Some Business Results of Successful Companies 2005-2007

 Capital support for investment projects in the fields of fiber production, textile, printing and dyeing, finishing, and textile materials. These enterprises are allowed to borrow capital from the State at an interest rate equal to 50% of the current interest rate for half of the investment capital.

 Tax support: Enterprises producing fabrics and garment accessories, if selling to garment export enterprises, will receive the same value-added tax rate as for export goods.

 In case of necessity, the Government guarantees the purchase of equipment on deferred payment, commercial loans from suppliers or domestic and foreign financial institutions; priority is given to providing a one-time supplement of 30% of working capital for each enterprise.

- The support regimes from the State fees still face many difficulties in administrative procedures, and the approval process is still rigid. Before joining the WTO, projects producing fabrics and garment accessories were given many incentives, but the development of garment accessories production was still very slow. One of the reasons is that the implementation of preferential regimes is difficult due to procedures, approval, and "nagging and harassment" from administrative agencies.

- The implementation of planning for concentrated textile and garment industrial zones is still slow. The development of the fiber and fabric production industry requires synchronous infrastructure, which is very important, ensuring the connection between fiber - textile - garment and ensuring the stages of water and wastewater treatment, the decisive issue of the printing, dyeing and finishing industry.

2.1.4 Current status of the linkage relationship between raw material production and garment enterprises

This is the vertical linkage between raw material manufacturing enterprises and garment enterprises. The analysis focuses on the linkage between textile fiber manufacturing enterprises and garment enterprises.

2.1.4.1 Internal business links

Internal business linkage activities are carried out in enterprises that both produce textile fibers and garments or weave fabrics and garments. This linkage activity is applied by many enterprises and brings quite high efficiency. Some large enterprises in the Vietnam Textile and Garment Group have implemented this form of linkage well.

This combination brings quite high business efficiency such as Hanoi Textile and Garment Corporation, Thanh Cong Textile and Garment Company, Dong A Textile and Garment Company, Hoa Tho Textile and Garment Company, Thang Loi Textile and Garment Company.

These companies all produce yarn - weave fabric - garment or weave fabric - garment. Most of the yarn and textile products of the companies are supplied for internal production. The effectiveness of the linkage activities is demonstrated by the production and business results of the companies. Below are the production and business results of three companies with quite good results in internal production linkage.

a. Hanoi Textile and Garment Corporation (HANOSIMEX)

Hanoi Textile and Garment Corporation is one of the leading textile enterprises under Vietnam Textile and Garment Group. The main products that the enterprise produces are yarn, knitted fabric, denim fabric, and garment products.

- Yarn production is a traditional field of Hanosimex, it was formed and developed right from the early days of the Company's establishment. Yarn production has always been an effective and stable area in both quantity and quality, constantly meeting the demand for yarn supply for textile units and also meeting export requirements, contributing to the rapid increase in yarn export turnover to other countries (ranked second after garment export).

- Weaving: With the Denim weaving line including modern equipment, advanced technology installed and operated since the early 2000s, the Denim fabric produced has been supplied to the export garment area at Hanosimex, supplied to domestic customers and supplied for export purposes.

Knitted fabric production in the past few years has only been enough to meet the demands of internal garment factories, and has not had enough capacity to meet the supply needs of other garment units.

- Garment: In recent years, with the increase in garment production facilities, Hanosimex has seen a significant increase in export turnover; the export sector of garments from woven fabrics and knitted fabrics is the sector with the largest export turnover, larger than the export turnover of both yarn and fabric sectors combined.

- Some business results of the Company from 2004-2006 - table 2.21

Table 2.21 Some business results of HANOSIMEX 2004-2006

Target

Unit	2004	2005	2006
Total assets	Copper	681341854622	824278832744	939196594820
Revenue	Copper	967523265852	1.35117883703	1579817627004
Profit before tax	Copper	14229753422	7736963336	8535496655
Submit budget	Copper	6332460204	8343922227	5880707667
Average labor	People	5549	4117	4136

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Source: [54]

b. Thanh Cong Textile Garment Joint Stock Company

Table 2.22 Some business results of Thanh Cong Company 2005-2007

Unit: VND

Target

2005	2006	2007
- Equity	161.046.097.760	160,000,000,000	189,824,970,000
- Net Revenue	857.855.625.734	1,031,368,399,330	1057276652812
- Profit from business activities	3,088,123,828	41,743,990,010	74410245160
- Other profits	1,733,122,543	(13,997,118,737)
- Total profit before tax	4,821,246,371	27,746,871,273	74410245160
- Profit after tax	3,471,297,387	25,357,118,157	74251350889

Source: [8]

Also a textile manufacturing enterprise, with the connection between the stages of yarn production - fabric weaving - garment production has brought the industry very high business results. Thanh Cong Textile Garment Joint Stock Company is a leading textile company in Vietnam, especially in the field of knitting, dyeing and finishing. The quality of the company's fabric products has been affirmed in the domestic and foreign markets. The company has a reputation in the export market for many years, is a strong exporter in the textile industry, known by many foreign customers.

c. Dong A Textile Garment Joint Stock Company

Dong A Textile Joint Stock Company is an enterprise that produces knitted fabrics, woven fabrics and garment products. Textile products are mainly used for the company's internal garment production, and a part is sold outside and exported.

