he textile industry in Vietnam has become one of the fastest-growing in Asia, thanks in
large part to the country’s recent entry into the World Trade Organization (WTO).
The nation historically has been strong in cut-and-sew operations, but it is now investing
heavily in spinning and weaving. In fact, just recently the Burlington WorldWide business unit of
International Textile Group Inc., a US-based company of WL Ross & Co. LLC , has partnered with
Phong Phu Corp., a state-owned, Vietnam-based cotton textile and apparel manufacturer, to build an
$80 million cotton fabric and apparel manufacturing complex in Da Nang. Additionally, WL Ross has
signed memoranda of understanding with Phong Phu to explore opportunities to expand their
joint-venture operations and strategic investments in Vietnam.
According to a company release, WL Ross and Phong Phu will team to explore
real-estate-related joint ventures, and a possible investment and privatization assistance by WL
Ross in Phong Phu as the latter privatizes through an initial public offering.
“Vietnam is among the most rapidly growing countries in the world, and we are delighted to
have the opportunity to commit additional capital to support that growth,” said Wilbur L. Ross Jr.,
chairman, WL Ross. “We are especially eager to broaden and deepen our relationship with Phong Phu
and are committed to help that management to change from being a state-owned enterprise to becoming
a privatized business. The memoranda of understanding that we have just signed with President
Nguyen Minh Triet provides for the basis for expanding our mutual relationship.”
The new joint venture in Da Nang includes weaving, dyeing and finishing, cut-and-sew and
laundering, with a focus on cotton and cotton blends. The facility should be totally operational by
April 2008. It will have the potential of producing 60 million yards of cotton and cotton-blended
products, and 20 million garments.
With its recent – Jan. 11, 2007 – entry into the WTO, Vietnam is now in a position to
rapidly expand the value of its textile and apparel exports. The country plans to more than double
its 2005 export total of US$4.8 billion to US$10 billion by 2010, according textile researcher
Textiles Intelligence. Correspondingly, the nation plans to double the number of textile employees
to 4 million over the same period of time. Vietnam’s textile and clothing industry plans to achieve
these targets by streamlining production and thereby reducing unit costs to boost international
competitiveness. Vietnam, as part of its drive to double exports by 2010, has set an export target
for 2007 of US$7 billion.
As of the end of October 2007, the textile industry became, for the first time, Vietnam’s
largest exporter. In the first nine months of 2007, textile and apparel exports reached US$5.8
billion, an increase of 31 percent over the same period in 2006. Crude oil exports, historically
Vietnam’s leading export, were valued at US$5.78 billion and are expected to decline.
Overall, export growth in Vietnam has been strong since the turn of the century. In 2002,
according to reports, textile and apparel exports grew by 40 percent, and by 33 percent in 2003. US
quota restrictions contributed to a slowing of export growth in 2005, when the rate fell to 9.4
percent. With the entry of Vietnam into the WTO, the United States will be required to remove all
quotas on Vietnamese goods. This is expected to result in a significant increase in US demand for
Vietnamese textiles and apparel.
According to a presentation by the Vietnamese Ministry of Industry, Vietnam’s annual
production capacity in 2004 was as follows:
• Fiber — 1,050,000 rollers, with 150,000 tons of fiber produced;
• Textiles — 10,000 weaving machines, 5,500 of various types of
specialized weaving machines, including more than 2,000 large-width machines, producing more than
500 million meters of cloth;
• Knitting — 1,540 machines, with production capacity of 70,000 tons —
equivalent to 262 million standard T-shirt products;
• Complete dyeing — 380 million meters of dyed fabrics; and
• Towels — 25,000 tons of towels of various kinds.
According to the Switzerland-based International Textile Manufacturers Federation (ITMF),
Vietnam’s investments in textile machinery have increased substantially in recent years. In 2006,
the country added 171,720 new spindles and 5,840 open-end rotors. From 1997 through 2006, 840,132
spindles and 19,784 open-end rotors were added.
In weaving, Vietnam added 1,357 shuttleless looms in 2006, bringing the total added since
1997 to 6,012.