Despite orders in the last quarter dropping sharply, garment and footwear production still reported its highest figures of $71 billion in export turnover in 2022.
Last year, garment and footwear production brought in $71 billion from exports, including $44 billion from garments and $27 billion from leather, footwear, and handbags.
According to the Vietnam Textile and Apparel Association and the Vietnam Leather, Footwear, and Handbag Association (LEFASO), 2022 was a challenging year. Particularly in the second half of the year, the number of orders dropped considerably. Despite this, the sector still reported double-digit growth.
It is expected to be hard to maintain growth in the new year amidst the current challenges. Inflation in Vietnam's major partner countries like the US and the EU is holding back the consumption of unnecessary items like wooden furniture, garments, footwear, electronics, and plastics. Therefore, these sectors anticipate a quiet market until at least the end of Q1 2023.
In the new year, the textile and garment sector is targeting $46-47 billion in export value, while the leather and footwear sector aims to gain $27-28 billion.
They will try to hold on to as much labour as possible, even if suffering some financial losses to do so. This is necessary to allow them to speed up production quickly and remain competitive as orders increase.
At Pousung Vietnam in Dong Nai province, the number of orders is forecast to drop until the end of the first quarter or even into the second. The company is still retaining jobs for 22,300 employees, a decrease of only 5 per cent compared to the first half of last year.
In terms of leather and footwear production, Nguyen Duc Thuan, chairman of LEFASO, said that Vietnamese businesses have a strong position and reputation as they are prioritised by partners over the world.
"Local businesses should positively adapt to the market's demands and new trends, including mitigating carbon emissions in production, using solar energy, and focussing on sustainable materials," said Thuan.
In long term, garment and footwear production is still the major export sector of the economy. The strategy for the development of the textile and footwear industry to 2030, with a vision to 2035, that was adopted last year targets annual growth of 6.8-7 per cent over the 2021-2030 period and 7.2-7.5 per cent from 2021 to 2025. Its total export value should reach $77-80 billion by 2025 and $106-108 billion by 2030.
Source: Vietnam Investment Review
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