Developing sustainable value chains in the textile industry


In the morning of December 23, 2019, in Hanoi, the Prime Minister’s Conference took place with the business theme “Strong development of enterprises – Integration, efficiency and sustainability”. At the Conference, Mr. Le Tien Truong, Vice Chairman of Vietnam Textile and Apparel Association – General Director of Vietnam Textile and Garment Group made a speech on Sustainable Value Chain Development in the textile industry. The following is the full text of Mr. Le Tien Truong’s speech at the Conference!

Vietnam Textile and Garment Industry has just celebrated the 20th anniversary of the establishment of the Textile and Apparel Association and it was its great honour to welcome the Prime Minister to the ceremory, with his directing speech, in which the Prime Minister requested the textile and garment industry to maintain its stable position. In the top 3 of textile exporting countries, as well as upgrading the position in the supply chain to a higher value-added ladder, by 2030, it will have to own 30 global brands of fashion products. Based on the Prime Minister’s direction and analysis of market trends in the context of Industry 4.0, the textile and apparel industry has launched major development programs in the next 10 years.

2019 is considered the particularly difficult year for Vietnam’s textile and garment industry, with many unpredictable market fluctuations which had been lasting longer than expected. The U.S.-China trade conflict has caused the total textile demand of 2019 to increase by only 3.3% compared to 7.4% the previous year. Among the 5 largest textile and apparel exporting countries in the world, China decreased by 2.3%, Pakistan decreased by 4.6%, India increased by 1.4% and Bangladesh increased by 2.4% while Vietnam maintained a growth rate of 7.3%, the gap of export turnover. with the 2nd country falling from USD 4.6 billion in 2018 to USD 2.8 billion in 2019. Besides the declining aggregate demand, the bigger difficulty is the short-term business trend, defending against unpredictable policies. international trade, short-term orders, difficulties in optimizing plans and costs have led to a decline in efficiency despite revenue growth.

In this context, the requirements beyond price, quality, and schedule are as usual, many new requirements are posed by big buyers as a barrier to screen and restructure the global supply system. Specifically, the criteria of environment, green production, saving of non-renewable resources such as water and electricity, using recycled materials. Along with that are the requirements on rules of origin of yarn and fabric to be able to get tariff benefits from new-generation free trade agreements, labor pressure and wages due to Vietnam being a country. With high economic growth rate, stable exchange rate, it is no longer an advantage of having cheap labor compared to other competing countries. With the new features of the global textile supply chain, only businesses that are officially involved in the chain, It was assessed by the new chain leader that it was able to get stable production orders, the most reasonable price due to the sharing of profits from high-rate stages such as design, distribution to production areas. . For example, in 2019 is a difficult year for the fiber industry as the export unit price to China decreases by over 15%, while cotton and fiber only decreases by 5%, non-supply units export to companies. If trade sees an average loss of 6-8 billion VND / year for 10,000 spindles, the yarn factories in the supply chain of fabric, garment and distribution still maintain 1% of revenue, lower than previous years. before (3-3.5% of revenue) but no loss. It can be said that becoming a member of the global supply chain, complying with new and competitive supply standards to maintain that position is a mandatory task for businesses to develop sustainably.

From the new characteristics of the global textile market, the global supply chain, and the unique characteristics of Vietnam, the textile and apparel industry identifies the goals for 2020 and the five-year plan for 2020-2025 as follows:

  • Maintain export growth rate of the next 5 years at 6%
  • Particularly, 2020 targets to achieve export turnover of 41.5-42 billion USD
  • Implementing the greening strategy of Vietnam Textile and Garment industry
  • Improve the quality of working environment and income for employees
  • Effective application of industrial achievements 4.0. The target of 2025 is that the export turnover will increase to USD 55-60 billion, but the number of employees will remain at the present level (2.5 million industrial workers), the labor productivity per capita will increase by 150%. Currently, according to the report of the state-level scientific project on the impact of Industry 4.0 on Vietnam Textile and Garment Industry, based on the actual survey of 300 enterprises, the readiness level for Industry 4.0 of the new industry only at medium level, in which yarn industry reached 3.1 / 5 points, weaving – 2.5 / 5, dyeing – 2.3 / 5 and sewing 2.85 / 5. Meanwhile, the operation of the global supply chain is completely based on the achievements of Industry 4.0, especially big data and artificial intelligence.