- Production capacity:

+ Woven fabric: 10 million m2 / year, including types: Yarn – dyed and colored, produced from 100% cotton, CVC, TC, Visco, Rayon… materials with indices 20S/1, CM 30/1, CM 40 S/1, CM 50 S/1…

+ Knitted fabric: 2000 tons/year, including: Rib 1x1, 2x1, Pigue, Frenchterry, Interlook, Singlge with 100% cotton, CVC, TC materials that can be dyed and printed according to customer requirements.

+ Garment products: 12 million products/year, including: T-shirts of all kinds: 7 million products

Fashion items: 2 million products Shirts: 1 million products

- Some business results of the Company from 2004-2006

Table 2.23 Some business results of Dong A Company 2004-2006

Target

Unit	2004	2005	2006
1. Business capital	Million Dong	174883	144656	150000
4. Revenue	Million Dong	221377	280054	280000
5. Profit before tax	Million Dong	1596	4044	5000
6. Submit to budget	Million Dong	2142	1437	798
9. Average labor	People	1312	1373	1742

Source: [9]

Through the data on business activities of three enterprises in the Textile and Garment Group with internal production linkage activities, it can be seen that the business efficiency of yarn production and weaving always accounts for a large proportion of the total production value of the enterprise. This proves that the efficiency of yarn production and weaving in the condition of internal production linkage with garment is very high.

2.1.4.2 Links with other businesses in the industry

Currently, most domestic textile products do not meet the requirements for export garments, both in quantity and quality. According to economic experts, the quality of Vietnamese fabrics is much worse but the price is higher than that of other countries. The quantity of fabrics meeting the requirements for the export garment industry is only about 10% -15%. According to calculations, the domestic added value of the export garment industry only reaches a maximum of 25%, the rest is imported fabrics and accessories from abroad. Economists

The economic situation has assessed that the garment industry is not proactive in raw materials from domestic sources, which is the reason for the reduced competitiveness and the ability to increase the value of the garment industry. The relationship between raw materials and garments is still weak, mainly due to the lack of quality assurance.

For the garment industry, the upstream products are textiles, yarns, and cotton, and the vertical relationship is loose. These product industries do not support and promote each other. Cotton and fiber, synthetic fibers, dyes, and auxiliaries in Vietnam must be imported from abroad, over 90%. With many imports from abroad combined with poor quality of domestic raw materials, domestic relationships are not established closely or have no connection.

According to the Vietnam Textile and Apparel Association, the Textile and Garment Group holds the leading position in the industry with yarn output accounting for over 80%, silk fabric accounting for 45%, and garment products accounting for about 27% of the country's total output. Recently, enterprises in the Group have paid attention to and promoted economic linkages such as spinning enterprises buying cotton from the Vietnam Cotton Company, pure textile enterprises buying yarn from spinning enterprises, and garment enterprises buying fabric from textile enterprises. However, the value of purchases and sales is still modest, only reaching 10-15% of the total value. This shows that the linkage activities between cotton, yarn, textile and garment enterprises are still very limited.

According to [25], survey data of the group of economists of the National Economics University in 2002-2003 conducted a survey of 31 enterprises of all economic sectors, showing that most textile enterprises produce their own yarn, especially central state-owned enterprises accounting for 11/14 enterprises. These enterprises believe that domestic yarn does not meet the requirements of garment enterprises. On the other hand, textile enterprises that buy domestic or foreign yarn believe that domestic yarn can meet the requirements of garment production.

Regarding textile-garment linkage, most textile enterprises have established relationships with domestic garment enterprises, of which 80% have long-term relationships. However, this relationship also encounters problems, the main reason being that the fabric quality does not meet the requirements for garment production.

The survey shows that garment enterprises' opinions on the quality of domestic fabrics and yarns are that 50% of domestic fabrics do not meet the requirements of enterprises.

Garment enterprises confirm this opinion as correct. Garment enterprises believe that the quality of domestic fabrics does not meet the requirements for high-quality export orders. 80% of surveyed enterprises believe that the relationship between upstream raw material and garment enterprises is currently exploited at a low level and is ineffective.

2.2 GENERAL ASSESSMENT OF THE CURRENT STATUS OF DEVELOPMENT OF GARMENT ACCESSORIES PRODUCTION IN VIETNAM

2.2.1 Achievements

2.2.1.1 Increasingly better meeting domestic consumption needs

Although the growth rate is much slower than the garment industry, not meeting the requirements of garment export, it must be affirmed that the textile industry in particular and the production of garment accessories in general have contributed greatly to the overall economic growth rate of the country, increasingly meeting domestic consumption needs. Textile and accessory products have produced a large volume of goods serving low-income domestic consumers and rural residents.

