A 100 USD shirt, Vietnam receives less than 2 USD

If the textile industry does not change, no matter how much President Obama supports the TPP, it will not be a miracle for this industry considered to benefit the most.

The textile industry is facing many difficulties. Photo: Tan Thanh

The Trans-Pacific Partnership (TPP) is one of the important issues discussed during US President Barack Obama's visit to Vietnam. And for a long time, the textile industry has been considered the industry that benefits the most from the TPP.

However, looking at the reality of the Vietnamese textile industry, many experts have raised questions and warned: Can Vietnamese textiles and Vietnamese textile brands build a foothold and position in the market, when the majority are small and medium-sized enterprises (SMEs), have not built a brand, only do outsourcing for foreign companies and enjoy every small penny in the value chain.

Mr. Nguyen Tuan Viet, CEO of VIETGO Company, a consulting unit for export enterprises, said that many enterprises from China, Hong Kong, Taiwan, etc. have flooded into Vietnam, not only enjoying many benefits in the textile production chain but also intending to "take over" and manage the textile chain of small enterprises in Vietnam.

This person cited an example, a branded textile product, sold on the market for 100 USD, but in reality the production and labor costs... are sometimes paid for less than 2 USD. The majority of the benefits fall on garment companies from Hong Kong, Taiwan (China), Korea and intermediary contractors...

Explaining this difference, Mr. Viet said that it was because many manufacturers were concentrated in industrial zones in Vietnam, mainly many garment factories operated simply and only waited for orders to be sent, following the samples of intermediary companies but could not meet orders with higher requirements.

“Also because of the inability to meet all stages, but only making finished products - that is, processing on the basis of available raw materials, so the price is often "squeezed" when making finished products and also cannot receive large orders directly from manufacturers but only make small-scale products" - Mr. Viet analyzed.

A notable point mentioned by the above expert is that in many cases, Vietnamese processing enterprises are not only weak in production, but also refuse to change, causing contractors and customers to "turn their backs" on the enterprises.

For example, there are importers who change the drawings but Vietnamese enterprises do not meet this requirement, unprofessional associates lead to substandard product quality. In fact, there are many cases where the director of this garment factory accepts a profit of less than 2 USD to avoid changing orders and is willing to make finished products.

“This reality leads to the textile industry being “bleeding”. For example, with an export turnover of 2 billion USD, businesses can only earn 200 million USD in profit. Businesses could have earned more if they knew how to change the quality, which would greatly increase their income,” said Mr. Viet.

Up to now, the TPP Agreement is opening up many opportunities for the textile and garment industry as this is the industry that is considered to benefit the most. However, with the majority of textile and garment enterprises being small-scale, mainly doing processing, and not having many changes in improving production capacity, it is not only very difficult to increase the added value by more than 2 USD as at present, but also difficult to take advantage of the opportunities that TPP brings.

Mr. Nguyen Khac Hieu, Sales Director of AZ International Art Joint Stock Company, said that enterprises need to boldly transform production, doing all stages of production instead of just processing and finishing products as at present. Also, textile materials in Vietnam are relatively sufficient.

“Completing all the stages to create a product helps businesses be proactive in production, promote creativity, and improve their capacity. Although this is a big challenge for most small and medium-sized textile and garment enterprises, if businesses know how to proactively improve, they will certainly increase their added value and take advantage of opportunities,” said the Director of AZ Company.

According to Laborer