According to the Vietnam textile industry report of VIRAC, the first 6 months of 2023 the overall picture of the textile industry is not very positive. Production, export and import output of branch textiles and garments fell sharply.
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Summary of Vietnam textile industry report 2023
Accumulated in 2022, the revenue of the textile industry in 2022 will reach nearly 40 trillion dong, the industry’s profit will reach 5.6 trillion dong. The garment industry is also a spearhead of Vietnam’s industry, providing jobs for nearly 1.8 million people. The capital of the industry also reached x trillion dong.
The textile industry consists of three main industries: the yarn industry, the fabric industry and the garment industry. According to the revenue structure by sub-sector in VIRAC’s report, the garment industry accounts for the largest proportion of revenue in the textile industry. Meanwhile, the yarn industry has the smallest revenue contribution.
In the first 6 months of 2023, the import and export volume of the textile industry decreased sharply compared to the same period in 2022. According to VIRAC’s report, in the first 6 months of the year, Vietnam exported a total of x billion USD to the world market.
Influential macro factors mentioned in the Vietnam textile industry report
Gross domestic product:
GDP in the first 6 months of 2023 increased by 3.72%, quite low compared to GDP in the same period of 2011 – 2023, in which service was the largest contributor, followed by the construction industry. Policies to stimulate domestic consumption, promotional activities advance, advertise. The promotion of tourism has contributed to maintaining the growth of the service sector in the past 6 months.
Industrial production index of the processing and manufacturing industry:
In the second quarter of 2023, the industry had more positive changes compared to the first quarter of 2023. Growth remains low in the context of general difficulties of the world economy. However, production and business activities of enterprises still face many challenges, especially in accessing cash flow, export markets and orders.
Consumer price index:
CPI in the first 6 months increased because the education sector increased tuition fees again, housing prices increased and the price of input materials increased. On average, domestic gasoline prices fell relative to the same period last year, restraining CPI’s growth rate.
Total exports and imports:
Generally, in the first 6 months of 2023, the total import and export turnover of goods reached 316.65 billion USD, down 15.2% over the same period last year. In which, exports decreased by 12.1%, imports decreased by 18.2%. This general downward trend of import and export has partly affected the import and export situation of Vietnam.
Interest rate:
The State Bank of Vietnam has reduced the operating interest rate 4 times with a reduction of 0.5%-2%. Lending interest rates are forecast to decrease more in the near future. However, the decrease was slower than deposit rates due to policy lag and a high degree of concentration on a few priority businesses.
Overview of the textile industry mentioned in the Vietnam textile industry report 2023
Overview of the yarn industry:
– According to the report of VIRAC yarn production volume in the first 6 months decreased by x% over the same period in 2022:
The reason for this is that the first 6 months of 2022 have a fairly high base because the number of orders skyrocketed to offset the period of production slowing down affected by Covid. Meanwhile, in the first 6 months of 2023, Vietnam’s PMI dropped sharply, causing a shortage of special orders in the textile and garment industry. Enterprises have a lot of inventory, so they mainly produce in moderation. Manufacturing output estimates are all down for commodities.
– The volume of imported yarn in the first 6 months of the year decreased by x% compared to the same period in 2022:
Source: VIRAC
The reason for the decrease in import volume is that Vietnam’s orders are still weak, and the demand for imported yarn has decreased. Except for Indonesia, Vietnam’s main textile fiber and yarn supply markets still fell sharply in the first half of 2023. Meanwhile, the import price of fiber and yarn also cooled down over the same period; Accordingly, the average import price in the first 6 months reached $2,091/ton, down x% over the same period in 2022.
– Yarn exports in the first 6 months of the year reached x billion USD, down x% over the same period in 2022:
Source: VIRAC
Find out the cause of yarn exports dropping.
Overview of the fabric industry
– Fabric production in the first 6 months of the year decreased by x% compared to the same period in 2022:
Source: VIRAC
In general, in terms of quantity, the garment industry needs about 9 billion meters of fabric each year, but domestic textile enterprises can only supply about 3.2 billion meters of fabric each year, the rest must be imported (imported about approx 65 – 70% of fabric per year). Thus, the yarn produced today must export two-thirds of the output, while the garment industry has to import 65-70% of the fabric each year. Find out the cause of this drop.
