Big garment companies survive clinging to tiny orders

By Anh Minh June 20, 2023 | 09:10 pm PT

Vietnam’s largest garment manufacturers, with staff in the thousands, are accepting orders as mall as several hundred units to survive through tough times never seen before, an industry insider says.

"We have never experienced difficulties like this," said Cao Huu Hieu, CEO of major garment firm Vinatex.

Since the end of last year, big companies have been receiving orders as small as a few hundred or a few thousand shirts just to give their employees jobs, Cao explained.

He added that even during the pandemic the situation had never been this challenging.

The Vietnam Textile and Apparel Association (VITAS) is also communicating a similar message. In the first five months, garment exports fell 21% year-on-year to levels even 5% lower than the same mid-pandemic period in 2021.

"Companies have been cutting expenses. Some of them even had to sell assets to survive," said Truong Van Cam, VITAS deputy chairman.

Buyers are paying less for products. The cost of labor to produce a shirt used to be $1.7-1.8, but has now dropped to $0.7-0.8.

To make ends meet, companies have to accept unusual orders. For example, a factory specializing in pants is now accepting shirt orders, just to ensure that production will continue.

Many textile companies have recorded large inventories since April.

However, Hieu said that over 63,000 Vinatex workers still have jobs paying VND9 million or more a month.

Accepting small orders and looking for new markets has helped companies avoid layoffs due to lack of orders, he explained.

Vinatex expects pre-tax profit to fall 40% year-on-year to $610 billion in 2023.

VITAS has forecast that Vietnam’s total garment export value will account for $40 billion this year, 12-15% lower than targeted.