Affected by the slowdown in global growth, rising inflation, and geopolitical influences, Vietnam's leading textile enterprise, the Vietnam National Textile and Garment Group (Vinatex), admitted that 2023 was the most challenging year in history. However, the market in 2024 is expected to gradually recover, and more emphasis on green transformation.
Cao Huu Hieu, CEO of Vinatex, stated that the group has closely monitored and predicted market developments and trends, but unexpectedly, the worst case happened. Though relevant measures were implemented, it is estimated that the first half of 2024 will remain challenging, with hopes of getting better in the second half.
During the COVID-19 pandemic of the 2020-2021 period, Vietnam's textile industry survived by taking masks and protective clothing orders. However, even though the pandemic is over, Vietnam's textile total exports in 2023 witnessed a significant decline of 11%, reaching a historic low of only $40 billion, and Vinatex's profits also plummeted by 60% compared to 2022.
Vuong Duc Anh, Chief of Office of the Board of Directors of Vinatex, expressed optimism about the global economy recovery this year. In particular, the U.S. Federal Reserve has hinted could cut rates at least three times next year, and the cut rate could reach 3 basis points, becoming a significant driver for boosting consumption. Additionally, as other countries face labor issues and armed conflict, there is an opportunity for orders to flow to Vietnam.
In line with the current global economic development, Vinatex is prioritizing just-in-time orders with higher unit prices, while also actively continuing its green transformation. The solar panel electricity generation in the group reached 25 million kWh at the end of 2023. Many textile manufacturers also pay attention to carbon emissions reduction, pursuing environmental protection, social responsibility, and Environmental, Social, and Governance (ESG) goals.
For example, the Radiant Dyeing Factory in Binh Phuoc Province and the South Korean-owned Green TG Textile Factory in Quang Nam Province signed a Power Purchasing Agreement (PPA) to install more than 2,000 rooftop solar panels in their facilities. Many factories in Vietnam are collaborating with solar developers to obtain green energy through PPA or leasing photovoltaic systems to acquire green energy without any payment for construction costs, and when the contract expires, they can retain the system for continued use.