Concerns are rising among Vietnamese garment producers about whether they have enough raw materials to be able to continue production into the second quarter.
According to local reports, production is currently unaffected, but many factories are worried that if supplies are not replenished they will struggle to maintain operations.
Many Vietnamese factories rely on raw materials that come from China. But city-wide lockdowns in the country earlier this year meant interruptions to production have seen several countries including Myanmar, Cambodia and Bangladesh struggling with supply delays.
Some factories such as Saigon and Song Hong Garment Co, are negotiating with partners to find alternative sources of supply, says the Vietnam Textile and Apparel Association (VITAS), citing an industry and trade report. However, the possibility of material shortage in the second quarter “is inevitable” according to a representative at Song Hong, the report says.
Earlier this month, reports from Vietnamese outlets suggested the country was looking to India for raw material supplies following a meeting between the secretary of the Municipal Party Committee, Vuong Dinh Hue and the Indian Ambassador to Vietnam, Pranay Verma.
China is by far the largest textile exporter, accounting for 37.6% of the world total in 2018 – a new record high. Measured by value, as much as 53.8% and 60.6% of East Asian and Southeast Asian countries’ textile imports came from China in 2018, compared with only 33.4% and 33.7% in 2005.
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By GlobalDataWhile Vietnam is the world’s eighth-largest textile exporter (worth US$8.3bn in 2018) it is also the fourth largest textile importer (US$17.8bn in 2018). Like most developing countries it relies heavily on imported textile inputs due to the lack of local manufacturing capacity.
Many major apparel supplier countries have reported interruptions to business as a result of the coronavirus outbreak.
Factory owners in Bangladesh have said they have seen a marked rise in requests from buyers to delay payments as they battle with lower footfall and store closures.
Small and medium-sized enterprises (SMEs) in Myanmar’s garment sector similarly say they are feeling the impact of the coronavirus outbreak as a result of raw material shortages, but concern over a fall in orders is now spreading across the sector as the US teeters on the brink of recession.
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