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Garment companies sharing orders to survive together   2009-03-31 - VietNamNet/TT

A lot of small and medium garment and footwear producers now have to ‘live from hand to mouth’ as they seriously lack orders. Meanwhile, big enterprises now have to speed up the production with rapid-fire orders. The enterprises have decided to sit together to share orders.


It was the working hour but the large workshop of the Lien Phat Footwear Company in Binh Duong province was quiet. Some productions were seen running with workers making shoes, while three production lines were left idle. “We have just received jobs to do since mid-March. Prior to that, workers just stayed at home. Therefore, the order we have just found proves to be the lifebuoy for us,” said Truong Thuy Lien, Director of Lien Phat Footwear Company.


Orders down by 60-70%


Lien Phat once had over 2,000 workers, but it now has only 1,400 workers. With the contract on making 500,000 pairs of shoes for export to Germany and the UK which have the outsourcing unit price of between US $1.70-1.80/pair, Lien Phat can get between US $700,000-800,000 from the order.


“The outsourcing unit price has not decreased, but the orders have dropped dramatically. In the first three months of the year, the orders have dropped by 60-70%,” said Lien.


M., a private garment company, is also facing the sharp decrease in orders. M.L, Director of the company, said that she has just gotten an order which can bring jobs to 200 workers in April. Her company’s workers have been cut by a half due to the sharp fall of the orders.


Pham Xuan Hong, Chairman of Saigon 3 Garment Company, said that the sharing of orders, in some cases, can be implemented only when the importers accept this.

For example, US importers only accept the order sharing, if the garment companies which make the products, have to meet the SA 8000 requirement and other requirements in accordance with international standards.


“We are working at moderate level, while we cannot say anything about our future,” L. said. With the new contract on making 10,000 sets of sportswear at US $2.00/set FOB, her workers will have jobs until the end of April.


Nevertheless, big scale companies still can live well as they have a lot of orders. The enterprises with several thousands workers, including Garmex Saigon, Saigon 3, Hoa Tho, Donagamex, Viet Tien, and Nha Be, reportedly have enough orders to bring jobs to their workers until the end of the second quarter.


Pham Phu Cuong, Deputy General Director of Nha Be Garment Company, said that the company has got enough jobs until the end of October with the average export value of between US $10-12 million a month.


Sharing orders


According to Diep Thanh Kiet, Deputy Chairman of the HCM City Garment, Knitting and Embroidery Association (Agtek), and Deputy Chairman of the HCM City Footwear Association, said that Agtek’s members can get the orders which just use 65% of their capability and represent the decrease of between 40-50% over the implemented jobs in 2008.


Kiet said that big scale enterprises have advantages in fulfilling orders within a short time, while small enterprises have difficulties due to limited capability. Besides, bigger companies have more advantages in cutting production expenses.


The Vietnam Textile and Garment Group (Vinatex) and Vietnam Textile and Apparel Association (Vitas) have decided to link Vinatex’ big companies and smaller ones in order to share orders and labourers.


Le Tien Truong, Deputy General Director of Vinatex, said that Garment Company No. 10 is now supporting garment companies in Hai Phong City, Quang Binh, and Thai Binh provinces, while the Duc Giang Garment Company is sharing orders with smaller companies in Thai Binh province and the former Ha Tay province. The Nha Be Company has decided to shake hands with the companies in Binh Dinh and Quang Ngai provinces, while Viet Tien is in Can Tho and Long An provinces.


Under the cooperation agreements, when orders come to big companies, they will share with smaller companies. “Big companies will consider which products smaller companies can do. The small companies have to make commitments not to break the business channels of supporting companies and not to dump prices. Big companies will support the small companies by sending technique experts to supervise the production,” Truong said.

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