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Thousands of Japanese enterprises vie for Vietnam! The open and secret struggles of Southeast Asian countries

In recent years, Southeast Asian countries such as Bangladesh, Cambodia and Vietnam have become "OEM factories" of many international brands. Labor intensive industries such as clothing and shoe making have become their main industries. For example, garment manufacturing is one of the pillar industries in Bangladesh and Cambodia. Bangladesh has always been the world's second largest textile exporter. According to official statistics, garment exports account for more than 80% of Bangladesh's total merchandise exports, with more than 4 million employees. The textile and garment industry is crucial to Bangladesh's economic development and people's life.

However, Vietnam's sustainable development of industry and strong labor laws and regulations make the country has made great progress in the field of textile and become one of the most powerful competitors in the field of clothing export of Bangladesh. This year, under the severe impact of the epidemic on exports, Vietnam's performance in the traditional manufacturing industry is still eye-catching. From July 2019 to June 2020, Bangladesh's statistics show that Vietnam's garment export has decreased by 3% (Bangladesh's decline by 18%) to reach US $30 billion, becoming the second runner up in the global export market, second only to China.

Heavy weight! Vietnam overtakes Bangladesh as the world's second largest garment exporter

In recent years, Bangladesh's textile and garment industry has developed rapidly and has become one of the most important garment producers in the world. HM, gap and other large global garment companies have purchased goods from Bangladesh. However, hundreds of garment factories in Bangladesh reopened on Sunday, despite nationwide blockades against the new coronavirus, raising concerns that vulnerable groups in the industry, mainly women, may be infected with the virus, AFP reported. The report pointed out that due to the outbreak of the new crown epidemic, some international famous brands cancelled or delayed orders of billions of dollars, which had a serious impact on the garment processing industry, which accounted for almost all of Bangladesh's export revenue.

Garment factories in Bangladesh closed at the end of March because of compliance with the blockade, but some suppliers say foreign clothing brand retailers are pressing them to complete outstanding export orders.

The novel coronavirus pneumonia epidemic in March forced most garment factories in Bangladesh to close. It is estimated that social segregation has cost Bangladesh at least $6 billion. At least a quarter of Bangladesh's textile workers have been laid off, more than a million, according to NPR on April 3. Due to the fact that China, Cambodia and other major garment manufacturing enterprises have begun to resume operation in recent years, if Bangladesh does not take effective action to resume production, its share in the global garment OEM market will be relatively large.

Bangladesh has more than 4 million workers working in thousands of garment factories, the report said. Last year, Bangladesh exported $35 billion worth of clothing to retailers such as H & M, INDITEX and Wal Mart, second only to China. Bangladesh is the second largest textile exporter in the world. According to official statistics, garment exports account for more than 80% of Bangladesh's total merchandise exports, with more than 4 million employees. The textile and garment industry is very important to the economic development and people's life of Bangladesh.

According to the statistics of the garment manufacturers and Exporters Association of Bangladesh, from July 2019 to June 2020, the clothing export volume of Bangladesh is 27 billion US dollars, and that of Vietnam is 30 billion US dollars. Vietnam has overtaken Bangladesh as the world's second largest garment exporter.

Japan has tasted the sweetness in Vietnam, and thousands of Japanese enterprises are scrambling for Vietnam

In the past decade, the competitiveness of clothing exports between Bangladesh and Vietnam has been comparable. However, Bangladesh mainly exports low-cost clothing. Vietnam mainly exports high priced clothing.

Affected by the novel coronavirus pneumonia, Bangladesh's clothing exports fell by 18.12% in the last fiscal year. Over the same period, Vietnam's export revenue fell by 3.09%. According to the garment industry in Bangladesh, the free trade agreement signed between the EU and Vietnam in June last year will take effect from next summer.

On August 17, an online edition of Vietnam's investor Daily reported that more than 1400 Japanese enterprises were studying to expand reproduction in Vietnam. More and more Japanese companies are shifting their business focus to Southeast Asian countries, with Vietnam as a preferred investment destination, according to the JETRO news.

