Vietnam Textile Development, Bring Pressure To China

- Jul 13, 2019-

Against a backdrop of global trade turmoil, the latest set of data from Japan, Germany and the euro zone showed continued weakness in momentum among major exporters, with weak trade activity hitting manufacturing confidence.

Domestic textile industry feel cool

In the context of sluggish global trade growth, the domestic textile market has also felt the chill.Since the beginning of this year, the prosperity of the textile market has been at a low level, many downstream weaving garment factories are delayed.

In traditional textile season "yue four", the market is not as good for years, "orders received hand cramps" the beauty of the day for a long time to don't come, especially in the mid to late April, the market quickly turned cold, should have been the most busy time is at leisure, baromon afraid to stock up and downstream of the clothing factory is more simply the May Day holidays.

Since the reform and opening up in 1986, Vietnam's GDP has been growing at around 6-7% for many years, and reached 7.08% in 2018, an 11-year high.Over the years, foreign investors have been increasingly keen on Vietnam.In 2018, Vietnam attracted us $35.46 billion in foreign investment, of which us $19.1 billion was allocated, up 9.1 percent year-on-year.In the first quarter of this year, Vietnam attracted $10.8 billion in foreign investment, up 86.2 percent from a year earlier.

In 2018, Vietnam's exports totaled us $244.7 billion, with a total import and export volume of us $428.8 billion, equivalent to twice its GDP, ranking second only to Singapore in Asia.

While the domestic textile industry is struggling, southeast Asian countries represented by Vietnam are rapidly seizing the textile market.As we all know, with the rapid rise of domestic production costs and labor costs, the textile industry is now transferring to southeast Asian countries in bulk, and Vietnam is one of the most important countries to undertake the transfer of China's textile industry.Vietnam is now the world's third-largest textile exporter, after China and India.

Half an hour's drive from Hanoi to haiphong, a manufacturing hub in northern Vietnam, there are roughly 30 industrial parks on either side of the road.

Low tariff rate, the biggest competitive advantage

What do you look for in investing in Vietnam?Zero tariffs and low tax rates on exports have become the focus of Chinese investment in Vietnam."Many of the textiles exported from Vietnam to Europe, the United States and Japan are tarion-free, and the saved tariffs are profits.""Said lu jianjun, general manager of jiansheng group Vietnam.

From the perspective of tariff, Vietnam has formed a relatively large and mature free trade system, and Chinese enterprises have gradually increased investment in Vietnam to avoid trade barriers.Especially after 2019, a number of new foreign trade agreements come into force in Vietnam, and Vietnam's export tariff advantage in foreign trade is becoming more prominent.

In addition to low tariffs, Vietnam's own preferential tax policies can not be underestimated.Huafu (Vietnam) industrial co., LTD., located in long an province of south Vietnam, is enjoying the "four waivers and nine halves" tax preferential treatment from Vietnam.According to the policy of Vietnam, the special preferential policy of "four waivers and nine halves" will be implemented for enterprises with investment of 300 million us dollars, annual sales of 500 million us dollars or providing more than 3,000 jobs.

Obviously, under the dual incentive, the enthusiasm of industry transfer has been greatly increased, especially for enterprises mainly exporting to the us market.In the first quarter of this year, the United States was Vietnam's largest commodity exporter, with exports totaling $13 billion, up 26 percent from a year earlier.

Vietnam textile, not to be underestimated competitors

Vietnam bans the import of used machinery, equipment and production line technology with a service life of 10 years or more, which will take effect on June 15, 2019, according to a government decision signed by vice prime minister chung dinh yong on April 24.

This means that Vietnam will no longer be satisfied with the garment production market, will go directly into the fabric and raw material market.It can be briefly summarized as follows: if all textile enterprises producing in Vietnam want to enjoy Vietnam's tariff preference, then the origin of raw materials such as yarn, fabric and auxiliary materials used in textiles must be in Vietnam (the proportion of origin in Vietnam is at least 90%).