Vietnamese Textile Sector Witnesses Spate Of Mergers
There has been a rash of mergers and acquisitions in Vietnam’s textile and garment industry as the sector jockeys to take advantage of free trade agreements, particularly the Trans Pacific Partnership (TPP), experts said.
According to the HCM City Association of Garment – Textile – Embroidery – Knitting (AGTEK), there was a wave of mergers and acquisitions in local garment and textile sectors as local enterprises found they could not fulfill orders due to their limitations in capital, Vietnam News has reported.
Pham Xuan Hong, deputy chairman of the 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, recently, many small textile and garment companies have sold their workshops and machines and entered other sectors.
Some local enterprises have sold part of their factories to foreign investors, he said, including Chinese investors who have developed a system of processing and production for export products in Vietnam to take advantage of the TPP agreement.
Nguyen Van Hoan, former head of Hanoi Industrial, Textile, Garment and Fashion College, said foreign investors had difficulties in expanding their production in Vietnam because some provinces and cities have limited foreign investment in the garment and textile sectors due to concerns about environmental pollution. This has prompted foreign investors to purchase local textile and garment companies that already have production lines and employees.
Further, the Ministry of Planning and Investment said management offices carefully weighed requests before issuing investment licences for large textile and garment projects, since textile, fibre production and dyeing projects often cause environmental problems. So, some investors have bought factories from local partners in of building their own factories