According to a survey conducted by the Labor Relations Research Center (ERC) on enterprises located in the areas where instruction No. 16 is implemented, 65.3% of Vietnamese enterprises stopped operating in September and only 34.7% of enterprises are still operating. Among them, textile clothing and leather shoes are one of the industries most seriously affected in terms of psychology, health and economy. More than 60% of employees want to return home or have returned home. Nevertheless, most employees are sure that they will only return home in a short time to recover their health and think about their own and their children's lives. 89% of employees emigrated and 96% of local employees wanted to continue working in the factory.
Novel coronavirus pneumonia outbreak has been a major problem in the past fourth waves of labor. Bai Shenglong, vice president of No. 10 Garment Corporation, said that about 20% of the employees of the enterprise were unable to work because they were trapped in the closed area, the stores were "paralyzed" because they were forced to close, and many uniform contracts could not be carried out because they were unable to travel. Despite the large volume of goods, enterprises have to face the risks of slow delivery and high aircraft delivery cost, resulting in lower efficiency than expected.
However, due to the implementation of a number of flexible adaptation measures, the total income of the unit in the past nine months is the same as that in the same period last year. With efforts to reduce costs, the unit strives to make the profit at the end of the year higher than that of last year. At present, No. 10 garment corporation has received orders at the end of the first quarter of 2022. In order to increase the export volume of goods, the company will mobilize employees to work overtime and take measures to improve productivity. At the same time, the company has always done a good job in epidemic prevention and control. So far, more than 90% of its employees living in various provinces and cities have been vaccinated with the first dose of vaccine and more than 50% of its employees have been vaccinated with the second dose.
Ruan Chunyang, chairman of Xing'an Garment Corporation, also held the same opinion and reiterated that Xing'an is one of the provinces that do a good job in epidemic prevention and control. Therefore, no unit of the company stopped production. Due to the investment of technology and modern equipment, the productivity was even 20% higher than before. Thus, the total revenue of the company in the first nine months increased by about 10%, and the average income of employees reached vnd 10 million / person / month (an increase of 10% in the same period).
However, affected by the epidemic and rising costs, the profit of Xing'an garment corporation decreased by 5% year-on-year. The company has also signed orders until the end of January 2022, and will continue to negotiate and sign orders in the next few months. The difficulty is that February is the time of season change, but some customers expect Vietnam's anti epidemic methods. If the anti epidemic work is effective, they will negotiate and sign, otherwise, they will transfer their orders to other places.
Gao Youxiao, general manager of Vietnam National Textile and Garment Group (VINATEX), said when evaluating the enterprise performance that at present, most units of the group have received orders at the end of the fourth quarter of 2021, or even the first quarter of 2022. However, in the past period of time, affected by the complex and severe epidemic situation, garment enterprises in southern provinces and cities fell into a state of moderate production, plant closure and shutdown. Many enterprises complete orders according to the "three in place" scheme, resulting in high cost and loss.
In the future, the rising trend of feed prices will be a great challenge for enterprises, especially those enterprises that signed contracts with customers at low prices last year and then imported raw and auxiliary materials at high prices, or the slow arrival of raw and auxiliary materials will suffer huge losses. In addition, in some southern enterprises, about 20% - 30% of employees are expected to leave the city and return home. In the future, it will take time for employees to return to work and restore labor productivity to the level before the implementation of social isolation measures.
Flexible measures
Gao Youxiao, general manager of VINATEX, also said that the group has vigorously implemented a number of response measures to reduce the negative impact of the epidemic and the rise in raw material prices. There is no other way for the slow arrival of raw materials or the sharp rise of raw and auxiliary material prices and logistics costs caused by the interruption of the supply chain in recent times. The production unit must cooperate closely with customers and call on customers to share difficulties in carrying out orders and jointly find out the best measures. In addition, take the initiative to discuss with suppliers to avoid the impact of excessive price rise on output products, improve market forecasting ability, and formulate raw material reserve and import plan to avoid the impact of rising prices. When the market recovers and production activities return to normal, enterprises need to formulate a variety of response plans for 2022.
On the other hand, enterprises need to take advantage of the advantages brought by the new generation free trade agreement (FTA) to increase exports. In order to achieve this goal, enterprises must invest in a complete supply chain to meet the rules of origin of "starting from yarn" in the comprehensive and progress agreement of the trans Pacific Partnership (cptpp) and "starting from cloth" in the Vietnam EU free trade agreement (evfta). The key direction in the subsequent stage is to establish the common goal of "becoming a complete set supply point", develop a comprehensive chain of enterprises including yarn, textile, finishing, accessories, garment making and auxiliary (such as logistics, training and scientific research), improve their position in the value chain, develop product design, provide complete sets of products from design, and appear in a separate brand group with consideration.
In the nine months of 2021, VINATEX's total revenue reached 24.68 trillion Vietnamese Dong, a year-on-year decrease of 12.4%, and its profit reached 1.14 trillion Vietnamese Dong, a year-on-year increase of 136.9%. Recently, although the garment and textile industries have been affected, the yarn revenue and profit have also made remarkable achievements, with a revenue of 5.530 trillion Vietnamese Dong, a year-on-year increase of 28%, and a profit of 484.72 billion Vietnamese Dong. Many enterprises face financial and order difficulties, but they try to support employees, take care of their lives and retain them. In order to promote exports in the future, enterprises need to resume production as soon as possible to ensure the completion of signed orders, and closely cooperate with local governments to implement epidemic prevention programs to maintain production stability.
Dr. Ruan Shiqiu Zhuang, director of the WTO and integration center of the Vietnamese chamber of Commerce and industry, said that during the complex epidemic situation, the production chain of many enterprises was interrupted, resulting in customers canceling previously signed orders or transferring to another country.
This has raised concerns about the export prospects of these products. However, for large textile and garment brands, it is normal to transfer orders to areas with well controlled epidemic situation in order to meet the demand of shopping peak season at the end of the year in European and American markets. Therefore, if the enterprise quickly resumes production and successfully completes the remaining orders in the following months, there is no need to worry too much. In the long run, compared with many competitors, Vietnam's textile and clothing still has certain advantages in product quality, technical level and the ability to meet the strict requirements of labor force and environment, especially the tariff preferences shown in the free trade agreement.
At present, for textile, garment and leather footwear enterprises, the most important thing is direct support policies, such as financial support, vigorous tax reduction (such as social insurance premium, trade union fee, etc.), or timely launch of credit interest package support plan to quickly and comprehensively resume production. At the same time, the state needs to introduce policies to help enterprises make effective use of existing labor resources, relax or cancel the restriction on the maximum overtime, and help enterprises attract employees to return to work by providing on duty meal and accommodation support, or regular testing for employees. Establish a national unified transportation green channel mechanism serving the export of production raw materials, goods, machinery and equipment.
