Garment exports soar in early part of 2022, come down with a thud

The fourth quarter is usually the peak production season, but in 2022 the market plummeted as orders tumbled.

The director of a garment company with 1,200 employees in HCMC’s Binh Chanh District said there were lots of orders in the first half of the year and workers had to work overtime, but the situation reversed in the second half.

“We were forced to reduce seasonal workers, and stop some production lines because there were no orders,” he said.

Workers were furloughed, he said. The gloomy market with few orders and lower prices resulted in a large amount of inventory. Instead of bulk orders like in the first half, buyers placed smaller orders with tight delivery schedules.

To provide jobs for workers and avoid mass layoffs, garment and textile producers had to accept small orders, reduce selling prices and diversify export markets.

Production slowed down in the last quarter, but due to the high growth in the previous three quarters, the textile and garment industry still reached the export target of $44 billion, up 10% against 2021.

The U.S. was still the largest importer of Vietnamese garments and textiles for the year with orders of more than $18 billion, followed by South Korea with $4.2 billion, and Japan and China with around $4 billion each.

The market situation changed suddenly in the middle of the year, but Vinatex managed to realize its consolidated profit target of VND1.090 trillion ($45.4 million) in 2022.

However, there are difficulties ahead for the industry. “Demand for garments in 2023 will still be weak, at least the first quarter will not be positive,” Truong said.

Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association, said orders from the end of 2022 to the first quarter of 2023 decreased by 25-27% due to weakened global demand. Many businesses are currently receiving orders equivalent to 70-80% of their production capacity.

Businesses could shift production to lower value items and accept smaller orders, he said. Nguyen Huu Tuan, human resources director of Thanh Cong Textile and Garment Co., said to safeguard the jobs of more than 5,000 workers and retain customers, it is accepting orders at low prices, sometimes even below breakeven.

The garment and textile industry foresees one of two export scenarios in 2023: Exports could fetch $47-48 billion if the market recovers in the second half of the year, but otherwise it has to settle for $45-46 billion.