is the upstream product of the textile industry, directly the textile industry. The textile and garment industry produces downstream products, if the downstream products are developed, it will lead to the development of upstream products.
Creating favorable conditions for agricultural development of cotton and mulberry cultivation, although the growth rate is still very slow and unstable, it has maintained the foundation of agricultural production to create conditions for strong development in the future. Currently, the cotton growing area is still very low compared to the needs of the textile industry, according to 2006 statistics, about 20000 hectares, providing about 10,000 tons of cotton fiber for the textile industry, meeting 5% of the demand[48] ].
The mulberry craft is a traditional craft of many regions of Vietnam, having become local brands such as Nam Dinh silkworm, Bao Loc silkworm Lam Dong province, Ha Dong silk… The "golden" times of In the world silk market, the area of mulberry cultivation has increased rapidly, a number of provinces have developed mulberry production such as Bac Ninh, Son La, Thanh Hoa, Hung Yen, Vinh Phuc... There are times when the area is present. The area of mulberry cultivation in the whole country has reached 25000 ha [85], in Lam Dong alone 14000 ha [84]. However, due to many reasons, quality of varieties, low price, the area of mulberry has decreased rapidly, Lam Dong is considered the "capital" of Vietnam's mulberry industry. about 7000 hectares.
The development of production of garment materials has led to the development of cotton and mulberry trees, which have contributed and will contribute to the restructuring of agricultural crops in the localities, increasing income and increasing production value. Agriculture.
2.2.1.4 Solve employment and social problems
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The textile and garment industry in general, the textile industry and the production of garment accessories in particular, are industries that attract many workers. As of 2007, the number of employees working in the textile and garment industry is over 2 million, handling a large amount of labor. jobs for workers. Not to mention a very large labor force is cotton and mulberry farmers in all provinces in the country. Labor in the field of manufacturing garment accessories and the textile industry mostly requires low qualifications, except for technical positions in the textile dyeing and finishing industry.
In the future, at the current rate of investment, when projects and industrial zones of textile, dyeing, finishing and production of garment accessories come into operation, leading to the
With the development of cotton and mulberry farming, the labor force involved in this field will increase greatly.
2.2.1.5 Attracting a significant amount of foreign investment
With great conditions and potential for the production of raw materials and accessories for apparel, it has attracted the attention of foreign investors. From 2002 up to now, most foreign investment projects in the textile and garment industry have focused on weaving, dyeing, finishing and production of auxiliary materials (presented in section 2.4). As of 2007, the total foreign direct investment capital in the textile and garment industry is over 3 billion USD. The textile and garment industry has been taking measures to attract and call for foreign investment capital, along with Vietnam's accession to the WTO, which will create conditions to increase the amount of registered foreign investment capital and its cash flows in the near future. .
According to the approval of the Government of Vietnam, in 2008, the Vietnam National Textile and Garment Group will conduct equitization, creating opportunities for foreign investors to make capital investment through indirect channels through the purchase of shares of the company. Group when listing on the stock market. Currently, a number of reputable textile and garment enterprises will list more and more on the stock market. With the potential and development conditions of raw material production serving the domestic strategy of raw materials and accessories of the textile industry, in the future, it will attract an increasing amount of capital from foreign investment.
2.2.2 Existing difficulties
2.2.2.1 Low business efficiency
a. Production and business efficiency
Only the production of accessories (sewing thread) has high business efficiency, notably Phong Phu Coats and the sewing thread production system of Phong Phu Corporation. Meanwhile, enterprises producing yarn and weaving fabrics have low business efficiency.
The business performance of yarn and textile manufacturing enterprises is analyzed through the indicators of turnover on working capital, turnover rate, profit on working capital, return on equity. , the return on labor in section 2.1.2 shows:
Business efficiency of enterprises is still low tended to decrease, especially foreign-invested enterprises fell the most in two years.
2005 and 2006. However, it is foreign-invested enterprises that have the highest revenue growth rate, demonstrating high market exploitation ability.
From the perspective of the number of businesses making profits or losses, it shows that the proportion of profitable businesses still accounts for a higher proportion.
However, the total loss tended to increase, the highest was in 2005 (-8320.8 million average per enterprise). While the total profit did not increase, it remained stable and lower in absolute terms than the loss, the highest year was 2004 (+3297.3 million average per enterprise). Thus, the total number of enterprises having more profit but the total being less shows that the overall business efficiency of the whole industry is low.
b. Efficiency of market exploitation
For state-owned enterprises and equitized state-owned enterprises holding a controlling stake, business management is still short-term and has no strategy. Therefore, the leaders of these enterprises often want to invest capital in the garment sector, especially garment export, garment processing for export, but do not want to invest in the field of textile dyeing, production of accessories. Because investment in garment processing for export can quickly recover capital, do not have to worry about finding and protecting the market. Enterprises have not paid much attention to investing in strategic areas and activities, and have not had long-term solutions to build brands for businesses and products. The main reason is that in the management thought of managers, they only pay attention to business results during their tenure, but have not paid attention to building a sustainable brand in the market.
