Export of textiles and garments Opportunity to benefit from free trade agreements

After the Vietnam-EU Free Trade Agreement (FTA) and the Trans-Pacific Partnership (TPP) conclude the negotiation and are signed, public opinion often mentions the textile industry, a given industry is to benefit the most from the FTA agreements, especially from the TPP, the Vietnam – EU FTA.

Commitment TPP Agreement unanimously eliminates tariffs on Vietnam textiles, some sensitive items will be deleted according to the roadmap. The condition to enjoy the 0% tax rate is to meet the rules of origin of yarn onwards in the exporting country or be calculated aggregated from within the bloc, for the Vietnam-EU FTA, the export regulations are applied. Made from fabric.

With the applicable tax rate for Vietnam’s textile and garment exports to the US from 17-18%, to the EU from 8-12%, when the TPP and FTA Vietnam – EU take effect, Vietnam will be the country. benefit greatly. Because many TPP member countries, the EU is the main textile and garment importers of Vietnam such as the US (40%), EU (13.7%), Japan (10.6%) …

However, along with the above opportunities, Vietnam’s garment and textile will face many challenges. The biggest shortcoming of Vietnam’s garment and textile in the supply chain is the supply of raw materials and input materials, which currently only meet less than 1% of the cotton demand and 30% of the fiber demand. Yarn production reaches over 1 million tons / year, of which nearly 70% is exported. Yarn used domestically is mainly imported (equivalent to the amount of exported yarn, but with higher quality) from China 43%, South Korea 20%, Taiwan 15%, TPP countries only 9.7%.

Fabric weaving creates about 1.5 billion meters of fabric / year (accounting for 18% of demand). Meanwhile, imports of fabric to 6.7 billion meters, accounting for over 80% of demand, mainly imported from China, Taiwan, South Korea, TPP countries only accounted for 5.3%.

The strength of Vietnam’s garment is in the sewing stage. However, the main mode of outsourcing for export is 70%; the method of buying raw materials, semi-finished products according to the customer’s designation or self-harvesting (FOB I and FOB II) is only about 20%; Product method including design (ODM) is 9% and direct sales and production method at foreign trade centers (OBM) is only 1%. Therefore, the low efficiency and added value of textile and apparel for export only account for over 50%.

Thus, garment exports depend too much on imported raw materials and auxiliary materials, but mainly not from member countries of the TPP and the Vietnam-EU Agreement.

Export of textiles and garments The method to help Vietnam textile and garment actively penetrate the EU market

In order for Vietnam’s textile and garment to stand firmly and develop in the global value chain, especially in the EU market, we need to soon have a synchronous and consistent solution system for the textile and garment sector.

Firstly, Vietnamese textile and garment enterprises need to choose the appropriate method to actively penetrate the distribution channels of the EU market. Specifically:

(i) Establish close and close relationships with distribution centers, major supermarkets in the EU market through Vietnamese deals in the EU, the European Union delegation in Vietnam, and embassies of EU countries in Vietnam for direct export, minimizing export through intermediaries.

(ii) Organizing joint ventures in the forms of using licenses, trademarks of well-known marks. Under this form, Vietnamese exporters should apply the technique of buying trademarks of well-known European manufacturers to attach them to their products before launching them into the EU market. After a while when EU consumers got used to it, the Vietnamese manufacturer’s branding was started to be attached alongside the European one. When consumer demand for dual-branded products begins to show signs of rapid growth, Vietnamese manufacturers can strip the European manufacturer’s mark. Enterprises with Vietnamese economic potential can join ventures to become subsidiaries of transnational companies with famous EU brands.

In addition to direct export or form of export joint venture to penetrate the EU market, Vietnamese garment enterprises also need to study to increase penetration by direct investment to reduce non-tariff barriers. concerned.

(iii) Promote the promotion of Vietnamese garment brands on the EU market through actively participating in overseas stalls, fairs and exhibitions, and building showcases in the domestic market. out…

Second, it is necessary to improve the quality of Vietnam’s textile and garment exports.

Vietnam textile enterprises need to conduct a strict inspection of the quality of raw materials, creating a partner to provide stable raw materials, good preservation of raw materials and accessories to avoid degradation. In addition, it is necessary to strictly comply with the ordering party’s requirements on raw materials, technology as well as the production process.

Improving the quality of Vietnamese textiles and garments by innovating processes, achieving ISO 9000 quality management certificates, ISO 14000 environmental certificates … Enterprises that have not yet obtained these certificates need to try harder. to get. Because, EU consumers are very interested and used to using quality products that meet international standards. Therefore, garment and textile enterprises that have the above standards will easily penetrate and be accepted by the difficult EU market.

In addition to international standards, Vietnam textile enterprises also need to meet the EU’s own standards such as: Garment brand standards are based on ISO 3758, laundry standards. based on ISO 3759, 5077 and 6330; The moisture absorption is based on the German standard DIN 5411, the wash is based on the ISO 3175 standard, the level of the fabric is ruffled based on the British standard BS 5811 … These are the standards that EU customers are very interested in. Mind, Vietnamese textile enterprises need to pay close attention to be able to meet these requirements well.

For businesses with financial conditions, they can research and implement more eco-branding standards for products in order to increase their competitiveness in the EU market.

Third, linking with domestic enterprises producing and exporting textiles and garments to the EU.

Vietnam textile enterprises need to link together in the process of trading, manufacturing as well as exporting textiles and garments. Vietnam established the Vietnam Textile and Apparel Association, established the Vietnam Textile and Garment Corporation and later the Vietnam Textile and Garment Group. Small and medium enterprises need to link together in order to reduce internal competition pressure among industries and improve competitiveness in international markets.

In addition to the above solutions, businesses need to focus on production organization, find ways to reduce production costs, research and apply advanced production technologies, management software to improve productivity. mobility and competitiveness. Take advantage of opportunities to attract orders, maintain and effectively exploit traditional customers and develop new customers, contributing to stabilizing production and securing jobs for employees. Focusing on building strategic links with customers who are major retailers and importers in the world, participating in their link chains to stabilize orders, customers, access management experience. their business …

Export of textiles and garments References:

1. Customs Statistical Yearbook on Vietnamese import and export goods;

2. Report on Vietnam Textile and Garment Industry.