Domestic garment exporters seek more export orders to overcome lagging business, according to local garment firms.
Textile and garment producers struggle from a lack of export contracts due to the ongoing public debt crisis in the EU and resulting market difficulties, said the Viet Nam Textile and Apparel Association (Vitas). Many small-and medium-sized producers have been forced to lower production due to a lack of demand.
However, Pham Phu Cuong, chairman of Nha Be Garment Company's (NBC) management board, said NBC actually managed to grow its business during these past months of fiscal woe. This was because the company saved on production costs, he said, including raw materials and electricity, and was able to implement free-on-board (FOB) contracts.
Under the FOB terms, the Viet Nam factory takes care of basically everything: trims, accessories, fabric, cutting, sewing, packaging, boxing and transportation to the port.
The company established its own division for implementing FOB contracts and hired foreign managers to seek FOB contracts in the US, the UK and France, Cuong said. The FOB contracts create higher turnover than sub-contracts.
NBC plans to develop the FOB Division further to create more turnover for the company in the next few years, Cuong said.
Additionally, NBC got involved in the expanding Russian market by participating in international trade fairs for apparel products in Russia and seeking business partners at the fairs, he said.
Now, the NBC exports 400,000 units of apparel each month to Russia and has more export orders to implement by the end of this year, he said.
As a result, the company gained a year-on-year increase of 20 per cent in export value for the first seven months of this year to US$240 million.
The Garco 10, a large local apparel firm, also saw its export value increase because it retained export contracts with large customers in the world apparel market, including Target, Macy's, Old Navy and DKNY, said Than Duc Viet, Garco 10 managing director. Because the company had a large production scale and diversified products, it was able to weather the grim economic situation.
In the first half of this year, the company reached $80 million in export value, he said.
Youngone Ltd Company in Hoa Xa Industrial Zone, northern Nam Dinh Province implemented export contracts that its parent firm, Youngone Group in South Korea, signed with foreign partners, according to a representative of the company. The company reached $60 million in export value for the first half of this year.
Due to the support from its parent firm, the company had export orders to implement by the end of this year, the representative said.
Dang Phuong Dung, Vitas deputy chairwoman, said the reduction in contracts for producing export products for the EU market would continue through the end of the year and that the situation would remain the same until mid-2013.
Therefore, the local apparel exporters should save themselves by seeking export orders on their own, Dung said.
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