Added Value in Vietnam Textile & Garment Sector Very Low
Although Vietnam is a major textiles and garment exporter, the added value in the industry is very low compared to the potential of the industry.
Exports of textiles and apparels are expected to reach around US $40.3 billion in 2023 for which, imported raw materials and accessories accounted for nearly 58 percent or $23.2 billion.
This indicates the shortage of raw materials and accessories produced domestically, due to which supply cannot meet demand.
According to an expert, Vietnamese apparel exporters are content with cutting and sewing low value garments, for various global clothing brands and retailers.
“The first stage from growing cotton, spinning, weaving, dyeing or printing fabrics accounts for 15 percent of labour, but creates 60 percent of the value of the product,” the expert added.
Distribution, trade and costs of other services add up for 20 percent of the value. But although the stitching stage accounts for 80 percent of overall labour, this stage created only 18-20 percent value.
Giving an example, he said a shirt exported to the US has an average price of $6. Of this, the cost of all raw materials is $3 and processing costs of $1.2.
The total cost of garment accessories like cartons, hooks, bags, taxes, export fees, etc is about $1.8. After deducting all costs, the value or profit reaches only 2-3 US cents per shirt.
This indicates that a majority of the Vietnamese garment businesses are participating at a stage which has the lowest value or profit.
The expert concluded by saying that Vietnamese companies need to integrate vertically by adding spinning, weaving and fabric processing facilities to add value to the final products that they produce.