For state-owned enterprises or equitized state-owned enterprises in which the State holds a controlling stake, the corporate administrators (chairman of the board of directors, general director, director) are still appointed by the State. appointed for a term, usually 5 years. Managers only focus on completing tasks well during their tenure without long-term production and business strategies for a long period of 10 years, 20 years or longer. They try to find ways to make strategic, short-term deals to quickly increase revenue and profit during their tenure. Managers do not care much about building a sustainable brand in the domestic as well as international markets. The problem is that the rights of the administrator and the interests of the business have been violated
separated in time. Many businesses still have to deal with the situation of having many benefits, the previous managers have enlisted to reap while the difficulties and shortcomings are pushed to the next term for the successor leaders to bear and solve. . This process is repeated and the result is poor business performance.
For non-state enterprises (private sector), the issue of strategy formulation is not satisfactory, business management and market exploitation are weak. Managers in these enterprises are still affected by the "snatching" business mindset, with no foresight, no measures to exploit the market and protect the market. Some businesses have had the idea of building a sustainable brand, but the financial potential is limited, the management level is still weak, the owners of small private businesses are hardly allowed study or train through any business administration school, mainly based on personal experience accumulated in business practice. Managers of these enterprises are often weak in foreign languages and foreign business experience. they are still affected by the reticence when doing business with foreign countries, the contracts they have are mainly ordered by foreign customers, the enterprises themselves have not actively searched for markets. This is also a common weakness for Vietnamese small and medium enterprises.
In general, the effectiveness of business management and market exploitation of Vietnamese garment and textile raw material manufacturers is still very weak, without a sustainable business development strategy, and has not been exploited and created a market. of the business itself, there are no measures to build a brand.
2.2.2.2 The competitiveness is still weak
Through the analysis of competitiveness by diamond model, it shows that the competitiveness is still low, reflected in the difficulties in the following factors:
- Conditions of input factors: still highly dependent on imported sources from abroad, domestic sources have not yet developed or have no conditions for development such as cotton and silkworm.
- Output conditions: Difficulty in sales promotion and brand building. Most foreign partners when ordering outsourcing garments have not put their trust in the quality of Vietnamese garment materials and accessories.
- Conditions of related supporting industries: a number of related supporting industries that determine the quality of products and raw materials such as machinery manufacturing, dyes, chemicals, and auxiliaries have not yet been developed.
- Conditions on competitive strategy: the industry's competitive strategy is not highly feasible, at the enterprise level, there are no long-term strategies, no business philosophies have been built. The intensity of competition is high in both the world market as well as the domestic market.
- Random risk conditions: the volatility of the world garment raw materials market is very strong, it is difficult to accurately identify the fluctuation trend.
- Conditions of the State: the support from the State is increasingly limited.
2.2.2.3 The linkage activities of enterprises producing raw materials and accessories are not very effective
From the actual situation of production links of yarn - textile - garment shows that:
- Currently, this linkage is done mainly within each enterprise, the businesses that carry out this linking activity bring high economic efficiency for both raw material and garment production.
- The link between different businesses between yarn - textile - garment is still very weak, not tight, lacks sustainability, and has not been effective.
The main reasons leading to the inefficient relationship between the production of raw materials and apparel:
- The price of domestic fabrics is less competitive, compared to imported products of the same type, the price of domestic fabrics and yarns is usually 5% to 7% higher. The high price is due to low labor productivity, the cost of domestic fabric products is higher than that of other countries. Currently, the cost of Vietnamese fabrics is about 20%-30% higher than that of China, Pakistan, India, and Indonesia.
- The quality of the fabric is not high, the designs and types are not diverse and rich according to the requirements of the garment. Many fabric samples were given by garment enterprises, and textile enterprises tried many times and failed to meet the requirements. The quality of domestic fabrics is unstable in shipments, failing to meet the requirements of garment enterprises in terms of type, quantity, design, and technical factors.
- The ability to meet customer requirements is low, domestic textile enterprises are not capable of meeting customers' requirements on product quality,
The level of product finishing is weak, in many cases garment enterprises submit fabric samples, textile enterprises try many times and fail to meet the requirements.
- Textile enterprises also find themselves not active in finding customers and designing new patterns, especially in state-owned enterprises. Many businesses are still very passive in marketing activities, and have not even seen the full benefits of marketing activities.
- The quality of raw materials upstream in the country is poor, not guaranteed, leading to the fabric quality not meeting the requirements of the market. Most synthetic fiber and cotton materials must be imported from abroad, when the price of imported raw materials increases, textile enterprises cannot ensure the size, type and time of orders. .
The domestic demand for fabric is very high, but textile enterprises cannot meet it. Most fabrics of domestic enterprises only serve their own sewing activities and domestic demand for products of medium and low quality.
