Garment exports from Vietnam has been falling in the recent past. For example, Thanh Cong Garment, one of a few Vietnamese garment companies that owns a yarn – fabric – garment production line that has a strong demand from South Korea and the US, has seen a contracts decrease considerably from foreign partners in the first six months of the year.
The annual revenue from fabric accounts for 10 per cent of net revenue, while yarn brings 30-40 per cent and garment 50 per cent of revenue. The company’s revenue in the first six months of the year increased compared with the same period last year but its post-tax profit dropped sharply by 42 per cent from VND 86 billion to VND 50 billion. The company’s business efficiency also fell, with gross margin down.
Many Vietnamese companies are losing orders to companies in Laos, Myanmar and Bangladesh that have the advantage of making products at lower prices thanks to preferential tariffs offered by some large markets. Vietnam may have the same preferences obtained by 2018 if the TPP is ratified.