Goals and solutions for sustainable development:

  • Emission: 30% reduction of waste water after dyeing by applying water-free dyeing technology, using low-ratio 1: 3 dyeing machines instead of the current 1: 8. 30% reuse of treated waste water for washing, washing and sanitation stages. Overall, over 40% of the water used in the dyeing industry is reduced
  • In fiber industry: by 2025, at least 20% of recycled polyester fiber and 15% of organic cotton will be used to minimize the use of plant protection drugs. Currently, cotton growing is using the largest amount of irrigation water in the world among crops.
  • Invest in solar power in plants with natural conditions, strive for 10% of electricity used from renewable energy sources.
  • Using robots in workplaces with environmental hazards
  • Integrating big data in Vietnam’s textile and apparel industry and linking with the data environment of global buyers and supply chain operators.

The works have been implemented:

  • Fiber factory: has successfully invested and put into operation 2 factories with a capacity of 10,000 tons of yarn / year in Dong Nai shop, accepted into the US global supply chain, supplying yarn to weave fabric for underwear, knitted. G7 devices, save 20% electricity compared to other devices, reduce 50% of workers. EC – 40 million USD
  • The system of weaving – dyeing in Bao Minh Nam Dinh Industrial Zone with a scale of 30 million meters / year, 80 million USD of total investment. Has been in operation since the beginning of 2019
  • Center for designing and making samples, producing small series of denim, washing water without using water, without waste water. Meet samples, approve samples, price with customers in 48 hours at Linh Trung Thu Duc. E-commerce is over 15 million USD for only 400 employees, the investment rate on labor is 10 times higher than the standard
  • Garment production area in Ben Tre with 6000 employees meeting the Lead platinum standard (using renewable energy, renewable raw materials)

Request:

  • The Government has a comprehensive policy to accelerate the improvement of national competitiveness, giving enterprises a relatively competitive position with enterprises in the textile and garment producing countries in the top 5. Especially The target of port service efficiency is currently ranked 83/141, continuing to decrease by 5 ranks in 2018, while India is 49th. The funding source for SMEs (the major textile and apparel enterprises in this group) is currently ranked 97th, down 12 places compared to 2018 while India was 23, investment capital for ventures (such as fashion design, production and sales under the Vietnamese brand) also dropped from 51 to 61 while India was 22 years 2019. (Source: WEF -2019 review report on weforum.org October 9, 2019)
  • The Government has a policy to return support to businesses investing in clean production and environmental protection. For example: refunding CIT already paid for profits and then using new investment in the direction of green production, without collecting VAT on investment expenses, reducing EIT for 5-10 years
  • Planning textile and garment industrial park with the scale of 300-500 ha, with an area of ​​about 10 zones nationwide, with adequate infrastructure investment in environmental treatment so that enterprises can invest in producing fabric to serve the supply chain. application
  • There is a policy of no VAT collection when using domestic raw materials to produce exports. Considering the possibility of mobile lending in foreign currency with the enterprises having the respective export foreign currency collection.
  • Continuing efforts to reduce loan interest, especially investment loan interest.
  • The bank has an appropriate policy on short-term credit limit for yarn and textile enterprises based on competitiveness, not only based on short-term results of 1 difficult business year.

Commitment of the business

  • New investment following the trend of greening the textile and clothing industry. Ensure modern technology, lowest emissions.
  • Focus on developing non-emission production such as producing fiber, dyeing technology with little water and without water.
  • Strive to compete and build businesses in the direction of meeting global supply chain criteria.

Le Tien Truong – General Director of Vietnam National Textile and Garment Group


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