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  • “Going green” or losing orders in Vietnam’s textile and garment industry

    The sustainable and circular textile strategy with a vision to 2030 has just been discussed by the European Parliament (EU).

    This strategy stipulates that textile products entering the EU market must have a long life, be reusable and repairable. All of the above information must have digital certificates. Some key standards will be applied from early 2024.

    The EU is currently the second largest market for Vietnamese textiles and garments with an export turnover of more than 4 billion US dollars, accounting for 10-11%, behind the rate of more than 45% of the US market.

    Does Vietnamese textile and garment have enough time to adapt?

    Responding to Saigon Economy, Chairman of the Vietnam Textile and Apparel Association (VITAS) Vu Duc Giang said that the Vietnamese textile industry is confident and can adapt to new regulations.

    “I don’t think these standards are out of reach because Vietnamese businesses have become familiar with these in recent times. Next are the standards being considered and proposed, which have not yet become mandatory across the EU or globally, and are still 18 months away from being applied. Therefore, I think we have enough time to adapt if these regulations are applied from 2024-2025 onwards,” Mr. Giang said.

    2021 is a breakthrough year for Vietnamese textiles and garments in the context of the Covid-19 outbreak and prolonged social distancing. Export turnover reached 39 billion dollars, an increase of 23% compared to 2020. VITAS Chairman explained: “The most important factor is the quick adaptation of textile and garment enterprises during the epidemic period with production methods.” “on-the-spot” production and then flexible adaptation. The workforce returning quickly after lifting social distancing or blockade also contributes to that goal. The fiber industry has largely contributed to 2021’s achievements because the turnover accounted for 5.7 billion dollars. It is important to mention that 70% of the industry’s raw materials must be imported from the Chinese market and border closures often occur.”

    Vietnamese textile and garment can achieve export turnover of 43-44 billion USD in 2022, an increase of more than 10% compared to the previous year.

    Too few businesses meet EU standards

    Textile and garment is one of Vietnam’s key manufacturing and processing industries, using a lot of labor and resources. Therefore, converting to a green production model is a big challenge. VITAS sets a goal of “greening” with a plan to reduce energy consumption by 15% and water by 20% by 2023, and green the Vietnamese textile and garment industry by 2030, while building 30 national brands. international.

    Brands evaluate development on the basis of outsourcing enterprises’ compliance with environmental, social, and responsibility towards workers and global consumers. “The 15 new generation free trade agreements (FTAs) all have environmental and low-emission commitments. This is both a challenge and an opportunity for businesses to focus on investing in modern production technology, increasing the competitiveness of products when exporting, and increasing brand reputation with consumers,” Mr. Giang emphasized.

    In December 2020, 29 international fashion brands such as Nike, H&M, Target, Mulberry, Mammut… jointly sent a petition to current Prime Minister Nguyen Xuan Phuc urging Vietnam to implement direct energy purchase agreements. (DPPA) between textile and garment enterprises and private renewable energy suppliers in Vietnam. At that time, businesses could only buy electricity directly through the national grid or through small rooftop solar power projects.

    Textiles use an average of $3 billion in energy costs each year. If renewable energy sources are used, electricity costs will be reduced by $1 billion. About 70% of Vietnamese textile and garment enterprises are small and medium-sized, 30% are large domestic enterprises with foreign investment. Overall, according to EU documents, currently only 5% of Vietnam’s garment factories fully meet EU requirements, including using clean or renewable energy.

    VITAS President believes that the actual numbers may be higher. For example, the rate of clean energy use in some places accounts for 31-32% of total electricity consumption. Meanwhile, the number of textile and garment enterprises using clean energy has reached 60-65%, either buying their own electricity or investing in installing solar energy production projects. He believes that in the next five to seven years, 100% of textile companies can fully meet the clean energy target.

    “Go green” or stand aside

    Greening the textile industry is a global trend that businesses are required to implement to achieve sustainable development goals and increase exports to major markets that have signed FTAs. Businesses now only have two options: one is to go green, the other is to stand by and watch orders go elsewhere.

    Using green energy is one of the first criteria that textile companies implement. Most recently, Phong Phu Joint Stock Corporation has just signed a cooperation agreement with Coro Renewables Vietnam Co., Ltd. to develop rooftop solar power on the company’s factories in Ho Chi Minh City. Solar power output is expected to reach about 4.2 million kWh per year.

    Textile and garment enterprises are facing pressure from importers such as green factories, working environment and accommodation of workers, reducing emissions and toxic waste. Currently, the entire factory system of May 10 meets the requirements of highly demanding markets. Many customers ask the company to use materials of natural origin, recycled materials and biodegrade after 5-10 years… “That is also the goal May 10 is focusing on implementing”, General Director of Garment 10 Corporation Than Duc Viet spoke at a VITAS conference held in mid-May.

    Also at the above seminar, Mr. Cao Huu Hieu, General Director of Vietnam Textile and Garment Group (Vinatex), said that he will focus on reducing 30% of post-dyeing wastewater with new technology and reusing 30% of water. Treated waste for washing, washing and cleaning. For the fiber industry, Vinatex will use at least 20% recycled polyester fiber, 15% organic cotton to reduce the use of pesticides…

    Profit problem

    Profit is the engine for businesses to survive and develop, and sustainable development requires the right way to create profits.

    Mr. James Phillips, Vice President of TAL Garment Group, shared the “secret” that TAL has built an independent materials management department, set separate standards for each type of fabric, and optimized markers (diagrams). fabric cutting), loss management, classification and utilization of fabric scraps. By saving 1% of fabric, TAL saved a minimum of $90,000, 37 million liters of water and 64,000 kilograms of CO2. The amount of water used to wash one shirt has decreased from 11 liters to 1.5 liters…

    New directions require new thinking, investment and large resources. But can brands push the huge costs incurred to processing factories? Nikkei Asia quoted a garment contractor in Guangzhou, China that “costs could increase by 50%”.

    Certainly, brand owners or manufacturers will push up costs on consumers and processors as they did before.

    “Previously, when placing processing orders, brands often provided designs and fabric samples. Over the past few years, we have often been asked if we have any new fabric samples or innovative designs. This means that these research and development costs are cleverly pushed by the brand to the processor. We have to accept it if we don’t want to lose orders,” said a garment business.

    Source: thesaigontimes.vn

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