– The volume of imported fabrics of all kinds decreased by x% compared to the same period in 2022:
Due to the shortage of orders, businesses actively reduce the volume of imported raw materials, including fabric. According to VIRAC’s report, in the first 6 months of 2023, fabric import turnover has decreased very low in the past 5 years (only higher than 6 months of 2020 – when the Covid pandemic was complicated globally).
China, Taiwan, and Korea are the main fabric suppliers to Vietnam. Vietnam mainly imports fabrics from these three markets because at present, the import of fabrics and textile materials is mainly done by FDI enterprises. These companies often import 100% of raw materials from their parent companies, affiliates or partners from their own countries at a low price to return to Vietnam for garment processing.
Source: VIRAC
– Vietnam’s lychee exports in 6 months reached x billion USD, down x% over the same period in 2022:
Find out the cause of Vietnam’s lychee exports dropping.
Source: VIRAC
The main markets of Vietnam’s blinds and technical fabrics are the US, Korea, Thailand and Luxembourg. Most of the exports to these markets declined, in which the US and South Korea fell deeply at x% and y% respectively.
Overview of the garment industry
– Production output of a number of garment products of Vietnam is subject to the same downward trend:
According to VIRAC’s report, in the first 6 months of 2023, garment production slowed down, the output of casual clothes in 6 months reached x million pieces, down x% compared to the same period in 2022. In terms of types, suits , uniforms, jackets, trousers, overalls, shorts for adults account for the main output.
Source: VIRAC
– Total retail sales of garments in the first 6 months of the year:
According to the VIRAC report, in the first 6 months of 2023, Vietnam’s total apparel retail sales is estimated at x trillion dong, up x% over the same period in 2022. There are many reasons for the increase in sales. retail apparel industry. One of them is due to the influence of inflation, but also depends on other causes.
Source: VIRAC
Currently, the garment market share is in the hands of foreign enterprises from China, Europe and the US with brands such as H&M, Zara, Uniqlo, Pierre Cardin, Adidas,… There are only a few enterprises. domestic enterprises such as Viet Tien, An Phuoc, Canifa,… can compete with foreign enterprises abroad.
Source: VIRAC
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– Export of garment products in the first month of 2023 generally decreased over the same period:
Source: VIRAC
According to VIRAC’s report, in the first 6 months of this year, garment export turnover reached nearly x billion, down x% compared to the same period last year.
By category, orders still fell in many product groups, except for shirts, vests, workwear, cotton towels and Muslim shirts. Within each product group, orders decreased in both the high-end and mid-low segments. According to VIRAC’s report, in the structure of export products, the Austrian product group still accounts for the largest proportion.
Source: VIRAC
Prospective forecast mentioned in Vietnam textile industry report 2023
The textile industry faced many difficulties in the first 6 months of 2023 and will continue to face difficulties in the following months due to concerns about rising inflation and high inventories.
The source of input materials for the textile industry is still volatile:
- The USD/VND exchange rate is at a high level, increasing the import price of input materials of enterprises, in the context that the domestic textile and garment industry is relatively dependent on imported raw materials. However, the material cost pressure on producers will be eased because cotton and oil prices in the world market are falling significantly.
- In addition, the increase in the USD price makes the payment costs in USD of enterprises such as transportation fees (logistics), debt will have to bear a huge exchange rate difference.
At the output of the textile industry, consumer demand for this industry is forecast to decrease.
- Spending on non-essential goods and general consumption is also forecast to decrease. This makes garment processing enterprises will face more challenges in 2023 due to a sharp drop in orders and weak purchasing power. As a result, profitability of the entire value chain in the textile industry will come under pressure, with domestic yarn and garment manufacturers being the most vulnerable due to lower average selling prices.
- This difficult situation of Vietnam’s textile industry is expected to last until the end of this year. The reason is that the world demand for textiles in 2023 is expected to decrease by 8-10%.
Find out more about the textile industry outlook.
Check out other articles on VIRAC’s textile industry report
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The information collected in “Report on textile industry Q2/2023“. The report not only provides full information on macroeconomics, trade supply and demand, but also provides detailed information about the textile and garment industry. The report also features forecasts and prospects of the textile industry with the most up-to-date information.
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