Capital transfer, industry hollowing out? Vietnam's textile and garment export share is approaching China

Bit port analysis: import and export data released today by worrying China trade, the textile industry from the perspective of this article explains the reasons for China's exports are continuing to shift to the Southeast Asian countries: Since joining the WTO in 2007, Vietnam textiles, fabrics and garments exports The growth is rapid. Vietnam became the eighth largest country in the world last year, accounting for 1% of the world's export share. Made in Vietnam's label is being increasingly used in internationally renowned clothing brands such as ZARA, GAP, NIKE, etc. Vietnam has also become Asia's most promising country to replace the Chinese textile industry. From spinning manufacturing to garment manufacturing, especially with the promotion of the TPP agreement between Vietnam and the United States, Vietnamese clothing has expanded its exports to the United States, Japan and South Korea, and is second only to China in the US market.

The general trend, the textile industry is transferred from China

The decline in export markets, rising domestic raw material costs, and rising prices of production factors such as labor force are becoming a roadblock for the development of textile companies. Affected by the weak international economic environment such as the European debt crisis and the US debt crisis, the export performance of Chinese textile companies in Europe and the United States has fallen sharply, orders have decreased, and changes in the US dollar exchange rate have brought certain risks to companies.

The textile enterprises difficult foreign orders, inventory pressure, as well as by rising labor costs, raw material price fluctuations, loan interest rates and other factors led to China's textile industry will once again fall into the pattern of re-shuffle, the export situation is not optimistic.

On the other hand, the price difference between China and international cotton continues to be too high. The cotton cost of Chinese cotton spinning enterprises is at a disadvantage of international competition. Not only cotton textile enterprises but also textile enterprises including downstream textiles and garments are facing enormous competitive pressure. The cost of cotton is higher than the international market, which has long plagued the development of China's textile industry. Especially in the past six months, it has become more prominent in the case of rapid growth of other costs, which has largely led to the international competition of China's textile industry. The power is slipping. Because of this, Chinese textile companies such as Blum Oriental and Tianhong Textile have to resolve the corporate dilemma through the layout of overseas production capacity.

Vietnam advantage: low labor and production costs

In Asia, Vietnam, Cambodia, Bangladesh, and Indonesia have become the foundry bases of international apparel brands, and Vietnam is emerging with the most prominent regional environmental advantages. Among these countries, Vietnam's regional environment is clearly superior to several other countries. Vietnam has sufficient electricity, abundant water resources, political stability, and relatively high quality of personnel. The efficiency of garment workers is about 70%-80% of that in China, much higher than other countries.

At the same time, the cost advantage of investing in Vietnam is very obvious. Small and medium-sized enterprises in Vietnam are small, with a medium-sized enterprise investing only 1 million to 1.5 million US dollars, and small businesses with a maximum capital of about 100 million US dollars. The land price is the cheapest among Southeast Asian countries. In the past, a Vietnamese textile mill was priced at around 1 million VND (about 60,000 U.S. dollars). After the financial crisis broke out, the price of the factory fell by 40%. In the context of the continuous appreciation of the renminbi, this will help Chinese companies to go to Vietnam to acquire factories.

Therefore, the current cost of setting up a factory in Vietnam is relatively low. For the average small and medium-sized enterprises, the initial investment burden is not large.

The rising labor costs in China have not only forced many international apparel brands to move their foundries to other Southeast Asian countries, but China's spinning companies are equally unbearable. Compared with China's wages of nearly 3,000 yuan for textile workers, Vietnam is rich in labor and low in price, half of the Yangtze River Delta and Pearl River Delta regions. Take the salary of garment workers as an example. The labor cost of garment workers in Vietnam is only about 1,000 yuan. The value-added tax of enterprises is only 10%, and water and electricity charges are only half of that of China, which can further reduce production costs.

In addition, Vietnam and the United States signed the "Agreement on the Trans-Pacific Partnership" (TPP), principal processes of spinning, weaving and dyeing in the Member States carried out, can enjoy export tax exemption. The tax-free treatment will further amplify the global competitiveness of Vietnam's textile manufacturing industry in the context of low processing cost advantages. For textile companies in Vietnam, the order volume is expected to further increase.

Rising status, or becoming a textile exporting country

During the period of 2009-2015, the annual growth rate of Vietnam's textile and apparel exports reached 18.6%, exceeding China's 6 percentage points over the same period. Chinese textile and apparel imports accounted for Japan's market share from 80% to 70% last year to quickly lower.

According to statistics, Vietnam's national yarn production capacity is about 600-7.5 million spindles, 82% of locally produced yarn is exported to China, Indonesia and other places; knitted garment exports increase by 30% per year, and apparel exports in 2015 have reached 28.3 billion US dollars, but 88% of apparel fabrics are imported from China and South Korea.

Foreign experts said that 2015 is a good opportunity for the breakthrough of the textile and garment industry in Vietnam. Currently, in the global textile supply chain, Vietnam is rated as a highly competitive country. Therefore, global investors regard Vietnam as an ideal center for exporting textiles. In 2014, there were 20 new FDI projects in this field. At present, the textile industry has attracted more than US$2 billion.

The Vietnam Textile Association (VITAS) has determined that if the original free shipping agreement and the Trans-Pacific Partnership Agreement between Korea, the European Union and the Russian White Harbin Customs Union are signed in early 2015, Vietnam will usher in many new opportunities. The textile industry is striving to achieve the goal of a total export value of US$ 28-285 billion in 2015. Therefore, Vietnam is entirely likely to become a major textile exporter.

Recently, the Ministry of Industry and Trade of Vietnam has also drafted a draft of the “2020 Vietnam Textile and Garment Industry Development Plan and 2030 Outlook Plan” to re-plan the textile and garment industry to meet international demand. “Vietnam is increasingly integrating into the international economy and the world in depth and breadth. Eighty countries have signed bilateral and multilateral cooperation agreements, which require innovation in the textile and apparel industry to meet actual demand."

Tariff concessions, easier access to international markets

Vietnam's preferential tariff conditions make it very convenient to enter the international market. Even if Europe and the United States impose anti-dumping duties on Vietnamese products, the tax rate will definitely be lower than that of China. Globally, the total amount of Vietnamese products exports is much smaller than that of China, so there may be a punitive tariff of 30%-40% for China, but only a few to 10% for Vietnam. On the other hand, the GDP of the entire country of Vietnam is only more than 100 billion yuan. For Europe and the United States, it is difficult to pose a threat.

Chinese companies invest in Vietnam, many of which are based on the consideration of the globalization of enterprises, and hope to enter the ASEAN market through Vietnam. Some enterprises said that the shipment of spare parts into the Vietnamese market and the sale of finished products to the local and even ASEAN markets could save some tariffs on Vietnamese imports because the tariffs on the parts are low and the tariffs on finished products are much higher.

There are also companies that are close to the origin of raw materials. Blum Oriental Co., Ltd. is one of them: China has imposed high tariffs on the import of foreign cotton in order to protect the development of domestic agriculture. After relocating to Vietnam, it can avoid high tariffs caused by imported cotton.

After years of sustained rapid growth, Vietnam has become “a rising star in Asia”. The British Economist Intelligence Unit has listed Vietnam as the most attractive destination for foreign direct investment after the “BRIC” countries. Vietnam’s implementation of China’s “ going out ” strategy is of great significance. If such Chinese enterprises “go out” in the form of evacuation from China, the superposition of foreign capital due to operating costs and a weak global economy will continue to retreat, which will put more pressure on Chinese exports and the economy. These beliefs have been reflected in the progress. The weakness of export data.