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The CPTPP agreement, which involves a population of over 0.5 billion, came into effect in Vietnam on January 14, 2019, which is likely to increase the substantial growth of Vietnam's clothing industry. And where does the growth come from? This should not be detailed. This is a zero-sum game ".

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) entered into force in Japan, Canada, Australia, New Zealand, Mexico and Singapore on December 30, 2018, and in Vietnam on January 14, 2019, Comprehensive Progressive Trans-Pacific Partnership. Vietnam became the seventh country to ratify the CPTPP. In addition, Brunei, Chile, Malaysia and Peru will begin implementing the agreement 60 days after the agreement approval process is completed.

It is reported that the CPTPP agreement countries account for 13% of the global gross domestic product (GDP) and involve more than 0.5 billion of the population. After the CPTPP officially came into effect, Japanese officials told the media that Thailand and the United Kingdom may join the negotiation of this agreement in 2019 and become the new signatories of the agreement.

Involving population over 0.5 billion, CPTPP agreement came into force

"Vietnamese clothing" or become the biggest winner

The impact of CPTPP on Vietnam's economy will largely depend on Vietnam's ability to seize opportunities and overcome challenges. The CPTPP will phase out 98 percent of tariffs on agricultural and industrial products, liberalize investment regulations and strengthen the protection of intellectual property rights.

Joining CPTPP has brought an unprecedented market to Vietnam, and "made in Vietnam" may become the biggest winner. According to the Vietnam News Agency, Vietnam has brought in a total of US $112 billion billion in foreign investment from CPTPP contracting countries, equivalent to 15% of Vietnam's total foreign investment.

The people in this land of Vietnam are not only hardworking, but also full of vitality. At present, there are about 30 million young and middle-aged people. However, the aging trend of my country's population is obvious, and the Vietnamese population is relatively young. Vietnam will maintain this advantage for a long time and thus increase the competitiveness of its labor force.

In the field of textile and clothing, "Made in Vietnam" is quietly occupying the market of "Made in China. In 2009, Nike's Vietnam foundry completed a comprehensive surpassing of China's production capacity; in 2012, Adidas's last mainland China factory was closed in Suzhou; in April 2018, Uniqlo announced that China's production capacity was transferred to Southeast Asia, and Vietnam would assume 40% of the total production.

Not only foreign brands, but attracted by cheap labor, many private enterprises of clothing, shoes and hats originally rooted in Guangdong and Fujian, China, have set off an upsurge of moving factories to Vietnam. Chinese textile and garment enterprises have also accelerated the pace of transfer to Vietnam.

Chinese down jacket manufacturer and seller Bosideng will also expand its production in Southeast Asia. With the help of the capital partnership with Itochu Corporation of Japan, Bosideng began pilot production in a Vietnamese textile factory related to Itochu Corporation and plans to further expand production according to production trends.

The reason for the transfer is not complicated, because the labor cost to Vietnam can be nearly 50% cheaper. Production workers in Vietnam earn an average of $216 a month. And, according to the World Bank, Vietnam is one of the largest labor force countries in Southeast Asia, with 57.5 million workers, while Malaysia and the Philippines are 15.4 million and 44.6 million, respectively.

Under the background of Sino US trade friction, China's garment foreign trade orders are struggling, while Vietnam's garment manufacturing industry is making great strides forward, which can not but arouse the industry's vigilance.

Why transfer?

China's textile and garment industry deserves vigilance

Vietnam currently has about 30 million young adults. According to the World Bank, Vietnam is one of the largest labor force countries in Southeast Asia, with 57.5 million workers, while Malaysia and the Philippines are 15.4 million and 44.6 million respectively.

While China's population is aging, Vietnam's population is relatively young. Vietnam will maintain this advantage for a long time and thus increase the competitiveness of its labor force.

In the field of clothing, now "Made in Vietnam" is quietly squeezing the "Made in China" market.

In 2009, Nike's Vietnam foundry completed a comprehensive surpassing of China's production capacity;

In 2012, Adidas's last Chinese mainland factory closed in Suzhou;

In April 2018, UNIQLO announced that China's production capacity will be transferred to Southeast Asia, and Vietnam will bear 40% of the total production.

Not only foreign brands, but also attracted by cheap labor, many private enterprises of shoes, hats and clothing originally rooted in Guangdong and Fujian, China, have set off an upsurge of moving factories to Vietnam.

The reason for the transfer is not complicated, because the labor cost to Vietnam can be nearly 50% cheaper.

According to the World Bank's forecast, Vietnam's economic growth rate is expected to reach 1.1 to 3.5 percent by 2030. To participate in CPTPP, Vietnam needs to carry out institutional reform and improve the investment and business environment. Institutional reforms will help boost Vietnam's GDP by 10 percent.

Under the background of Sino US trade friction, China's foreign trade orders are struggling, but Vietnam is making great strides forward, which can not but arouse the vigilance of China's shoe industry.

After the Comprehensive and Progressive Trans-Pacific Partnership Agreement (CPTPP) comes into effect in Vietnam, Vietnam's economy is expected to grow by 1.3 and trade exports by 4%. Among them, textiles and clothing are regarded as one of the important industries in the economy and one of the biggest beneficiaries of CPTPP.

