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| Issue date:01/12/2008 |
| ATA Journal for Asia on Textile & Apparel - Dec 2008 Issue |
| Source:Journal for Asia on Textile & Apparel |
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Featured company: Vinatex
by Ngo Tuan
In an exclusive interview with ATA Journal, Le Tien Truong, Deputy General Director of Vietnam National Textile Garment Group (Vinatex), the largest textile and garment conglomerate in Vietnam, explained how the company’s expansion plan in fibre production keeps pace with the national industry development at large
Established in 1995, Vinatex is a group of 102 companies in Vietnam owned by the state, including such known manufacturers as Phong Phu Corp and Viet Tien Garment Corp.
The group plays multiple roles as a manufacturer, exporter, importer as well as distributor for textile and garment in both wholesale and retail businesses. It has also set foot in the sectors of finance and real estates.
Within the textile and apparel sector, Vinatex manufactures a diversified portfolio of textile and apparel products with an annual capacity of 14,000 tons of cotton, 150,000 tons of yarns, 380 million square meters of fabrics, 8,000 tons towels and 360 million pieces of garment products.
Headquarters of Vinatex |
Vinatex’s garment products are primarily for exporting markets overseas to international retailers and brands, including JC Penny, Nike, Gap, AMC, Phillips Van Heusen, Liz Claiborne, Target, Perry Ellis in the US market; Marks & Spencer, Otto Group, Pierre Cardin on the European continent; as well as Itochu, Marubeni, Mitsui, Katakura in Japan. Vinatex’s exports accounts for over 20% of the total export turnover of the Vietnamese textile garment industry a year.
Vinatex’s export markets |
The retail business of Vinatex, meanwhile, involves a network of 52 textile-garment supermarkets named Vinatex-Mart in 19 cities and provinces across the country. The group has also a number of wholesale centers to trade textiles, materials and accessories covering both North and South regions of Vietnam.
Key statistics of Vinatex
The group’s 5 major players: Phong Phu Corp, Viet Tien Garment Corp, Hanoi Textile and Garment Corp, Hoa Tho Textile and Garment JSC and Nam Dinh Textile and Garment JSC
Annual production capacity
-Cotton ginning: 14,000 tons
-Yarns: 150,000 tons
-Fabrics: 380 million square metres
-Garment: 360 million pieces
-Towels: 8,000 tons
Total labor force: 116,000 people |
Mr Truong said that the textile and garment industry in Vietnam had been growing in recent years, but more should be done so as to enhance the enterprise competitiveness, expand production as well as move towards sustainable development.
ATA: What are the industry issues in the textile and garment field of Vietnam?
Mr Truong: Vietnam is among the top 10 textile and garment exporters on the globe and it targets to be top five in the near future.
The country, yet, is heavily relying on imported sources of various materials, including cotton, fibres, yarns and fabrics.
Textile and garment represents Vietnam’s second largest currency-earning industry. Playing a driving role of this industry, Vinatex has proposed 24 projects, and 11 of them are put in priority for implementation, to nurture the domestic development of textile fibers and materials. These projects include:
a 300 ton/day synthetic fibre plant worth US$280 million at Nhon Trach Industrial Zone (IZ), Dong Nai province;
an OE (open-end) spinning projects of 20,800 tons/year at US$91 million;
a 40 million meter/year plant of high quality denim and fabric funded with US$56 million at Hoa Xa IZ, Nam Dinh province;
a US$8.3 million plant producing 78 million meters/year of high quality finished dyeing fabric in Nhon Trach IZ, Dong Nai province; and
a US$38.2 million project on making 850,000 pieces/year of high quality suit and garment for exports (worth US$38.2 million) at Pho Noi B IZ, Hung Yen province.
The projects were approved by the Vietnamese government. Some of them have been invested by local and foreign investors, and some are under proposal for calling on investment.
ATA: How will Vinatex increase cotton production?
Mr Truong: A large program was approved by the Vietnam Textile and Apparel Association (VITAS) and Vinatex’s board of directors within the long-term strategy of textile and garment industry in early 2008.
The program aims at developing the supply of materials with a capital investment of around VND6,500 billion or US$400 million, involving the cotton cultivation and manufacturing synthetic fibres.
Under the program, 40,000-ha land along the central coastal regions and Tay Nguyen will be irrigated for cotton by 2015 so as to increase the domestic supply of cotton.
The import value of cotton, fibre and cloth reached nearly US$5 billion last year, while the domestic textile and garment makers earned approximately US$7.8 billion from export.
With these investments, it is expected that the textile and garment industry will gradually increase the rate of domestic materials sourcing from the current 30% to 50% in 2010, 70% in 2015 and 80% by 2020, and the net export revenue will increase.
The project on cotton plantation is to partially meet demand on natural cotton of Vietnam as Vietnam is currently imported 95% of cotton among its total cotton demand.
Under the project, we plan to create a sustainable cotton developing area in Vietnam, which will satisfy 20% of the country’s total cotton demand.
ATA: What are the reasons for boosting domestic supply of fibers?
Le Tien Truong |
Mr Truong:Vinatex earned an export revenue of US$883 million in the first seven months 2008, up 20.8% year-on-year. It also witnessed a growth in the production of fibre (+96.5%), fabric (+107.5%), knitwear (+16.4%).
To fulfill the exports target of US$9.5 billion of Vietnam in 2008, Vinatex set its full-year target of fiscal year 2008 at an export turnover of US$1.7 billion, up 20.7% y-o-y.
Vietnamese textile and apparel manufacturers usually conduct processing services, earning a relatively small amount of fees from foreign clients. The same situation also applies to members of Vinatex, though the clients are famous brands in the world.
Moreover, a heavy dependence on importing materials for production puts the industry a relatively passive position, making it difficult for them to offset the external challenges, such as rising material prices.
The Vietnamese government, therefore, has emphasized on developing materials for the industry, which would support effectively for the domestic industry, as well as help attract more overseas investors. And, Vinatex is expected to lead in both investment and management for the development of local sources of textile materials.
Vinatex has been investing and operating some industrial zones for textile and garment manufacturing in Vietnam, including Pho Noi B industrial zone in Hung Yen province, Bao Minh in Nam Dinh province and Long An. These industrial zones house both locally and foreign invested textile and garment plants.
ATA: How about the development of synthetic fibers?
Mr Truong: Besides the cotton supply, Vinatex coordinated with Petrovietnam to build the first polyester fibre plant in Vietnam with a capacity of about 500 tons/day. With an estimated investment of US$200 million, the plant is scheduled to operate in 2011.
This Petrovietnam-Vinatex Dinh Vu plant produces various types of polyester fibre and filament yarn for further domestic manufacturing. Its strategic products are spun polyester fibre and filament yarn.
In the initial period of the operation, the input materials of the Dinh Vu fibre plant will be imported. PetroVietnam will provide materials for the plant after 2014.
ATA: Which segments are targeted by Dinh Vu fibre plant?
Mr Truong:The plant will mainly serve local textile companies, whether they are Vietnamese and foreign invested enterprises. We would welcome exports depending on the availability of favorable conditions in the international trade.
He concluded that Vinatex expected that some of its members to be listed on the stock exchange in the country in a few years, and it was planning a number of projects to enhance the enterprise competitiveness, expand production as well as move towards sustainable development.
Vinatex would also continue the projects for the development of both the group and the industry as a whole, he added.
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We reserve the right to take legal action against any party who reprint any part of this article without acknowledgement. For enquiries, please contact the Editorial Department. |
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