Garment industry suffers severe shortage of raw materials due to Covid-19 pandemic
Uniqlo shipments from Vietnamese suppliers have been delayed by about two weeks.
With the delay, Uniqlo has pushed back the launch of several new product lines due to potential shortages in March. Disruptions to China’s transportation and supply chains are spilling over into Southeast Asia, with Vietnam, which sources 60% of its garment materials from China, among the countries affected.
At a meeting with representatives of the Import-Export Department (Ministry of Industry and Trade) on February 21, Mr. Truong Van Cam - Vice President of the Vietnam Textile and Apparel Association (Vitas) - said that the impact of the Covid-19 epidemic on large enterprises in the industry is not really clear.
However, for small businesses that are not self-sufficient in orders and depend heavily on large businesses, raw materials can only last until the end of February. By March, many businesses may have to close.
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| Operations at a garment company in Binh Xuyen, Vinh Phuc on February 19.Photo: Ngoc Thanh. |
According to Vitas, many textile and garment enterprises have had to reduce working hours and extend work schedules to maintain working hours for employees. Most enterprises believe that raw material supply and logistics are two major difficulties at this time.
Trade by road, rail and air between Vietnam and China is still limited. Lack of raw materials makes it impossible for businesses to ensure supply to the Asian market, mainly short-term orders from countries such as Thailand, Indonesia, Korea, Japan, etc.
A large garment company in Bac Giang said it has allowed workers to return to normal working hours because it had imported enough raw materials before Tet. At the same time, it is looking for alternative supplies from Indonesia because businesses in China will not resume operations until mid-March.
In Binh Xuyen district, Vinh Phuc, according to records ofVnExpressOn February 19, garment businesses in the area were disrupted. Many employees quit their jobs due to quarantine. Work was slow.
Vitas data shows that in January, the industry's total export turnover reached 2.85 billion USD, down 23.48% over the same period in 2019, down 18.59% over December 2019. Import turnover reached 1.39 billion USD, also down 28.5% over the same period in 2019 and 34.59% over the previous month.
According to Mr. Tran Thanh Hai - Deputy Director of the Import-Export Department, the impact of the pneumonia epidemic on the Vietnamese textile and garment industry cannot be stopped, even when the epidemic ends. Currently, Vietnamese textile and garment enterprises mainly do export processing, have close links with China in terms of raw materials, so the disruption of supply is very clear.
To cope with the worst-case scenario, Vitas said some textile and footwear businesses are considering importing raw materials from other countries such as South Korea, India, Bangladesh, Brazil, etc. to make up for the shortage of raw materials for production.
Some large companies are implementing a proactive strategy. For example, Tinh Loi Garment Company is building new infrastructure and creating human resources so that when the pandemic ends, it will increase labor productivity by 200% to achieve the set growth rate.
However, in general, since about 90% of enterprises are small and medium-sized, in addition to the initiative of enterprises, according to Mr. Cam, it is necessary to have support in terms of mechanisms and policies from the state on preferential loans, support packages to access new technologies, and in-depth trade promotion. In addition, reducing the burden of electricity, water, bridge and road fees, and seaport fees for enterprises is also proposed as necessary.