According to the annual survey report of Japan's Trade Promotion Agency (JETRO), 41% of the Japanese enterprises surveyed (1460 enterprises) are studying the expansion of reproduction in Vietnam in the next three years, an increase of 5.5% over the same period last year.

The Japanese Trade Promotion Agency (JETRO) sent a questionnaire to 9975 Japanese enterprises that might be interested in expanding reproduction overseas, and finally received responses from 3562 enterprises (35.7%).

Among the respondents, 36.3% responded that they were willing to expand reproduction in Thailand, an increase of 1.5% over the same period last year. While 48.1% of the enterprises replied that they would strengthen the expansion of reproduction in China, which was 7.3% lower than that in the same period last year.

According to the report of Japan's Trade Promotion Agency (JETRO), "since 2018, the continuous upgrading of Sino US trade war has prompted Japanese enterprises to transfer production capacity to Southeast Asian countries. The difference between Japanese enterprises' investment in ASEAN countries and Japanese enterprises' investment in China has increased from 10.2 billion yen in 2017 to 20.4 billion Japan (US $191 million) in 2019."

The report also said that due to the impact of the new crown epidemic, the business performance of about 80% of Japanese enterprises with overseas investment is expected to drop sharply in 2020. Japanese companies surveyed are expected to invest in the following Asian countries: 91.4% of Japanese companies will expand their investment in India; 89.4% of Japanese companies will expand their investment in Malaysia; 88.4% of Japanese companies will expand their investment in Thailand; 84.4% of Japanese companies will expand their investment in the Philippines; and 84.4% of Japanese companies will expand their investment in Indonesia.

The competition in Southeast Asia makes people in the industry uneasy, which is worth our vigilance

In the second quarter, Huawei became the champion in the mobile phone market because its sales volume was smaller than that of Samsung. This is very similar to Vietnam's anti surpassing Bangladesh, but there are two differences. First of all, Vietnam's export is anti oversupply. As the main customers are in the European and American countries with serious epidemic situation, the difficulty of export anti ultra is higher than that of domestic market growth. Second, Huawei's domestic sales are achieved under the control of the domestic epidemic situation. Although Vietnam is not seriously affected by the epidemic, its epidemic situation is still continuing. It should be said that both rely on slower than others to get the upper position. Although it is not a good hard core, it is still not easy.

Although there is still a big gap between the annual export volume of US $30 billion and that of China, which often costs hundreds of billions of US dollars, there are still three points worthy of our vigilance, which will even make some people in the industry feel uneasy

First, there is no statistical data of "ready-made clothing" in China. For the close indicator of "clothing", in the first half of 2020, the cumulative export of US $51.1 billion decreased by 19%, and the export to the United States decreased by 30%, which was obviously more severe than that of Vietnam's clothing export. But even so, the boss's position is stable in the short term.

Second, since the decline of clothing export index in 2015, it has not been able to resume growth, and its share is also declining. In addition, in the first half of 2020, the demand for domestic clothing, which has always been good, has also declined, and garment factories, large and small, can feel great pressure.

Third, although our exports of clothing related textiles such as yarns, fabrics and products, and clothing accessories are still growing, a considerable part of them are exported to garment manufacturing countries such as Vietnam and Bangladesh. However, a considerable proportion of cotton, high-grade chemical fiber and other raw materials still need to be imported from the United States and Europe. Due to the strict origin restrictions imposed by the United States and the European Union on Vietnam, in order to avoid high tariffs, Vietnam and other countries will increase investment in textile and chemical fiber industries in the clothing front-end industry or attract investment. These industries also tend to transfer to Vietnam and other industries. From the international experience of industrial transfer in the early stage, without the support of clothing, the front-end industry will not retain the advantages of the industrial chain for more than 10 years.

It seems that China's textile polyester yarn is also facing huge competitors.