2.3 ISSUES FROM THE SITUATION OF DEVELOPMENT OF GARMENT MATERIALS IN VIETNAM
From the general assessment of the development situation of the production of garment materials in Vietnam, it is shown that there are many problems in the development of the production of garment materials in Vietnam. In order to develop the garment industry to become a spearhead export industry of the economy, it is necessary to recognize the problems posed by the development of raw material production, from which strategic solutions can be developed. sustainable development of the garment industry. Below are some of the issues that need attention.
2.3.1 Policies and measures to attract investment capital have not exerted positive impacts
According to the forecast of the Ministry of Industry and Trade, to realize the development strategy of the textile and garment industry from 2006 to 2015 Vietnam's garment industry needs a capital of 7 billion USD[93]. In the 2006-2010 period, Vietnam's textile and garment industry needs an investment of 3 billion USD, of which investment in the production of raw materials (yarn, weaving, dyeing) accounts for 76% [88].
During the period from 2002 to the end of 2006, the textile and garment industry invested more than 2 billion dollars, of which more than two-thirds were in textile dyeing and production of accessories. Taiwan's Formosa Group is currently the largest fabric and yarn manufacturer with a project of over $450 million in Dong Nai Province. With such an investment scale, it only helps to increase the production capacity of fabrics and accessories by about 10%/year, while the garment production capacity always maintains a rate of over 20%/year. In 2006 Vietnam produced about 680 million m2 of fabric while the total demand for both domestic and export fabrics was up to 2300 million m2 [ 88].
If the investment rate as planned is 3 billion USD for the period 2007-2010, according to the calculation of the Ministry of Industry and Trade, it is only enough to maintain the growth rate of the field of manufacturing garment materials and accessories at 12%. -14%/year, while the garment industry is still growing at a rate of over 30%/year and tends to increase further in the next few years. That means the gap between domestic supply and demand for raw materials and accessories will widen.
With a capital need of 3 billion USD for the period 2007-2010, the Textile and Garment Group - the leading development of the industry will implement 15 large projects, with an investment capital of about 16155 billion VND (equivalent to 1 billion USD). la). Thus, Vietnam's garment industry needs to mobilize an additional $2 billion from foreign-invested enterprises, from issuing shares upon equitization, and from investment capital of private enterprises. Currently, the speed of attracting investment capital is still very slow.
To meet the needs of the garment industry, the amount of investment capital to attract as planned is 3 billion USD, which is difficult but still too small compared to the need for development, the gap between the capital that can be mobilized. with the growing demand for investment and development of the industry. This is a problem that greatly affects the ability to develop the production of garment materials and the sustainable development of Vietnam's garment industry.
Causes of difficulty in attracting capital for development investment:
- Investment in the field of production of raw materials and accessories has a slower payback period than investment in garment projects, especially garment processing for export. Investment capital in yarn, weaving and dyeing projects requires a larger amount of capital, more technical labor, modern technology, and more complex sewing projects. Business efficiency in the past time in the field of production of sewing materials, especially textiles, is lower than that of the garment sector, especially garment processing for export.
- Solutions to attract foreign investment have not really created a great attraction for foreign investors. From 2005 onward, foreign-invested enterprises in Vietnam still mainly focused on the garment sector, while the textile dyeing industry had a slow investment rate.
+ Solutions to attract investment capital have been proposed, but the implementation faces many difficulties in administrative procedures and approval. Or offer solutions but do not implement, improper implementation, bureaucratic phenomena, harassment in administrative agencies are still many.
+ Vietnam's economic management mechanism still has the inertia of the subsidy mechanism, which has caused a loss of autonomy for businesses, especially state-owned enterprises.
+ The infrastructure has not been invested, so it does not create attraction for foreign investors. The industrial zones ensure the infrastructure conditions for textile and garment in terms of water and wastewater treatment are not much.
+ Measures to encourage and prioritize investment are not enough to attract the attention of investors, especially domestic private enterprises.
- Other causes
+ The psychology of domestic enterprises, especially private enterprises, still lacks a long-term and sustainable strategy, mainly focusing on small and medium-sized projects, with quick capital recovery time, so they invest much for garment export.
+ Mobilizing loans is increasingly difficult. The State's concessional loans are getting smaller and smaller, moreover, it is not easy to qualify for preferential loans. For long-term bank loans of businesses are also limited. Banks have a conservative mindset to lend long-term loans to industries with large investment capital and long recovery such as yarn, textile and dyeing industries, plus the industry's production efficiency in recent times is very low compared to that of the textile industry. garment sector (In the analysis of the situation, it is shown that the efficiency indicators of textile enterprises are much lower than the average lending interest rates of banks), Collateral for both textile and auxiliary manufacturing enterprises materials are in old condition, low quality (half of the equipment is more than 30 years old [88]. Some companies like 8-3 textile company, Vinh Phu,