2023 most challenging year for Vietnamese garments: industry insider

“In the 30 years of Vinatex operation we never had to face difficulties as in 2023. The worst-case scenario happened to many businesses and some are yet to overcome the challenges,” he said at a press conference Monday.

In 2020 and 2021, Vietnam’s garment sector managed to survive through the pandemic with the manufacturing of masks and quarantine clothes.

But last year, rising inflation had cut spending in many countries, including in key markets such as the U.S. and Europe. Vietnam’s exports therefore plunged 11% to US$40 billion after years of growth.

Vinatex saw its profit plummet 60% to VND377 billion ($15.49 million), which was its worst scenario.

Rising competition from other countries also added to the challenges.

Nguyen Duc Anh, an office chief of the board of Vinatex, said that an average worker’s income in the garment sector in Vietnam is $330 per month, three times that of Bangladesh, double that of India, and 1.8 times that of Cambodia.

As other currencies fell steep against the U.S. dollar while the Vietnamese dong remained relatively stable, Vietnam’s garment sector became less competitive even though its productivity is 10-15% higher than competitors, Anh said.

Vinatex therefore had to accept a decline in profit to have enough money to pay salaries. Its workers average income dropped 4% from 2022 to VND9.5 million a month, which was still 11% higher than the national average of VND8.5 million a month.

There is now rising demand from some markets such as the U.S. Vinatex targets a revenue and profit growth of 10% this year.