Providing a large volume of raw materials for the production of moderate quality clothing products for rural consumers, and essential consumer garment products such as: towels, men's underwear, children's T-shirts, etc. Regarding materials, it has produced and supplied most of the needs for sewing thread, embroidery thread, and other types of thread for domestic garment production. Enterprises with large product volumes such as: Hanoi Textile, Thanh Cong Textile, Phong Phu Textile, Dong A Textile, Thai Tuan Textile, Coats Phong Phu, etc.

The products supplied are increasingly more diverse, creating products that previously had to be completely imported such as: imitation silk products, denim, imitation wool, sportswear fabrics, knitted fabrics, etc.

Some enterprises have produced large quantities of fabric to supply to workshops, and internal garment factories have provided the market with popular products such as: Hanoi Textile, Thai Tuan Textile, Dong Xuan Knitting...

2.2.1.2 Increase the ability to meet the demand for raw materials for garment exports, contributing to saving foreign currency

Although domestic raw materials have not yet met the needs and requirements for the rapid growth of garment exports, they have increasingly met the needs of export garments in terms of variety and quality.

Regarding raw materials, high-quality fabric products have been produced to serve garment export. Recognizing the trend of localizing raw materials for garment export, the benefits of proactively sourcing raw materials at home, the policy of developing raw material production of the State and the Industry, enterprises and production facilities have continuously invested in building raw material production facilities, modernizing technological lines. The result has been an increasing supply of high-quality raw materials, increasingly meeting the requirements of garment export.

With the direction of the Government and the industry, the goal is to strive to meet 50% of raw materials for export garments by 2010, reaching 1 billion m2 of fabric for export garments. With that goal, investors in general and textile and garment enterprises in particular are investing heavily in the fields of weaving, dyeing, and finishing. According to Vinatex, by the end of 2006, Vietnam's woven fabric production capacity reached 680 million m2 , of which fabric for export reached 125 million m2 [ 71].

Enterprises that are supplying large volumes of fabric for export garment production include: fabric products for making shirts and trousers produced by Nam Dinh Textile, Viet Thang Textile, Yen My Joint Stock Company, etc.; denim fabric products of Hanoi Textile Corporation and Phong Phu Textile Corporation.

Regarding accessories, it has supplied a large volume of sewing thread, embroidery thread; all kinds of accessories, zippers, adhesive tape, elastic bands, metal buttons, etc. Sewing thread alone has supplied most of the domestic garment needs without having to import from abroad. Companies with large supply volumes are: Coats Phong Phu, with very good quality, certified with ISO 9001:2000, ISO 14001:1996, SA 8000:2001, OHSAS 18001:1999 systems; sewing thread factories of Phong Phu Corporation.

Although the production of accessories and weaving only meets a small proportion of the garment industry, especially export garments, it must be admitted that it has contributed significantly to the strategy of localizing the proportion of raw materials and accessories for garments.

Gradually replace imports. Annual production of accessories and weaving has saved a certain amount of foreign currency for importing garment accessories from abroad.

2.2.1.3 Promoting the "spillover" effect on economic sectors

- For mechanical and chemical industry

The development of garment raw material production, especially the development of the textile industry, has led to the development of the mechanical industry. The mechanical industry produces technological equipment, provides components and accessories for the textile industry and produces accessories. Currently, a system of enterprises specializing in mechanics has been formed to serve the entire textile industry such as: Gia Lam Garment Mechanical Joint Stock Company, Hung Yen Garment Mechanical Joint Stock Company, Nam Dinh Textile and Garment Mechanical Company, Thu Duc Textile and Garment Mechanical Joint Stock Company, etc. Along with the mechanical system outside the industry, it has annually provided hundreds of thousands of equipment, details and spare parts to meet about 50% of the demand for regular replacement and repair.

The textile mechanical industry, together with the Institute of Economics and Technology, has researched, manufactured and improved many technological equipment to serve the production of garment raw materials, such as: Complete manufacturing of equipment for manual silk reeling lines, successfully improving the Chinese M.1511 shuttle loom into a cotton towel weaving machine, and expanding the width of weaving machines...

The textile industry is developing, textile products are increasingly diverse and rich in design, fabric color, fabric quality, etc. It is determined by the dyeing and finishing stages. To meet this problem, the chemical industry is increasingly developing. Currently, the chemical industry serving the textile and garment accessories industry only stops at providing some types of acids, caustic soda and other types of auxiliaries, dyeing aids, etc. The rest still has to be mainly imported from abroad. According to annual statistics, the Vietnamese textile industry has to import from 90% to 95% of dyes [91]. In the future, with strong investment in textile production and accessories production, it will create a driving force for the production of chemicals and dyes serving fabric production to develop.

- For agriculture

Vietnam is still known as a country with a tradition of growing mulberry, raising silkworms and growing cotton for weaving. With the ups and downs of history, this industry has had times of good development, and times of poor development. Agricultural products for garment production

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