Fan Chunhong, Chairman of Ho Chi Minh Textile and Garment Embroidery and Knitting Association (AGTEX), said: CPTPP is of great significance to the textile and garment industry. After the agreement comes into effect, it will significantly reduce tariffs and promote the diversification of export products and markets. Among them, Canada and Australia are Vietnam. The two major export markets for the textile and garment industry are promising.

Shen Deyue, deputy general manager of No. 10 Garment Corporation, said: The labor market in the textile and garment industry has increased significantly in quantity and quality. Driven by the zero tariff policy, the export of Vietnam's beneficiary goods to various countries will grow rapidly, and the demand for labor will also increase, which will inject impetus into the rapid development of textile and garment enterprises.

Vietnam's textile and garment industry has 10 years of golden period

Build 320 industrial parks to undertake the transfer of Chinese orders

On December 26, 2018, the "Vietnam Communist Party Electronic News" reported: Li Jinchang, general manager of Vietnam Textile and Apparel Group, said at a press conference that Vietnam's textile and apparel exports in 2018 reached US $3.6 billion, a year-on-year increase of 16%. The figure shows that Vietnam's textile and garment industry has achieved growth not only in quantity but also in quality. It is worth noting that Vietnam has become the world's third largest exporter of textiles and clothing, after China and India.

Li Jinchang said that the breakthrough factor to promote the export of textiles and clothing in 2018 is the trend of the world's textile and clothing production base shifting from China to Vietnam. At the same time, large foreign companies also see better investment opportunities in Vietnam than in India and Bangladesh.

Based on the above results, Li Jinchang commented that the results achieved in 2018 were brought about by the implementation of various strategies for many years, including investment in the construction of international production facilities, the use of green technology, care for workers, and then win the priority of customers.

Vietnam to become an all-round rapid response base in Southeast Asia

Not long ago, Huafu Fashion (002042) announced that it would spend 2.5 billion yuan to build a new yarn project with an annual production capacity of 500000 ingots in Long 'an Province of Vietnam, which is the first phase of the company's planned new yarn project with 1 million ingots.

Huafu fashion chairman Sun Wei Ting believes that Vietnam's textile industry in the next 10 years is still a golden period. The Longan Province of Vietnam selected by the company is adjacent to Ho Chi Minh City, which is an important gateway connecting the southeast of Vietnam and the Mekong Plain. The economic location advantage is very obvious. It not only brings rich water resources to the color spinning industry, but also facilitates the transportation of foreign trade at the international port.

2.5 billion to build an "all-round fast-reaction factory"

"Chinese companies must take two paths to become bigger and stronger: one is to take advantage of China's 1.4 billion population and do industrial upgrading in the process of following the consumption upgrade. The other is to 'go out' and layout the global market". Sun Weiding, who is famous for his prudent investment, said: Vietnam is the "Belt and Road Bridgehead" that Chinese textile and garment enterprises have to lay out ".

According to the announcement of Huafu Fashion, the company intends to invest in new yarn projects through its subsidiary Huafu Vietnam. This project is the first phase of the company's planned 1 million ingot new yarn project, with a production capacity of 500000 ingots and a total investment of 2.5 billion yuan. The source of investment funds is the company's self-raised funds.

Huafu has been working in Vietnam for four years. In 2013, Huafu set up a subsidiary in Longan Province, becoming the largest foreign enterprise with single investment in Longan, and the company also has its first overseas production base. Up to now, Huafu Vietnam has the industry's leading dyeing and spinning equipment, with a 280000 spinning capacity of 20000 tons, a research and development center of 2000 square meters and supporting production and living facilities of 110000 square meters.

A new journey begins immediately. As the world's largest manufacturer and supplier of new yarns, Sun Weiding said that Huafu positioned the Vietnamese company as a "Southeast Asia all-round rapid response" base, close to major international customers, and produce standardized products. Compared with China, the delivery time of local orders in Vietnam is shortened by 12 days, and orders in Bangladesh, Hong Kong and South China are expected to be shortened by 2-4 days, which can achieve competitive advantage through quality differentiation, product differentiation and cost differentiation.

At present, the five major production bases of Huafu Zhejiang, Yangtze River, Huanghuai, Xinjiang and Vietnam have their own emphasis, and the trend of capacity transfer to Xinjiang and Vietnam is obvious. In the future, Zhejiang will be positioned as China's "Italy" and become the "capital of fashion design". Huafu's "net chain headquarters" in Shangyu, Zhejiang is a demonstration base for fashion industry. By the end of this year, the company's 1 million spindle color spinning production capacity in Aksu, Xinjiang, China's high-quality long-staple cotton production base, will also be completed and put into production one after another, with efforts to upgrade domestic consumption and export markets in Central Asia and Europe.

As for the source of funds for this investment to raise 2.5 billion yuan, Sun Weiting said that it can be considered to raise from the Vietnamese company's own funds and overseas financing methods, and does not rule out domestic equity financing and other methods. In view of the financing liabilities of private enterprises, which are generally concerned by the market, the shares of listed companies held by Huafu Holdings are not pledged, and the debt ratio of listed companies and groups is maintained at a healthy level of 50%-60% in the manufacturing industry.

Previously, Sun Weiting had said that the company's capacity expansion "no ceiling". Data show that as of the first half of 2018, Huafu Fashion's production capacity reached 1.88 million ingots, an increase of 12.57 from the same period last year, and the overall production capacity is expected to continue to increase to 2 million ingots.