... pose significant challenges for Vietnamese export enterprises in maintaining stable growth momentum and seeking opportunities to penetrate deeper and more diversely into large global distribution systems.

For example, in the textile, garment and footwear industries, exporting enterprises need to overcome a series of “green barriers” when accessing developed markets, especially the EU. Most recently, the Corporate Sustainability Assessment Directive (CS3D) was voted on by the European Parliament and is expected to take effect from July 1, 2024.

As for the furniture, wooden products, and household appliances industry, the revised and newly issued laws in the US and EU set higher requirements for wood traceability, safety certification, business reporting, as well as regulations on forest management and chemical use for Vietnamese export enterprises.

According to Mr. Tran Phu Lu, Director of the Ho Chi Minh City Center for Trade and Investment Promotion, with the characteristics of the market in the coming period, businesses in the fashion, interior and household industries need to develop a number of plans to respond, be flexible in production, closely follow the market... to have forecasts, develop plans for production in converting products according to market demand, especially potential new markets.

Faced with these challenges, fashion, furniture, and household businesses need to reshape their production processes and invest in green technology to optimize production processes and minimize waste.

Building a sustainable supply chain is also important. Businesses need to work closely with suppliers to ensure that raw materials and products are produced and transported sustainably and efficiently.

Green transformation is inevitable

Mr. Tran Nhu Tung, Vice President of the Vietnam Textile and Apparel Association, informed that the order situation has shown signs of improvement, with most businesses in the industry having orders returning. However, selling prices are still a matter of great pressure for Vietnamese businesses as input costs, transportation, fuel, etc. show no signs of decreasing.

Meanwhile, many buyers are now ordering smarter by comparing prices with other countries, especially Bangladesh. However, what Bangladesh does better than Vietnam is labor costs. In this country, the minimum wage for workers is only 80-90 USD/month, while Vietnamese workers earn more than 200 USD/month.

“In addition, Bangladesh currently has a population of up to 170 million people but its area is only half that of Vietnam. Therefore, when partners use costs in Bangladesh to place orders in Vietnam, it will cause difficulties for Vietnamese businesses,” Mr. Tran Nhu Tung shared.

In addition, according to Mr. Tung, in the 12 criteria of international brands comparing countries with large textile export rates, namely China, Bangladesh, and Vietnam. Currently, Bangladesh is only better than Vietnam in 2 criteria, including: Low labor costs and better tax policies.

Mr. Tung commented: “ In the future, Bangladesh will no longer be a competitor of Vietnam, because if based on price criteria, it is not enough. Recently, Bangladesh has seen workers strike to demand the government increase the minimum wage. These things will make it difficult for Bangladesh in the future. In addition, Bangladesh is a country without a deep-water seaport like Vietnam. That is a disadvantage for this country. ”

In addition, in 2024-2025, Vietnamese enterprises are facing pressure to develop green. Currently, all customers, especially Europe, have issued many policies to tighten green production activities and enterprises must meet these criteria to receive orders.

“Many importers require businesses to use completely clean energy, which means businesses must use 100% solar energy. This causes many difficulties for businesses when clean energy sources are not enough to use. The current green production criteria cause many difficulties for businesses,” Mr. Tran Nhu Tung shared.

However, this is the path that the textile industry must take. The sooner a business does this, the sooner it will have the opportunity to receive orders.

According to Mr. Tung, China is a typical example for the Vietnamese textile and garment industry to improve its order situation. Thereby, in the coming time, Vietnamese enterprises must create products with higher value. Therefore, investing in machinery and equipment to increase productivity, digital transformation , greening the production chain and promoting market expansion from the lesson of declining consumer demand in the past time... is urgent now to increase competitiveness in the global market.

Thuy Linh