Production Capacity of Some Garment Accessories Products in Vietnam

According to the assessment of textile industry experts, “the supporting industry for the textile industry still has many shortcomings, if not to say it is too weak. The current specialized mechanical capacity of the textile industry is too small, not meeting the development needs of businesses in the industry”.

At the “Vietnam International Textile, Fabric and Accessories Industry Exhibition 2007” held in Hanoi and Ho Chi Minh City from April 17-19, among hundreds of booths introducing textile machinery and equipment mainly from China, Italy, Japan... there were very few booths of Vietnamese enterprises. Mr. John Tan, Director of Huanye Company, headquartered in Shanghai, specializing in manufacturing printing machinery and equipment for printing letters, images on fabric and fabric cutting machines, said: “This exhibition is an opportunity for us to sell all kinds of machinery, because the Vietnamese market has not seen investment from these factories.”

To better understand the current situation of the machinery and equipment manufacturing industry, this thesis will take Vietnam National Textile and Garment Corporation (Vinatex) as an example because this is the leading unit and the largest enterprise in the textile and garment industry in the country.

Vinatex has many mechanical workshops specializing in repairing and replacing spare parts and components and 4 companies specializing in manufacturing spare parts, components and equipment for the textile and garment industry such as: Gia Lam Garment Mechanical Joint Stock Company; Nam Dinh Garment Mechanical Joint Stock Company; Hung Yen Mechanical Joint Stock Company and Thu Duc Mechanical Company. In the past, although these units have made many efforts, due to limited capacity and outdated equipment, they have not been able to meet the very rapid development requirements of textile and garment enterprises. The annual production value of these 4 mechanical companies is only about 9 million USD, equivalent to nearly 4,000 tons of spare parts, mainly small spare parts and equipment such as: fabric spreading machines, fabric inspection machines, steam vacuum machines, thread leveling machines, thread vacuum machines, button punching machines, fabric cutting machines, lighting systems, cooling systems and some spare parts such as filing cabinets, sewing chairs, shelves for raw materials, and transport vehicles.

Internally, … mainly serving the garment industry, but still only partially meeting the demand. As for spare parts and components for the textile industry, businesses still have to mainly import from foreign countries, mainly from Japan, Korea, and Western Europe, from 70-80%, worth tens of millions of USD each year.[29]

In addition, in the textile machinery and equipment manufacturing industry, there exists a paradoxical situation. That is, when textile enterprises have to import machinery and equipment, domestic manufacturing enterprises cannot find an output market because the mechanical workshops in textile companies have not been able to promote efficiency, because they cannot meet the strict requirements on quality, both price and delivery time of textile enterprises. Therefore, these mechanical workshops often have to process for enterprises outside the industry.

The reasons leading to the weakness of the textile machinery and equipment manufacturing industry are concluded by industry experts as follows:

Firstly, because the machinery and equipment of textile and garment factories in the industry are too outdated and not renewed, they cannot meet the increasingly high requirements of businesses in terms of quality and delivery time.

Second, spare parts and components for the textile industry are being smuggled into Vietnam from China in large quantities at low prices. In addition, the mentality of businesses not wanting to innovate mechanical equipment to produce spare parts, for fear of not being able to compete with Chinese products, is understandable, especially in the current market mechanism.

Third, domestic steel prices often fluctuate and increase, so spare parts production is ineffective.

Fourth, the mechanical components of the textile industry are very complex, with strict quality requirements and require modern equipment, which mechanical enterprises in the industry do not have enough capital to invest in.

Fifth, the weakness of human resources. The textile machinery and equipment manufacturing industry requires highly qualified workers, with basic technical and high-skilled training, while our vocational school system has not yet met the demand. When receiving workers, manufacturing enterprises still have to retrain them to suit the production practices. Not to mention, the shortage of technical workers is still happening seriously.

Sixth, there is a lack of accurate and timely information on supply and demand among enterprises in the industry, and between machinery and equipment manufacturing enterprises and textile and garment enterprises. Therefore, there are machinery and equipment products that are produced in abundance by enterprises of the same type. While there are products that no enterprise produces. Not to mention, the machinery and equipment produced by enterprises do not meet the requirements of textile and garment enterprises due to differences in technical parameters as well as design and function. Therefore, supply does not meet demand, causing the paradox mentioned above.

