Developing textile and garment supporting industry in Nghe An
Textile and garment is one of the sectors with large export turnover of Nghe An province. The whole province currently has more than 50 companies and factories operating, creating more than 40 thousand jobs, exporting products to about 20 countries and territories. Supporting industry is a matter of concern.
Main imported raw materials
Nationwide, the textile industry is heavily dependent on imported raw materials: 99% of cotton yarn (about 3 billion USD) must be imported. Similarly, 70% (2 billion USD) of synthetic yarn and 80% (13 billion USD) of fabric.
An Nam Matsuoka Garment Factory with 18 sewing lines, each line has nearly 130 workers (total number of workers is more than 2,500), is currently the largest garment factory in VSIP Industrial Park, specializing in producing garments for export to Japan and other countries around the world. To meet export requirements, the raw materials and accessories of the Factory must be imported.
The company's General Director, Mr. Teramur Akito, said that the factory's accessories are imported from abroad, sewing thread and accessories are imported from a company in Vietnam, but that company is also Japanese. The accessories are needed in large quantities and meet European standards according to customer requirements.
The good news is that at this factory, carton packaging and nylon were purchased from Thien Phu Company Limited and a business in Vinh, which partly shows that Vietnamese accessory products are also of interest even though they are by-products.
Haivina Kim Lien Company (a 100% Korean-owned enterprise) in Kim Lien Commune, Nam Dan District specializes in manufacturing and exporting gloves and clothing to European countries. Currently, the company is creating jobs for more than 3,000 workers, mainly in Hung Nguyen, Nam Dan, Do Luong...
Ms. Chu Thi Ngoc, Assistant General Director of the Company said: As a business producing goods for Europe, fabrics and accessories must meet standards, the main materials we import from abroad. As for other accessories such as carton boxes, lead, tin, leather, labels, etc., the company must also buy from other businesses in the North.
Minh Anh Nghe An Garment Corporation currently has 4 factories in Nghe An province located in Vinh city, Do Luong, Tan Ky, Con Cuong,... each year creating jobs for more than 7,000 workers. Mr. Nguyen Dinh Sinh - General Director of the Company said: The company mainly imports accessories for garment production from Korea and China. Other accessories such as fabric, thread, embroidery, lace... can be produced by the company.
Textile and garment enterprises in Nghe An in particular and Vietnam in general are at a low position in the global supply chain, with about 65% of textile and garment enterprises exporting garments by processing method. Net profit margin is only 1-3%. The wage advantage is the factor that makes enterprises invest in Nghe An.
About 25% of exports are made using the OEM/FOB method - where the customer designs the model and the factory buys the accessories, makes the garment and delivers it to the customer, with a profit margin of 3-5%. Only 10% of exports are made using the ODM method - original design manufacturer, also known as private label, which is a form of contract manufacturing, with a profit margin of 5-7%.
Nghe An, like the rest of the country, is having to import up to 80% of fabric for export garments; about 70% of orders are for processing garments. Most of the input materials, such as fabric and accessories for buttons and zippers, must be imported from China and Korea; the country can only meet some of the needs for needles and sewing threads...
Currently, Nghe An only has 1 yarn factory of Hoang Thi Loan Textile Joint Stock Company, with an output of 20,000 tons of yarn/year; 1 embroidery facility (Lac Son Industrial Park, Do Luong District) with a workforce of 150 - 200 people embroidering accessories for garment factories and some other hand-woven facilities.
In general, the textile and garment industry has a low level of autonomy in raw materials because the supporting industry is not yet developed; it mainly processes garments for export and is stuck in a vicious cycle: importing cotton to spin yarn, then selling yarn and then importing fabric.
According to the Nghe An Department of Industry and Trade, every year, the provincial budget has allocated support funds of 2-2.5 billion VND to support supporting industry enterprises. The total support funds from the local budget for projects implemented to date have reached 6.34 billion VND. The Central Government's preferential policies for supporting industries are still difficult to access. The local budget funds allocated for supporting industry development activities each year are still low and difficult to implement..
Great potential for supporting industry
Nghe An has potential for raw materials to produce cellulose fibers, such as bamboo, due to its largest area in the country, of which forested land accounts for 53.3%; potential for producing artificial fiber products from post-petrochemical materials from Nghi Son Oil Refinery Complex, Thanh Hoa.
The problem is to produce raw materials for the industry, protect the environment and form textile - garment - accessories chains. Increasing the localization rate will ensure that businesses can control production, reduce costs and improve competitiveness.
Currently, the most difficult problem for businesses is how to recruit enough workers, and for auxiliary products they are looking for imported sources, but the cost is still high.
In the immediate future, businesses should closely follow domestic and international developments, develop growth scenarios and necessary contingency solutions to proactively and promptly respond to market fluctuations, and seek new markets. Effectively take advantage of tariff incentives from FTAs and diversify markets, partners, customers, and high value-added products, etc.
In the long term, it is necessary to study and apply the Strategy for the development of the textile and footwear industry from now until 2030, gradually shifting from rapid development to sustainable development according to the circular economic model; perfecting the domestic value chain and participating in a high-value position in the global supply chain. Textile and garment enterprises participate more deeply in global supply chains and value chains on the basis of increasing competitiveness.
Nghe An is currently prioritizing the development of large-scale textile and garment projects, focusing on stages with high added value, becoming key export products, participating in the global supply chain. Developing garment products that are suitable for domestic consumption needs, capable of competing with imported brands to effectively implement the campaign "Vietnamese people prioritize using Vietnamese goods".
Recently, Nghe An has approved the investment policy of the Mega Textile - Vietnam project, a large project in the textile industry to be implemented in Dien Tho commune, Dien Chau district, in Tho Loc Industrial Park phase 1 (Southeast Economic Zone).
The leader of Nghe An Department of Industry and Trade added: Nghe An also sets a target of an average growth rate of textile and footwear export turnover by the end of 2025 of 17-18%/year, and 16-17%/year in the period of 2026-2030. Strive for the export turnover of textile and footwear products to reach about 755 million USD by the end of 2025; about 1,600 million USD by 2030. Gradually increase the localization rate, by 2030 strive for the localization rate of textile and footwear to reach over 45%.
The province will also focus on attracting investment in developing supporting industries to produce products: Fibers, spinning for the textile industry, especially synthetic fibers; functional fibers, new environmentally friendly raw fibers, gradually increasing the localization rate, gradually reducing imported input materials. Attracting investment in plastic products to support the textile industry, such as: Plastic pipes, chemical products to support the textile industry, etc.
Nghe An also prioritizes the development of projects to produce knitted and woven fabrics, which are products capable of connecting the stages of yarn production, garment production and high-end fabric products for export to meet the needs of domestic garment factories.
