Creating more solidarity to accomplish Vinatex goals
Creating more solidarity to accomplish Vinatex goals
Vietnam’s garment and textile exports were estimated to have hit $39 billion last year, representing an increase of 11.2 per cent on-year and 0.3 per cent higher than the figure in 2019, before strict pandemic restrictions were imposed. This success was attributed partly to Vietnam’s state-run Vinatex and its subsidiaries, which all expect further impressive growth this year.
In the process of brainstorming the corporation’s development strategy for 2022, it is also an opportunity for Cao Huu Hieu to reminisce about what happened in 2021, a year with many ups and downs for all. Through a year of joy, sadness, and pressure, the entire leadership team and employees were determined not to cause extended production disruption, and ensure safety for all.
Hieu called 2021 an “unprecedented year”. For the garment and textile sector, social distancing led to supply disruptions, closure of factories, and affected livelihoods. Many factories had to shift production to a stay-at-work model to meet urgent orders to retain customers.
Last summer, Vinatex subsidiary Dong Xuan Knitting Sole Member Co., Ltd (Doximex) had to prepare the first orders for a new potential customer. This order was the result of the two parties’ long-term cooperation, and simultaneously an opportunity for the company to improve the capacity of Doximex’s fabric facility to between 300-500 tonnes per month.
It was an extremely tough time for Hieu because at the time, as chairman of Doximex, he had to commit to completing the order as planned. As luck would have it, strong partners meant the entire leadership and 60 staff of the fabric facility were determined to overcome the difficulties of the restricted production model to complete the order on time.
The Board of Directors of Vinatex respected the efforts of the staff at Doximex, in particular Do Thanh Tung, deputy general director of Doximex.
According to Hieu, under the close assignment of Vinatex’s leadership, Tung directly operated the stay-at-work model for around six weeks, ensuring the living and producing conditions were as effective as possible. Along with his role’s responsibilities, Tung voluntarily accompanied the employees for the duration, working shoulder-to-shoulder with employees around the clock and offering encouragement.
As a result, the order was completed on time and Doximex’s achievement played an important role in helping Vinatex reach its targets for 2021 and promoting productivity for upcoming years.
Enjoying the successes
Doximex’s case is an example of Vinatex’s effort to overcome similar difficulties. Statistics for 2021 showed that the group’s revenue surpassed $714 million, a 10.7 per cent jump on-year with many business targets even exceeding pre-pandemic levels. It acquired nearly $52.2 million in pre-tax profit for the whole year, twice as much as in 2020 and 70 per cent higher than 2019.
In the past, the garment business often accounted for about 80 per cent of Vinatex’s profit value, but in 2021 the yarn segment contributed around half the total profit. The result came from Vinatex’s well-conceived strategy with sizable investments into the segment five years ago.
In October, Vinatex Phu Hung JSC also put into operation its second modern fibre factory with a scale of 22,800 yarn spindles. A few months previously, Phu Bai Fibre JSC finalised an investment in its third fibre factory valued at $22 million which features 32,000 spindles. This is also the first two-storey yarn factory in Vinatex’s system, employing cutting-edge technology.
“However, the operations do not always go smoothly. There was a time when Vinatex faced the risk of serious production disruptions when our largest member unit, Viet Tien Garment Corporation, had its 34,000 labourers facing work suspension due to closed factories,” Hieu said.
As to how Vinatex maintained its growth rate in 2021, he said that it was a lesson in prioritising the preservation of the workforce. Vinatex adheres to the motto that employees are the most valuable assets. Thanks to maintaining close links with workers, later in the year the rate of mobilisation of labourers returning to work reached around 90 per cent.
Preparing for growth
Vinatex wants to grow into an all-in-one destination for clients in the fashion industry. In 2022, it aims to further enhance competitiveness, particularly strengthening the complete value chain in the group, focusing on improving growth quality through higher added value and better return on revenue ratio.
Meanwhile, over the next three years, the corporation’s target is to formulate a sizable supply capacity for the shuttle-woven segment, meeting the initial demands of the world’s major supply chains and leveraging the fairly developed local spinning industry. Simultaneously, Vinatex is considering the development of two knitwear centres in Khanh Hoa and Nghe An provinces in the central region.
The group’s strategy is aligning with the entry into force of the Regional Comprehensive Economic Partnership (RCEP) agreement, which kicked off in January. It opens opportunities for the group to boost export activity to the market with about 2.2 billion customers.
Hieu was excited to share that Vinatex’s target markets in the RCEP are Japan and China. Previously, when manufacturers wanted to export apparel products to Japan, they had to prove that the materials were sourced from ASEAN and Japan, while Vietnam imported most of its materials and accessories from China. Now, Vietnamese garments made from Chinese raw materials also enjoy preferential tariffs when are exported to the Japanese market.
“With the agreement, we will disseminate knowledge to member companies about tax reduction roadmap, rules of origin, commitment to opening the market in the field of services and investment, and regulations on customs procedures and trade facilitation,” Hieu explained. “In addition, we will also organise trips to connect member enterprises in the group and foreign customers so that businesses can actively find directions for cooperation, promoting exports, and enjoying the most of the benefits brought by such agreements.”
In order to realise new targets, in 2022 Vinatex will focus on forming and developing a package supply chain of knitted products on the basis of existing units. The company targets to increase the capacity of 50,000 tonnes of fabric per year, with input of knitwear production at a capacity of 30-35 million products per year.
Another mission that Vinatex is dedicated to is digital transformation. The target is that the entire operation of the parent company and all subsidiaries would be synchronised by the digital environment, which is considered the key to realise Vinatex’s targets towards 2025.
“Sustainable development and green production are two of the leading priorities for Vinatex to catch up with the global trends,” Hieu said.
Besides that, the group will strengthen production and quality management, increase productivity, and control the usage of resources.
Hieu shared that the group will build plans to invest in equipment for the weaving and dyeing segment, especially the knitwear and fabrics. In addition, Vinatex is also considering investing in a number of new yarn projects, ensuring quality for its textile chain. The group attributed the doubling of the group’s profit figure in 2021 to buoyant yarn business in recent years with soaring order intakes and a sharp hike in the yarn price.
The workforce is also a key power source to implement the group’s targets. Thus, training up new technical staff and managers is a top priority throughout the operation process. In 2022, along with training programmes, the group will build the criteria framework to evaluate the capacity and the effectiveness of staff to establish a workforce fit for the group’s development strategies.
