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Technology application is motivation of the textile industry

14:37 | 10/12/2019

VCN - The financial statements of Vietnam National Textile and Garment Group (Vinatex) in the third quarter of 2019 showed Vinatex's net revenue was only VND 4,152 billion, down 18 percent compared to the same period last year. After deducting expenses, Vinatexrecorded186 billion dong net profit, down 13 percent compared to the third quarter of 2018. In the first ninemonths of 2019, Vinatex's after-tax profit decreased by 20 percent to VND 534 billion.

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The textile industry is facing difficulties in labour resources. Photo: Nguyen Hue.

Profit drops

Yarn enterprises said customers from the main market of China are currently paying very low prices. Some businesses have sought to expand to other markets such as Korea, Taiwan (China) and Thailand, but have only received small and limited orders. Meanwhile, enterprises also face fierce competition from businesses from competing countries such as India, Thailand, Indonesiaand Pakistan. Because of the competition from competitors, the selling price is still in adownward trend and has not shown any sign of recovery, there are even signs of dumping to avoid inventory.

According to Vinatex, the US-China trade war continues to develop complicatedly, affecting the production and business activities of the whole textile industry and its member companies, especially fibre production units. Accordingly, the group's production and business results in some yarn production units in the third quarter of 2019 decreased significantly compared to the same period in 2018. This affects the overall business results of the group.

Not only yarn enterprises, but the profitability of textile and garment enterprises also decreased compared to the same period last year, even for large firms. According to the financial report of Viet Tien Garment Joint Stock Company, after-tax profit of Viet Tien in the third quarter of 2019 was only VND 116 billion, down 10 billion compared to the same period in 2018. From the beginning of the year to the end of September, the profit of this enterprise reached 292 billion dong, down 58 billion dong from the same period. Similar to the financial statements of Thanh Cong Textile Garment - Investment - Trading Joint Stock Company also showed after-tax profit of this enterprise in the latest financial statement period dropped sharply from more thanVND 95 billion. In the third quarter of 2018, down nearly VND 56 billion in the third quarter of 2019. Accumulated from the beginning of the year to the end of the third quarter, the profit of this business has also decreased from more than203 billion VND in 2018 to nearly 176 billion VND in 2019.

According to Pham Xuan Hong, Vice Chairman of Vietnam Textile and Apparel Association, an important reason for the decline in profits of textile and apparel enterprises is due to enterprises facing the problem of increasing salaries for labourers andspending rising input costs. However, it is still difficult to retain workers because living expenses also soar andthe increase could not meet expectations. This has led to workers jumping from jobs to higher-paid occupations or moving back to their home countries.

Innovation to develop

With deeper integration, together with increasing competition pressure, speeding up and innovating are considered two factors creating a foundation to promote the development of Vietnam's textile and garment industry. According to Vu DucGiang, Chairman of Vietnam Textile and Apparel Association, technology in textile and apparel is essential, helping businesses save time, costs and integrate into the general trends of the industry. In recent years, many textile and dyeing enterprises have applied automation as well as effective information technology. If 10years ago, to produce 10,000 spindles needed over 110 employees, now many businesses only need from 25 to 30 employees, down nearly fourtimes compared to before.

Particularly for sewing, high-end fashion products weredifficult to automate in production because of the small order size, constantly changing designs, and many different sizes. These will be obstacles to the application of robots in manufacturing,and production areas of standard goods with many fixed details, little changes, it is entirely possible to apply robots and robots are currently doing more difficult stages such as: grafting the neck, on the hands and bamboo shoots. The stages require high skills, productivity depends on the workers also havingautomatic equipment to reduce the number of employees, improve productivity and especially stabilisethe quality of products. These are new trends applied in the garment industry.

Using technology into management and production helps businesses increase labour productivity, reduce costs and professionaliseproduction activities. For example, Garment Company 10 has reduced the production time from 1,980 seconds to 1,200 seconds and currently only 690 seconds / product, labour productivity increased to 52 percent; the rate of defective goods decreased by 8 percent. In addition, the company also reduces an additional one working hour / day, increasing income of workers by over 10 percent, reducing production costs by 5-10 percent / year. Similarly, thanks to technology, Nha Be Garment Corporation has also increased the system productivity to more than20 percent. HoaTho Textile and Garment Corporation reduced inventory on a line from 30 products to 3 products, defective goods decreased from 20 percent to 8 percent.

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According to a recent report by the International Labor Organization (ILO), industrial technology machines of Industry 4.0 could replace 86 percent of Vietnam's textile and garment workers in the next few decades. Thus, technology not only helps businesses increase productivity, reduce production costs, increase profits, but also solve the current labour dilemma.

By NguyễnHuế/ Bui Diep