Will The Rapidly Rising Vietnam Be The Savior Or Rival Of China'S Textile And Garment Industry?

China is the world's "manufacturing factory" for many years, especially in the manufacture and export of commodities and household appliances. It has absolute advantages in the world, such as textiles, clothing, bags, footwear and so on.

But now, with the adjustment of China's industrial structure, especially in the coastal provinces, the strategy of "changing cage and changing birds" will continue to push forward. Many traditional labor-intensive manufacturing industries will not move to inland provinces with lower labor costs, or overseas.

Among them, Vietnam, a neighboring country in Southeast Asia, has become a popular destination for migration.

According to the December 26, 2018 "Viet Nam electronic newspaper", Li Jinchang, general manager of Vietnam textile and Garment Group, told reporters at the press conference that Vietnam's textile and apparel exports amounted to US $3 billion 600 million in 2018, up 16% over the same period last year.

The figures show that Vietnam has become the world's third largest exporter of textiles and clothing, second only to China and India.

Sun Weiting, chairman of Huafu fashion (002042, SZ), a well-known listed company in the A share market with prudent and prudent investment, also claims that Vietnam is the "one Luqiao head fort" that Chinese textile and garment enterprises have to layout. "Chinese enterprises must take two ways to become bigger and stronger: one is to make use of the advantages of China's 1 billion 400 million population to upgrade the industry in the process of keeping pace with the upgrading of consumption.

The other is the "going global" market.

Recently, Hua Fu fashion announced that it will spend 2 billion 500 million yuan on the construction of a new type of yarn with an annual capacity of 500 thousand spindles in Longan, Vietnam. This is the first phase of the new 1 million item yarn project planned by the company.

As for the source of the investment raised by 2 billion 500 million yuan, Sun Weiting said that it could consider raising funds from Vietnam's own capital and overseas financing, or excluding domestic equity financing.

In view of the financing liabilities of private enterprises which are generally concerned by the market, at present, the shares of listed companies held by Huafu holding company are not pledged, and the debt ratio of listed companies and groups is maintained at 50%-60%'s manufacturing level.

In the second half of last year, many economic work meetings in China emphasized the need for "high quality development of manufacturing industry" and "deep integration of advanced manufacturing and modern service industry".

It is expected that there will be more and more traditional manufacturing industries that rely on low labor costs to gain price competitive advantages. They will have to face the choice that needs to be improved through technological research and development to increase the level of technology added value, move inland (to the inland provinces of central and Western China) or move out to lower labor costs in Southeast Asia, Central America and Africa, so as to reduce production costs or even shut down.