To make the most of TPP, the Vietnamese local textile and garment industry have started mergers and acquisitions in full swing.
According to experts, small-sized enterprises in particular have faced difficulties in managing their business. In this regard, they have either migrated to other sectors or have sold their workshops and machines to foreign investors.
In 2015, Vietnam issued investment licenses for 30 textile and garment projects, while foreign investment in industry was expected to continue increasing in the near future.
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According to HCM City Association of Garment – Textile – Embroidery – Knitting (AGTEK), there was a wave of mergers and acquisitions in the local garment and textile sectors as local enterprises found they could not fulfil the requested orders due to their limitations in capital.
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Pham Xuan Hong, Deputy Chairman, Viet Nam Textile and Apparel Association (Vitas), said medium and large-sized enterprises have maintained stable production and business, but small-sized firms have faced many difficulties in their business. Therefore, many small textile and garment companies have sold their workshops and machines and entered other sectors in recent years. In addition, Chinese enterprises are taking advantage of TPP deal as they have developed a sound process of processing and production of export products in Vietnam.
Nguyen Van Hoan, former head of Ha Noi Industrial, Textile, Garment and Fashion College added that foreign investors were facing difficulties in building new production bases in some provinces of Vietnam, owing to environmental pollution. They have, hence, started procuring the established production lines from small-sized garment businesses. Furthermore, the Ministry of Planning and Investment also said that the management offices are being extra cautious while issuing investment licenses for large textile and garment projects, given that textile production often cause colossal environmental hazards.
