Green Growth Meets Productivity

20/11/2024 10:35

The increasing demands for green production in export markets and social responsibility pose critical challenges for Vietnam’s textile and garment industry. According to Assoc. Prof. Dr. Nong Ngoc Duy from Australia’s CSIRO- Griffith University, the industry is currently shaped by five major trends: sustainability and circular fashion, Industry 4.0 digitalization, buyers and skilled labor supply chains, advanced materials, and geopolitical trade dynamics. Vietnam Textiles & Fashion magazine discussed these trends with Assoc. Prof. Dr. Nong Ngoc Duy.

  1. Could you elaborate on the five major trends in Vietnam’s textile and garment industry?

The five key trends are as follows:

  • Sustainability and Circular Fashion: The industry is under increasing pressure to meet ESG certification requirements from the EU, US, and Japan, alongside achieving carbon neutrality goals.
  • Industry 4.0 Digitalization: Automation plays a crucial role in enhancing productivity and operational efficiency.
  • Geopolitical Trade Shifts: Trade shifts create opportunities for Vietnam to access the Chinese market and boost competitiveness in the Asian amid political uncertainties.
  • Innovative Materials: There is a growing preference for recycled, natural, organic, and sustainable materials. The global market for sustainable fabrics is projected to grow significantly, from USD 32.74 billion in 2024 to USD 74.8 billion by 2032 (Market Research Future, 2024).
  • Changing Buyer Dynamics: A shift towards co-creating value and fostering deeper collaborations among stakeholders within the supply chain is evident. Strengthening inter-enterprise cooperation and integration across supply chain stages is becoming important.
  1. What steps should Vietnamese textile enterprises take to enhance productivity and supply chain efficiency in light of global economic volatility?

Adopting advanced technologies can increase production productivity by up to 55% and profit margins by up to 15% (Majumdar, Garg, & Jain, 2021). The global market for textile industry automation is expected to grow by USD 775.92 million by 2028, with a CAGR of 3.75% (Technavio, 2023).

To navigate global market fluctuations and improve productivity and supply chain efficiency, Vietnamese enterprises should:

  • Invest in advanced technologies and automation.
  • Leverage digital systems and data analytics to forecast demand and optimize production.
  • Train workers in digital and technological processes to enhance productivity and supply chain flexibility.

  1. How can Vietnamese textile companies improve Total Factor Productivity (TFP)?

To boost TFP, companies should:

  • Implement lean manufacturing practices like Lean and Six Sigma.
  • Invest in quality management systems and digital processes to enhance efficiency and minimize waste.
  • Focus on advanced technology investments while upskilling management and workers through specialized training programs.
  1. What should training programs focus on to equip the workforce for the new demands?

Training should emphasize:

  • Digital skills and knowledge of green technologies.
  • Supply chain management capabilities.
  • Proficiency in automation systems and digital management tools to adapt to innovative solutions, including TFP optimization.
  1. How can Vietnamese textile companies balance green requirements with economic efficiency?

Balancing green production with economic viability requires:

  • Investing in energy-saving technologies and water recycling systems.
  • Adopting circular economy models, such as utilizing recycled materials and implementing product recycling initiatives.
  • Deploying environmental quality management systems to reduce waste management and energy costs.

Policymakers also play a role by offering green financing incentives and creating regulatory frameworks to support enterprises. Promoting R&D to localize green technologies, enhancing STEM education, and improving vocational training are crucial. Strengthening market access through trade agreements and adherence to international standards will further support the industry.

Forecast

China and Japan are forecasted to remain Vietnam’s largest textile and garment export markets in the long term. Vietnamese enterprises should focus on enhancing production capacity, diversifying product lines to meet customer demands, and complying with increasingly stringent quality and environmental standards. Investments in automation and digitalization will enable supply chain optimization and more agile responses to market demands in these key markets.

Thank you, Assoc. Prof. Dr. Nong Ngoc Duy, for sharing your insights!

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