Smaller firms fear inability to cash in on new agreement

According to the Vietnam Textile and Apparel Association (Vitas), not many businesses will have the capacity to cash in on the opportunities brought by this major trade deal.

Only big group with steady finance could become well prepared for TPP integration, whereas firms of small and medium size will face challenges ahead, Vitas assumed.

In the words of Dang Phuong Dung, Vitas’general secretary, one obstacle is that the textile sector has lagged behind the production pace of garment exports. Investment in textile is more costly than in the garment sector, coupled with a very lengthy capital recouping process.

Nguyen Van Thai, chairman of TNG Investment and Trading, said that most of the materials feed the textile garment sector were sourced from China, which was not a TPP member. Therefore, the sector would not reap many benefits from the TPP, as under TPP regulations, tax incentives only apply when using materials from TPP member countries.

Phi Ngoc Trinh, representing Hung Vuong Garment JSC in the northern province of Phu Tho, assumed that foreign invested firms could be major beneficiaries when Vietnam participates in the TPP, as two thirds of Vietnam’s textile garment export volume came from foreign invested enterprises.

The textile, clothing, and footwear industry’s other players, however, stood ready to cope with challenges created by the TPP.

Nguyen Phuong Nam, managing director of aothun.vn, is one example.

His company, founded in 2009, specializes in providing comprehensive solutions for elastic T-shirt to individuals and corporate customers, as well as original design manufactures (ODMs).

The company’s products are mainly exported to Japan. Two years ago, it shifted into importing materials from markets outside China.

Aware of their modest financing on exploiting nice markets and carefully choosing customers to be able to introduce a suitable supply chain.

“Vietnam joining the TPP will not influence our export contracts very much, since we serve niche markets and have the capacity to control the value chain. We are ready for the TPP,” said Nam.

Now aothun.vn controls the entire process, from manufacturing end products, designing, to printing. When the items from TPP countries flow to Vietnam, the company will concentrate on designing, printing and increasing the added value of products, according to Nam. Meanwhile, Le Thanh, managing director of a shoe market Veritas Shoes Canada, was upbeat about opportunities brought in by the TPP. This firm has an outlet network in both Canada and Vietnam.

Currently, the company’s products incur a 18% import duty when exporting to Canada. Therefore, the TPP’s enforcement will benefit the company. “We are considering going into an alliance with a local firm on shoe production and intend to enlarge production scale through capital contribution,” Thanh said.