Vietnam's garment and textile industry advised to stay alert of US-China trade clash

Created 21 July 2018
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 The profile of Vietnam’s garment and textile industry remains clear, without dumping or subsides, said the Vietnamese official.
Vietnamese garment and textile enterprises should be proactive in response to ups-and-downs in the international market, especially the rising trade protectionism, said Deputy Director of the Export-Import Department under the Ministry of Industry and Trade (MoIT) Tran Thanh Hai.
Hence, amid the trade clash between China and the US, Vietnam’s textile and garment industry is vulnerable to the threat of its reputation being taken advantage of, Hai was quoted by the Nhip Cau Dau Tu magazine as saying.

Illustrative photo
Illustrative photo
Currency devaluation proposed
Meanwhile, Vu Duc Giang, chairman of Vietnam Textile Association (VITAS), highlighted the role of the government in the issue.
“The Vietnamese government and the State Bank of Vietnam should consider raising the USD/VND exchange rate soon,” Giang told Nhip Cau Dau Tu magazine, while mentioning the rate should be around VND24,000-25,000 for one dollar.
As such, Vietnamese export products would be more attractive in price to global markets while the country can lure more foreign direct investment (FDI) to offset the domestic shortage of capital and create momentum for business sustainable investment.
Currently, China bears a 25% duties on its textile and garment exports to the US. However, the Asian power sells those products not only to the US but also to other markets including Japan, Europe, etc.
Meanwhile, the yuan is being continuously depreciated. “It bothers me most that China would weaken the yuan to help its exporters compete with others from countries like Vietnam,” Giang said.
“Keeping the current exchange rate unchanged won’t help Vietnam’s textile and garment products gain price advantage against China,” added Giang. “An early adjustment of exchange rate can boost the competitiveness of Vietnamese garment and textile firms,” said the head of VITAS.
China's heavy influece in Vietnam's trade
Vietnam's garment and textile industry saw growth in most of its large export markets in 2018’s first half. During the reviewed period, the US remains one of the leading buyers with volume reaching US$6.3 billion, adequate for 46.3% of the sector’s total exports, while the growth rate of garment exports to China was 50%.
The result fuels concerns that China remains the biggest importer of Vietnamese products with 2018’s first-half exports reaching US$31.1 billion, a 15.6% increase year-on-year, of which the textile and garment sector was once again named among the country's major export areas to China.
“Vietnam’s garment and textile industry hasn’t seen trade deficit for the past seven years,” Giang affirmed, while saying that the recent application of new production methods including Free On Board (FOB) and Original Design Manufacturing (ODM) has boosted the sector’s trade surplus.
Meanwhile, the input material for the sector do not come merely from China. Vietnamese producers now also buy fabric from Japan, South Korea, Thailand, Malaysia, etc.
Besides, Vietnam is set to implement ten free trade agreements (FTAs), of which domestic production and export must ensure the sustainable development. For example, the CPTTP’s strict request on origin of fabric, yarn can discourage Vietnamese firms to import materials from China.
Some Chinese enterprises, according to Giang, even buy materials from Vietnam, as prices in the China are higher.
Actually, the yuan hardly effects the input cost  of Vietnam’s textile and garment sector, hence Vietnamese producers who buy materials originating from China just benefit partly when the yuan falls.
“Don’t expect too much on the yuan's drop,” Giang said. China has many measures to adjust its currency and market structure. VITAS is now watching closely to the US-China tariff fight to give advice for Vietnamese enterprises in the time ahead, stressed Giang.

Source: HNT

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