Purchasing power from Vietnam's major textile and garment export markets such as the US and the EU has significantly declined. Photo: Vietnam

Difficulties from within to outside

Since the end of 2022, the textile and garment industry has been predicted to face numerous challenges in 2023. Cao Huu Hieu, CEO of the Vietnam National Textile and Garment Group (Vinatex), stated that in the first six months of 2023, the revenue of businesses within the system has sharply decreased by 18-20% compared to the same period. Particularly, the fiber sector has been facing prolonged difficulties since the third and fourth quarters of 2022 due to weak demand and continuous price fluctuations, with prices currently experiencing a significant decline.

Both the fiber and garment industries in Vietnam have high expectations for China's reopening, but this also poses immense pressure and challenges. Currently, China is the largest export market for Vietnam's fiber industry, but the export prices to China are not competitive compared to domestic usage by Chinese partners. The entire fiber industry in Vietnam is almost unstable, with large inventories, while production still needs to be maintained.

As for the garment industry, the orders are small and fragmented. Vinatex's leadership said that large textile and garment enterprises with thousands of workers have never had to accept small orders for 500, 700, or 1,000 jackets, and the garment prices have reached record lows. Customers also imposed stricter requirements.

Vinatex believed that in 2023, the slow global economic growth would lead to a trend of further tightening consumer spending, with textile and garment products being among the items reduced. Particularly, purchasing power from Vietnam's major textile and garment export markets such as the US and the EU has significantly declined...

In the seafood sector, Le Hang, Director of Communications at the Vietnam Association of Seafood Exporters and Producers (VASEP), said that seafood exports were facing many difficulties this year, with a decrease of 28-29% in the first five months compared to the same period last year. This decline stems from various reasons. Seafood is one of the essential commodities, so in 2022, when the market began to recover, importers rushed to import and stockpile, resulting in high inventory levels. Additionally, Vietnam's seafood competitiveness has been strongly affected by other producing countries such as Ecuador and India. Simultaneously, the financial health and resilience of fishermen and seafood processing enterprises have significantly decreased due to increased domestic production costs, slow consumption, and higher inventory storage costs, making it difficult to obtain loans as banks perceive it as a risk.

Economic expert Vo Tri Thanh said that in a recent survey conducted by the VCCI, businesses have identified many bottlenecks and difficulties in their current production and business operations. The first issue is the decline in orders and demand in markets where businesses can sell their goods. Looking at international trade and the history of the past few decades, we can see that negative growth in import and export, reaching up to 14-15% like in the first five months of this year, has never occurred.

Taking a deeper look, the market's contraction, financial difficulties of businesses, and inflation have contributed to the decline in import and export. However, the decrease in imports also reflects the difficulties faced by businesses. Because they cannot sell their products, there is a reduced demand for imports.

Adapt and seize opportunities

To cope with these challenges, Vinatex stated that they would focus on key solutions such as being flexible in responding to market uncertainties and fluctuations, regularly forecasting and updating the global and domestic textile market situation, prioritizing the stability of the workforce based on a balance between employment and income, preserving human resources to be ready to seize opportunities when the market recovers, and continuing to invest in sustainable textile production.

According to the CEO of Vinatex, in the upcoming period, especially in the context where Europe has implemented regulations on circular and green textile production, units throughout the system are researching new technologies to improve their competitive position in the market.

The export market is expected to face many difficulties, while the domestic market is believed to have a lot of potential. Therefore, many businesses have been focusing on exploiting the domestic market. According to Hang, in recent years, many seafood businesses have considered the domestic market as one of the important market segments that brings positive revenue. However, the domestic market is still untapped by many Vietnamese seafood businesses due to objective and subjective factors, as they have been more accustomed to conducting export-oriented business operations and producing products primarily for export.

Therefore, according to the VASEP, to sell in the domestic market, businesses need to proactively adjust their product structure to suit both the domestic and export markets, as each market has different characteristics. It is necessary to have a better understanding of consumer habits in each region. Currently, seafood businesses are mainly concentrated in the Central and Southern regions, so to access the market, it is necessary to study each region and develop suitable products for each specific market.

Tran Thanh Hai, Deputy Director of the Import-Export Department (Ministry of Industry and Trade), believed that whether it is the domestic or export market, finding customers or meeting consumer preferences was always an important factor. Therefore, proactivity means that businesses must strive to have a professional workforce to build sales and brand strategies. For example, in export activities, there are still some major industries that focus on processing, which means large-scale production based on order placement without fully capturing the actual market demand. Therefore, according to Hai, in addition to financial investment and technology, investing in human resources is an important factor in understanding real market requirements and increasing orders.