Textile firms stitch up pre-FTA deals

Several firms are relocating production to Vietnam to benefit from the country’s future FTA deals

HanesBrands Inc., an American clothing brand, has decided to outsource its production facilities to Vietnam and close its underwear factory Cartex Manufactura in Costa Rica in a bid to maximise profits, according to a Costa Rican newspaper.

“We are making significant progress in expanding our supply chain production capability in Asia and consolidating into fewer, larger facilities located in lower-cost countries around the world,” said HanesBrands CEO Richard A. Noll on the company’s website.

The company currently has two plants in the northern province of Hung Yen and the central province of Thua Thien-Hue.

With 50,000 employees worldwide, HanesBrands is a global clothing company that has been operating for more than a century. It has a wide portfolio of brands and products including t-shirts, women’s, men’s and kid’s underwear, socks, hosiery, casual wear and active wear.

The joint venture between two Hong Kong-based firms - Luenthai Holdings Limited and Sanshui Jialida Textile Co - and domestic Vinatex Investment Joint Stock Company expressed interest in building a $350 million garment and textile industrial park in a meeting with the provincial authorities of Nam Dinh province. The joint venture plans to complete its paperwork regarding its investment and designs by next month. It has also committed to completing infrastructure by the second quarter of 2015 at the latest to attract investors.

“The three developers in this joint venture are planning to hold equal shares in the venture,” a source from the Nam Dinh Provincial Industrial Zones Management Authority told VIR.

If carried out, the project would be the country’s largest garment and textile industrial park, which would be aimed at developing an A to Z supply chain and contributing to the development of the leather sector and supporting industries. Once operational, the park would have an industrial value of $3-4 billion each year and contribute the tax revenue of some $300-400 million. It is projected to employ 160,000 people.

In early June, China-based Jiang Su Yulun Textile Group received an investment certificate to build a $68 million project in Nam Dinh.

According to industry analysts, with more and more foreign firms investing in the textile and garment sector, Vietnam would be hard pressed to quickly wrap up final negotiations of its pending trade agreements, such as the EU-Vietnam FTA and Trans-Pacific Partnership (PPP).

On the other hand, Pham Chi Lan, economist and former deputy chairwoman of the Vietnam Chamber of Commerce and Industry, said Vietnam’s textile and garment sector is facing a scenario where non-competitive companies with outdated production facilities, low-level processes and technologies, and poor environmental pollution treatment facilities will be eliminated.

Le Quang Hung, chairman of Saigon Garment Manufacturing Trade Joint Stock Company, said the government should focus on luring higher technology and higher quality fabric, knitting and supporting industries.