China may increase its investments in textiles and garments in Vietnam

VietNamNet Bridge – Vietnamese textile and garment companies have warned that they would have more redoubtable rivals as China may increase its investments in Vietnam once the Trans Pacific Partnership TPP is signed.


Vietnam, TPP, China, garment and textile sector, import tariff

A senior executive of Vinatex, the biggest Vietnamese textile and garment group, said China is always very “nimble-footed” in seeking investment opportunities. Meanwhile, they might have heard that Vietnam may enjoy the zero export tariff when exporting garments and textiles to the US, the biggest export market, within the framework of TPP.

More Chinese projects to be registered in 2013

The senior executive of Vinatex has predicted that the new Chinese investment wave would be mostly seen in the garment sector, while there would be fewer projects in the textile and dying sectors. This would put Vietnamese enterprises in a stiffer competition once the TPP implementation begins.

This is really the bad news for Vietnamese garment companies which have weak competitiveness because they have been relying by nearly 100 percent on the material imports from China.

Vinatex has been following a strategy on developing the textile and garment industry by 2015, which aims to strengthen the group’s capability and improve the competitiveness to prepare for the TPP.

Also according to the executive, some Chinese enterprises have sent words intimating that they want to cooperate with Vinatex in the textile and dying sectors.

Nevertheless, it’s very difficult to develop the projects in the fields, because such projects which may cause the environment pollution, are not welcomed by local authorities. To date, no cooperation project between Vinatex and Chinese investors has come true.

In fact, Vietnam wishes to see more foreign investment projects in the textile and dying sectors than the projects in the garment sector. However, it still fails to attract investments.

Meanwhile, the South China Morning Post, in an article published in late May 2013, quoted Hong Tianzhu, President of Texhong Textile as saying that the group plans to expand its investment to Vietnam.

The Chinese businessman said that Vietnam’s fiber exports to China now enjoy the preferential tax rate of zero percent. And if the fiber exports from Vietnam to the US also can bear the tax rate of zero percent, the group’s additional capacity would be not high enough.

He went on to say that since Vietnam does not have many enterprises in the dying and textile industry, he can see many opportunities to do business here.

Also according to South China Morning Post, Pacific Textiles is also considering setting up a joint venture worth $180 million in Vietnam in 2013. Its partner could be Hong Kong’s Crystal Group.

In 2012, some Chinese and Hong Kong’s dying and textile projects were kicked off in Vietnam. The Vietnamese Thien Nam Investment and Development JSC and Chinese Sunrise in November signed a contract on setting up a joint venture, Thien Nam Sunrise which is scheduled to become operational by the end of 2013.

A Hong Kong’s limited company in July 2012 organized the opening ceremony for the fiber factory in the Hai Yen industrial zone in Mong Cai City of Quang Ninh province.

According to the General Department of Customs, in the first four months of 2013, Vietnam exported $5 billion worth of textiles and garments, up by 18 percent over the same period of the last year.

TBKTSG

Vietnam, TPP, China, garment and textile sector, import tariff
 
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