Thus, if we want the textile equipment manufacturing industry to develop and meet the current modernization needs of the textile industry, we must at least overcome the six weaknesses above.

b. Raw material production industry (cotton, silk). It can be said that one of the reasons leading to the high and low gap between the textile and garment industries is that Vietnam's raw material production industry is not really stable.

Cotton: Cotton, along with jute and mulberry, are raw materials for the textile industry. This is a plant that requires a lot of labor to produce and process. Cotton requires a dry, hot climate (25-30 0 C), and does not need much humidity. The flowering season requires a lot of rain, and when the fruit is ripe, the weather needs to be absolutely dry. Therefore, in our country, there are only a few places suitable for cotton growth. These are the South Central Coast provinces (from Phu Yen to Binh Thuan), Dak Lak and Dong Nai. Son La and Lai Chau provinces are also traditional cotton growing areas.

associated with the Thai people's handicraft weaving. The cotton area of the whole country is unstable because of low economic efficiency, only fluctuating around 20 thousand hectares (Table 2.8).[12, pp. 197-198]

Table 2.8: Cotton production situation in Vietnam

Unit: Area: 1000 ha; Output: 1000 tons

Crop year

2000	2001	2002	2003	2004	2005	2006
Acreage	18.6	22.5	30	32	26.5	20	15
Output	18.8	23	30.9	32.6	29.6	17.76	11.84

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Source: Summary of Vietnam Cotton Corporation Report and Vietnam Socio-Economic Textbook in the Integration Period (Associate Professor, Dr. Dang Van Phan - Education Publishing House)

The report of Vietnam Cotton Company said that the cotton industry has invested in applying new scientific and technical advances in production, innovated management methods, implemented many long-term strategic solutions, such as price support, materials for product consumption... for cotton growers, thereby increasing the cotton growing area from 10,676 hectares, yield of 6.43 quintals/hectare, seed cotton output of 6,866 tons (crop year 1996-1997) to 32,000 hectares, yield of 15-25 quintals/hectare, seed cotton output of 32,627 tons (crop year 2002-2003). However, in recent years, domestic cotton production has tended to decline, the cotton growing area has gradually narrowed to only 20-30,000 hectares, even only

15,000 hectares in the 2006-2007 crop year, nearly equal to the cotton growing area 10 years ago [15].

Why is there this lag?

First of all, it is the unfavorable weather developments in recent years, such as continuous droughts and prolonged heavy rains, which have had negative effects on cotton cultivation and reduced cotton productivity. For example, in the 2004-2005 crop year, out of the total cotton growing area of nearly 19,000 hectares of rainy season cotton, up to 10,000 hectares were not harvested or harvested with very low productivity due to early drought (about

50-70 days after sowing). The 2005-2006 crop year had more unusual and complicated weather conditions than previous crops. Heavy rains lasting from the time the cotton started to bloom until the end of December caused severe damage to most cotton areas, reducing cotton yield by 40-60%, and also reducing the cotton lint ratio. In the 2006-2007 crop year, the weather was also unfavorable, causing many cotton areas sown late in late August and early September to have very low yields.

Next, the prices of crops such as corn, beans, cassava, etc. have increased higher than the prices of cotton. The price of cotton fiber in the past 5 years has been unstable, sometimes even lower than the cost price. Meanwhile, the prices of materials for agricultural production, cotton processing, fuel, etc. on the market have increased sharply and are always high. With the current prices of cotton and other crops, to be competitive, cotton that is naturally irrigated by rainwater must yield at least 18 quintals/ha and cotton that is irrigated by artificial water systems must yield 30 quintals/ha. Meanwhile, in general, cotton productivity is still too low, not reaching 50% of the potential of hybrid varieties [12]. Realizing that the income from cotton cultivation is low, many farmers have abandoned cotton cultivation to grow crops that bring higher benefits.

