After an unprecedented wave of layoffs, the industry quickly recovered in the last quarter by abandoning its “zero-covid” policy.
Together with Cambodia, Bangladesh and, more recently, Burma, Vietnam is an important production country for the European Union (and the western world in general) when it comes to clothing and textiles. The country’s economy was one of the best performing in 2020 (2.9 percent growth). The increase in production is also due to the realignment of China, which has been striving for an increase in the quality level of its production for a decade. Companies like Nike, New Balance, Puma and Adidas depend on the Southeast Asian country for a large part of their production. But the pandemic – initially with the strict closure of the Ho Chi Min region, with the army delivering the meals – has not spared this new workshop in the world.
A trauma for 1.3 million migrant workers who returned to their home regions between July and September last year. The country experienced the pandemic with the Delta variant, which caused the contagions to skyrocket from last summer. The epidemic broke out again in early November. On November 29, VnExpress International, the English version of the leading Vietnamese news website, sounded the alarm: “While factories can offer wages and better benefits to attract workers while their order books fill up towards the end of the year, they receive few applications the background of the ongoing fear of Covid-19. “
Same level as before the pandemic
Bloomberg news agency reported in November that a Nike supplier was offering its workers $ 100 a month in bonuses – a quarter of their wages – and that a New Balance supplier was free to those returning to Ho Chi Minh City Promised transport. Phan Thi Thanh, the vice president of the Vietnamese Leather, Shoe and Handbag Association, recently told Reuters that many Christmas orders from other countries could not be delivered. Nevertheless, as Le Courrier du Vietnam claims, the industry has recovered, especially since the government eased measures to prevent and control the epidemic and abandoned its “zero covid policy”.
Cao Huu Hiêu, General Manager of Vinatex, reports to the newspaper Le Courrier du Vietnam that in October 90 percent of the employees in the companies in the group went back to work. Almost 100 percent of the Group’s employees have now returned to their companies. “The high growth rate in the fourth quarter enabled the textile and clothing industry to meet its export target of 39 billion. US dollars for the full year, an increase of almost 12 percent over 2020. The growth of the sector has already returned to the level before the outbreak of the coronavirus. Exports to the EU were $ 3.7 billion, an increase of 14 percent.
Good numbers that are explained by strategic decisions: The high profits generated are due in particular to the decision of the factory managers to give priority to the yarn industry, as this increased from 20 to 50 to 55 percent of total production. Still, concerns remain that logistics costs are still four to five times higher than they were before the pandemic. Other difficulties include the shortage of containers, the congestion of maritime traffic, which forces companies to ship the goods by air, and the fluctuations in the main export markets. In the worst scenario, the industry is aiming for 38 to 39 billion US dollars in export sales, in the most positive scenario it is 42.5 to 43.5 billion US dollars.
This article was previously published on FashionUnited.uk. Translation and editing: Barbara Russ
Image: Hervé Dewintre