Increased Orders Keep Factories Busy
In response to inquiries about the state of export orders in the final quarter of this year, Pham Quang Anh, CEO of Dony Garment Company in Ho Chi Minh City, shared some promising news. Not only has Dony secured enough orders to keep its factories running until the end of this year, but the company has already signed contracts for orders extending into the first quarter of next year. With such strong demand, Dony's production facilities have been operating continuously to meet delivery deadlines. In 2024, Dony's growth surged by 51% year-over-year, and the company expects its annual growth rate to reach approximately 30%, double the initial forecast of 15% at the beginning of the year.
Quang Anh attributes this impressive growth to two primary factors. First, the company experienced strong order volumes in the first half of the year as many customers depleted their inventories. Second, Dony had implemented an expansion strategy in 2023, and the company is now reaping the benefits of that initiative in 2024.
Pham Xuan Hong, Chairman of the Ho Chi Minh City Association of Garment, Textile, Embroidery, and Knitting, provided a broader view of the industry. He noted that most garment enterprises have secured orders through the fourth quarter and are now preparing for the 2025 production cycle. Compared to last year, the number of orders has increased by around 20%.
Industry leaders have also pointed out that political instability in Bangladesh has created opportunities for Vietnamese garment exporters. These disruptions have led to a shift in orders toward other exporting nations, including Vietnam. This year, the Vietnamese garment industry aims to reach an export target of $44 billion, having already achieved over $28 billion by the end of August. This leaves about $16 billion to be generated in the last four months, requiring monthly export revenues of roughly $4 billion. This goal seems attainable, given that the year-end period typically sees a surge in demand due to major holidays in key import markets. Additionally, July and August saw consecutive months where garment exports exceeded $4 billion, setting a strong foundation for the final quarter.
Fruits and Seafood Remain Strong Export Performers
Another export category that is confidently heading toward its targets is fruits and vegetables. According to Dang Phuc Nguyen, Secretary-General of the Vietnam Fruit and Vegetable Association, the sector generated over $5.7 billion in the first nine months of 2024, surpassing the total record from 2023. Notably, durian alone contributed $2.5 billion, exceeding the entire year’s record for 2023. The last quarter is expected to add further momentum, with durian harvests in the Central Highlands in October, followed by off-season durian harvests in the Mekong Delta provinces in November and December, setting the stage for new records.
Nguyen also highlighted that Vietnam overtook Chile in 2023 to become the second-largest supplier of fruits and vegetables to China, a market with a population of over a billion. Only Thailand ranks ahead. However, there remains significant untapped potential in the Chinese market, which Vietnamese enterprises should focus on exploiting further.
In the seafood sector, data from the Vietnam Association of Seafood Exporters and Producers (VASEP) shows that seafood exports reached $7.16 billion in the first nine months of 2024, marking an 8.5% increase year-over-year. In September alone, seafood exports generated $866 million, a 6.4% rise compared to September 2023. VASEP reports that demand in key markets is recovering, and export prices in these markets are either stable or increasing, providing strong motivation for Vietnamese seafood enterprises to ramp up exports in the final months of 2024 and into 2025.
Projections for 2024 suggest that seafood exports will surpass last year’s figures, with an estimated total export value of $9.5 billion, up 7% from 2023. Shrimp exports are expected to reach nearly $4 billion, pangasius (catfish) exports around $2 billion, tuna exports close to $1 billion, and squid and octopus exports about $640 million. The remaining exports will consist of various marine fish and other seafood products.
Challenges Remain Despite Positive Outlook
While the outlook for many sectors is promising, challenges persist. Quang Anh from Dony Garment Company acknowledged that although the company has a full slate of orders, profit margins remain below expectations. Dony has had to accept lower prices to retain customers and secure a steady flow of orders, ensuring job stability for workers and maintaining customer relationships.
Labor shortages also pose a significant challenge, especially in labor-intensive industries such as garment manufacturing. Many companies in this sector are finding it increasingly difficult to attract and retain workers, particularly during peak production periods at the end of the year. To address these challenges, businesses are investing in technology and management improvements to enhance productivity. However, many workers are no longer as eager to work in labor-intensive factories, such as those in the textile and footwear industries. To recruit and retain employees, companies must offer better working conditions and benefits, but this is difficult for firms that primarily operate as contract manufacturers.
In the fruit and vegetable export sector, while records continue to be broken, there are still hurdles to overcome in penetrating deeper into key markets like China. Currently, Vietnamese fruit mainly caters to demand in southern China and neighboring regions close to Vietnam.
Dang Phuc Nguyen pointed out that one reason for this limited market reach is Vietnam's inadequate post-harvest preservation technology, which affects the shelf life and transportability of fresh produce. Additionally, the marketing and branding efforts for Vietnamese fruit have not been as effective as they could be, further limiting its presence in wider Chinese markets.
Vietnam's export sectors have demonstrated impressive resilience and growth as they approach the year’s end. The garment, fruit and vegetable, and seafood industries are on track to meet or exceed their targets, buoyed by strong market demand and strategic planning. However, challenges such as labor shortages, lower profit margins, and logistical constraints in key markets must be addressed to ensure sustainable long-term growth. As these industries continue to expand their global footprint, Vietnam’s role as a key player in the international trade arena looks set to strengthen even further.
