Ktetaichinh’s Blog

December 26, 2009

Vietnam’s apparel losing competitive edge: AmCham VNBusinessNews.com

Filed under: Uncategorized — ktetaichinh @ 10:17 pm
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VNBusinessNews.com – The attractive image of Vietnam’s apparel sector is fading in the eyes of foreign investors

and importers, warned a representative from the American Chamber of Commerce in Vietnam (AmCham).

Falling productivity and rising strikes organized by workers in the sector are worsening the circumstance, said AmCham representative Herb Cochran in a meeting with a delegation of international importers of Vietnamese apparel products held by the Vietnam Garment and Textile Association.

Previously, Vietnam’s garment-textile sector stood out globally with its abundant workforce who accepted lower wages and were eager to improve their performance at work.

However, recent productivity of Vietnamese laborers keeps draining, currently equaling 70%-80% of that of Chinese laborers.

Even worse, Vietnamese workers tend to pick the strike as their first choice when, in fact, they just want to negotiate for higher wages and proper benefits, Cochran added.

For those reasons, foreign importers like the Americans feel uneasy when inking new deals, thus affecting the foreign investment flow into the country.

Social stability is the leading reason for investors to do business in a country that is not their homeland, Cochran explained.

Therefore, they have eyed Indonesia as a substitution for Vietnam due to equal costs, higher sense of discipline of the workforce and more efficient performance. Cheaper land leasing costs and the availability of local fabric producers are the advantages in Indonesia over Vietnam.

The ASEAN neighbor of Vietnam knows it when they have established more knit plants to enrich local fabric sources and offered more training courses to sharpen the skills of their laborers.

Vietnam has no choice but to regain the confidence of its EU and U.S. importers, or else it will lose the game, Cochran said.

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