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Chinese firms seen scaling up investments into vietnam textile industry

Chinese firms seen scaling up investments into vietnam textile industry Source: www.chinatexnet.com
Date: 26-06-2013
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Vietnam’s textile-garment industry will see a wave of Chinese investment, said a source from Vietnam National Garment and Textile Group (Vinatex).
 
Chinese firms are quick to seize investment opportunities. Vietnamese apparel products would enjoy a zero tariff in the U.S. after Vietnam signs the Trans-Pacific Partnership (TPP) agreement, said the source.
 
The garment industry will be the strongest magnet for Chinese investors, while textile and dyeing will also lure Chinese investment, but at a lower level, he forecast. Therefore, local players will face tougher competition when TPP comes into force.
 
Currently, Vietnamese garment manufacturers have weak competitiveness because they still depend heavily on materials imported from China.
 
Vinatex is working on a plan to develop the textile-garment industry until 2015 with an aim of helping local manufacturers improve their competitiveness when TPP takes effect.
 
A couple of textile and dyeing firms from China have expressed interest in cooperating with Vinatex. However, many provinces are not inclined to welcome textile and dyeing projects due to environmental pollution worries, so there has yet to be a project jointly developed by Vinatex and a Chinese partner, said the source.
 
Vietnam wants to attract more foreign investment in textile and dyeing than in garment to have advanced technology transferred but results so far are not satisfactory.
 
Speaking in South China Morning Post, Hong Tianzhu, chairman of Texhong Textile, said his company intended to boost investment in Vietnam.
 
Another Chinese company, Pacific Textiles, plans a US$180 million venture in Vietnam with Crystal Group of Hong Kong. Crystal will spend an additional US$49 million raising the size of the project to 70,000 spindles.
 
A number of Chinese and Hong Kong textile and dyeing projects got off the ground in Vietnam last year.
 
Thien Nam Investment & Development JSC of Vietnam and Sunrise Textiles Co. Ltd. of China on November 5 established a joint venture named Thien Nam Sunrise Textiles JSC. Their factory is scheduled to begin operation in late 2013 with a monthly capacity of one million meters of woven fabric and 300 tons of knitted fabric.
 
Texhong Yinlong Technology Co. Ltd. of Hong Kong in July 2012 started work on a yarn factory in Hai Yen Industrial Park in Mong Cai City, Quang Ninh Province.
 
In the first four months of 2013, Vietnamese textile-garment exports totaled nearly US$5 billion, up 18% year-on-year. The U.S. was the biggest buyer with total spending of over US$2.5 billion, more than half of the sector’s total textile-garment export turnover in this period.
 
Meanwhile, textile-garment and leather-footwear material imports reached US$4.32 billion, a rise of 15.5% over the same period last year. Fabric imports were put at US$2.39 billion, up 16.1% year-on-year, while material imports hit US$1 billion, up 13.4%.
 
Vietnam mainly imported this group of items from China, with a total import bill of US$1.55 billion, a year-on-year rise of 26.4%, according to the General Department of Customs.
 
Benefits for textile-garment industry from TPP
 
Among the TPP members, the U.S. is the largest market for Vietnamese textile-garment producers. In the American textile-garment market, China now holds the biggest share, followed by Vietnam, Thailand and Bangladesh, said Tran Viet, head of the department of international relations at the Vietnam Textile and Apparel Association (VITAS).
 
Nonetheless, Vietnam’s textile-garment export revenue from the U.S. is five times lower than China’s and not much higher than the other exporting countries. This position is not secure for Vietnam, he remarked.
 
The greatest benefit TPP may bring to Vietnamese textile-garment products is a zero tariff. These items are currently subject to an average tariff of 17.3%.
 
Vietnam now achieves annual growth of 7% in exports to the U.S., and the growth might reach 12-13% if TPP was favorable to the local textile-garment sector.
 
By 2025, Vietnamese textile-garment exports to the U.S. may hit US$30 billion, versus over US$7 billion in 2012, said Viet.
 
However, the demand of the U.S. market is forecast to not increase much, limiting Vietnamese exports to this huge market. Meanwhile, when TPP and other trade agreements to which the U.S. is a signatory have more members, there will be fewer chances for Vietnam, he stressed.
 
The 11 countries in negotiations over TPP are Australia, Brunei, Canada, Chile, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam. They are also now members of the Asia-Pacific Economic Cooperation (APEC) forum.
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