Vietnam becomes the world's 'mask factory' thanks to Covid-19

Vietnam is pushing clothing manufacturers to make personal protective equipment, including masks, to compensate for the decline in textile exports and foreign investment due to the impact of the pandemic.

For years now, clothing and footwear companies have been shifting their production lines to Southeast Asian countries, to reduce dependence on China and take advantage of Vietnam's trade deals. However, the arrival of the pandemic has ignited this trend.

Foreign direct investment in Vietnam from the beginning of the year to August 20 decreased by 13.7% compared to the same period in 2019. Investment has increased rapidly over the past several years and reached 7% in 2019.

Exports of clothing and fabrics also fell by 11.6% in the year-to-August period compared with the same period in 2019 after orders from the US and Europe were almost nonexistent.

After China and India, Vietnam is the world's third-largest textile and garment exporter - an important sector that has helped make it the fastest-growing economy in the world. The country delivered $32.6 billion worth of fabrics and clothing in 2019 under diverse brands including Walmart and Adidas.

"This spring, the sudden drop in global demand will of course have a significant impact on our order placement with suppliers in all markets including Vietnam," said a representative. fashion brand H&M said.

"Never before have people in the garment industry in Vietnam experienced such pressure and rapid changes. Every day is different from the day before, every week is different from the previous week." Mr. Vu Duc Giang - Chairman of Vietnam Textile and Apparel Association (Vitas).

To survive the epidemic crisis, the Ministry of Trade affirmed that Vietnam must "become the world's mask factory".

As demand for clothing dwindles, some factories have had to shift focus. At least 50 companies are producing antibacterial masks or planning something similar. One of them is TNG, which often supplies products to companies like Levi's, Tesco or Decathlon. Since this spring, they have exported millions of masks.

"A lot of textile companies switched to making masks, most of them were successful," said Frank Weiand, a supply chain consultant.

Although masks are a small value product, the Vitas president said that they have great export potential because they are becoming popular and needed by people all over the world. Vietnamese textile and garment manufacturers are betting on mask production, confident that demand for this product will be sustainable because ending the pandemic will take some time.

Another way for Vietnamese companies to adapt to the new environment is to adapt to new technologies such as keeping in touch with partners through digital means.

For example, for the first time Vietnamese textile and garment companies are able to make business agreements through WeChat – from product introduction to price agreement.

The Asian Development Bank has forecast that Vietnam's economy could grow by 1.8% this year, one of the very few countries expected to achieve this figure. However, this prediction is much lower than the 7% figure recorded in 2019.

Vitas said that its members had previously depended on about 60 percent of the supply of raw materials abroad, most of it from China. However, this number is expected to drop to 30% thanks to the development of the domestic supply chain. One of the association's strategies is to provide consulting services to foreign companies, advising them to invest in all stages of production, not just apparel.

A second strategy is to mobilize textile companies towards clean production to increase the advantages of manufacturers in order to establish local industrial parks.

Businesses and analysts say that foreign investment will increase if Vietnam has a more developed, larger supply chain.

The minimum wage in Vietnam is currently close to 140 USD/month in Vietnam, less than half of what it costs in China.

Vietnam also has trade agreements with most Southeast Asian countries including TPP and EVFTA.

H&M said it had to be "flexible because things are becoming uncertain" during the pandemic but that Vietnam remains an "important" long-term partner. "That said, we have no plans to change our supply strategy going forward."

The pandemic is making global companies realize they need to diversify, including moving production to Vietnam.

"Even without a pandemic, they still want to leave. Covid-19 only creates pressure to make it happen faster."

For more information, please contact
QILILA VIETNAM CO., LTD
Sales office and showroom in Hanoi: No. 16, Chu Van An street, STR Sunrise C, Southern urban area Ring road 3, Dai Kim ward, Hoang Mai district, Hanoi city
Transaction office and workshop in HCMC:  No. 406, No. 1 Street, Long Thoi Commune, Nha Be District, Ho Chi Minh City
Factory:  Sub-zone 14, Alley 855, Tran Phu Street, Luong Son Town, Luong Son District , Hoa Binh province
Phone: 0946 089 688, 0948 486 986, 0985 299 809, 0912 492 086, 096 2943068
Email: contact@qilila.com 
Website : https://qilila.com

Sales office and showroom in Hanoi:  No. 16, Chu Van An street, STR Sunrise C, Southern urban area Ring road 3, Dai Kim ward, Hoang Mai district, Hanoi city
Transaction office and workshop in HCMC:  No. 406, No. 1 Street, Long Thoi Commune, Nha Be District, Ho Chi Minh City
Factory:  Sub-zone 14, Alley 855, Tran Phu Street, Luong Son Town, Luong Son District , Hoa Binh province
Hotline: 0946 089 688
Phone:
0948 486 986, 0985 299 809, 0912 492 086, 096 2943068
Email: contact@qilila.com
Website : https://qilila.com

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