After a record-breaking wave of layoffs, sector recovery was rapid in the fourth quarter. The sector abandoned its “zero covid” policy.

Along with Bangladesh, Cambodia, and Burma, Vietnam is a major supplier to the European Union and the Western world. Its economy was one of the most successful in 2020 with a 2.9% growth. Since China has been striving to be more competitive in its production over the past decade, the country’s production has been steadily increasing. This country is responsible for a large portion of the production of Nike, New Balance and Adidas. The pandemic, which began with strict confinement in the Ho Chi Min area, and the delivery of meals by the army, did not spare the new workshop.

The trauma of the 1.3 million migrants who arrived from the countryside to return to their home regions between July and September was a tragedy. Infected with the Delta variant of the virus, the country has experienced a spike in infections since last summer. In November, the epidemic reverted to normal. VnExpress International (the English version of Vietnam’s most popular news site) issued the following warning on November 29: “Factories might be offering higher wages to attract workers as end-of-year orders books fill up. However, they are not receiving many applications due to lingering concerns about Covid-19.”

Similar level to before the pandemic

Bloomberg reported that a Nike subcontractor offered 100 dollars per month bonuses to its employees – a quarter their salaries – and that a supplier of New Balance was promising free transportation to those who return to Ho Chi Minh City. Phan Thi Thanh, vice-president of the Vietnam Leather, Footwear and Handbag Association, told Reuters recently that not all Christmas orders from overseas would be fulfilled. Le Courrier du Vietnam claims the sector is now recovering because the government has relaxed its measures to control and prevent the epidemic. It has also abandoned its “zero Covid” policy.

Vinatex’ general manager, Cao Huu Hieu told Courrier du Vietnam in October that 90 percent of its employees had returned to work since October. Nearly 100 percent of employees in the group are currently employed at their companies. The textile and garment industry has been able to reach the USD 39 billion export goal for the year due to the high fourth quarter growth rate. This is almost 12 percent more than in 2020. Already, the sector is experiencing growth that is comparable to pre-Coronavirus. The EU has exported 3.7 billion dollars to date, an increase of 14 percent.

Strategic choices are the key to these good numbers. The high profits can be attributed to factory managers’ decision to prioritize the yarn industry. This sector has grown from 20% to 50% to 55% of total production. However, logistics costs remain four to five times more than they were before the pandemic. There are also challenges such as a shortage in empty containers, shipping congestion which forces companies to ship goods by air and fluctuations within key export markets. In the worst-case scenario, the sector’s export sales are expected to reach USD 38-39 Billion. It is estimated that USD 42.5-43.5 Billion will be achieved in the best scenario.

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