Table 2.9: Production and import situation of cotton fiber in Vietnam

Unit: Thousand tons

2000	2001	2002	2003	2004	2005	2006
Cotton fiber yield	6.7	11	13.3	12	9.3	10	11.7
Import cotton fiber	84	98	98	92	138	146	159
Import vs. consumption demand (%)	92.3	89.9	87.3	88.5	93.7	93.6	93.1

(Source: Statistical Yearbook)

Table 2.9 shows us the production and import of cotton fibers in Vietnam in recent times. According to Mr. Le Quoc An, currently, the industry has to import a very large proportion of cotton fibers. Each year the textile industry needs about 60,000

tons of cotton fiber, but domestic cotton resources can only produce about

13,000 tons, a number too small compared to the demand.

Silk : Mulberry trees have been associated with the tradition of silk weaving in our country for generations. There are many regions famous for silk weaving: Ha Tay, Bac Ninh, Thai Binh, Nam Dinh, Quang Nam, Bao Loc (Lam Dong). According to statistics from the Vietnam Mulberry and Silk Corporation, Vietnam's mulberry area is currently about 25,000 hectares, second only to China in the world. However, due to the unstable silk market, the mulberry growing area has seriously decreased, the whole country has only about 20,000 hectares left. Moreover, the efficiency is very low. Every year, Vietnam still has to import more than 500 tons of raw silk for spinning and weaving from China, Uzbekistan... [21] The reason is that the quality of domestic silk cocoons is too low, only less than 30% can produce standard A-grade silk, and more than 70% is ordinary silk that cannot be ranked in the world's silk rankings from A to E. A problem in the silk industry is that famous silk weaving villages such as Van Phuc and Ha Dong cannot supply their own silk materials and must import them from other regions, especially from China. This increases the cost of weaving products due to transportation and brokerage costs. Therefore, small silk weaving establishments here only produce according to orders from contractors, meaning they receive silk and weave it into silk according to predetermined designs and quantities. In the past, these villages also developed the silkworm farming industry, but now because silkworm farming is not economically effective, the mulberry growing area has gradually shrunk, and now it no longer exists.

c. Garment accessories industry

Currently, Vietnam's garment accessories industry is still underdeveloped, as shown in the data table (Table 2.10) below.

Although in the past there were some factories such as Nha Trang Garment Accessories Joint Stock Company, Viet Tien Garment Company, Industrial Textile Company and others.

Private companies have produced many types of accessories such as zippers, linings, buttons, threads, etc., but the output is still low, only meeting about 20-25% of the industry's demand [29]. Vietnamese textile and garment enterprises mainly have to import accessories from abroad. Currently, in the Hanoi market as well as in some other localities, there are also shops selling sewing accessories, but they only trade in small quantities, mainly selling to small tailor shops. The goods here are mostly imported from China and Taiwan, and the quality is also relatively low. Even at the recent "International Exhibition of Vietnam Textile and Garment Industry, Fabrics and Accessories 2007", many foreign enterprises could not find sewing accessories in Vietnam to test run their machines. Ms. Phung Ngoc Thao, representative of SWF Group, specializing in supplying embroidery machines from Korea, said that the rolls of embroidery thread for the embroidery machines at the booth also had to be brought from Korea because it was very difficult to find a roll of thread for this machine in Vietnam.[42]

Table 2.10: Production capacity of some garment accessory products in Vietnam

Item

Design capacity	Perform
1. Suture	3,500 tons/year	3,500 tons/year
2. Cotton wool	33 million Yards/year	33 million Yards/year
3. Construction	12 million m2 / year	10 million m2 / year
4. Plastic buttons	752 million units/year	650 million units/year
5. Zipper	65 million units/year	60 million units/year
6. Label	120 million units/year	100 million units/year

(Source: Vietnam Textile and Garment Development Plan 2015 - 2020 )

Although sewing accessories and materials require a high level of specialization, currently, the number of SMEs participating in the production of this product is very small, because they face two major obstacles: capital and technology. Moreover, the scale of SMEs is also a problem, because small-scale production cannot bring competitiveness to businesses because they can hardly reduce product costs.

In addition, the quality of Vietnamese accessory products is currently uneven. For example, jeans buttons, while the quality of products from some reputable brands such as YKK is very uniform, 100% effective when put into the punching machine, when put into the machine, 20-30% of Vietnamese punching buttons are broken, some have lost the outer color layer, and some cannot be put into the punching machine because they are too big or too small.

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