Enhancing Workforce and Productivity

Amidst a challenging environment, the Garco 10 Corporation (Garco 10) is among the few that have maintained employment and ensured employee income despite the wave of layoffs and personnel cuts in the post-COVID-19 period. Garco 10 has proactively sought more job sources and markets beyond their traditional ones and organized supplementary training for employees. Garco 10 is one of the few companies with welfare facilities serving both employees and the community, including kindergartens, medical rooms, Vocational Colleges, supermarkets, restaurants, hotels, dormitories, and cultural centers for workers, etc.

At Hoa Tho Textile and Garment Joint Stock Corporation (Hoa Tho), employee welfare, creativity competitions, and promotion of improvements have always been prioritized alongside business development. Mrs. Tran Tuong Anh, Deputy General Director of Hoa Tho stated that the corporation consistently cares for employees’ jobs and promptly implements social welfare programs. All distant employees receive housing and childcare subsidies. Additionally, Hoa Tho has established a health station equipped with essential medical devices to meet onsite medical needs. Annually, Hoa Tho conducts two health check-ups for all workers and cancer screenings for females.

Similarly, Mr. Nguyen Tien Hau, Deputy General Director and Chairman of the Trade Union of Hue Textile and Garment Joint Stock Company (HUGATEX) noted that all workers are provided with personal protective equipment suited to their specific jobs and working environments. The company has improved working conditions by repairing and maintaining infrastructure, upgrading cooling, ventilating, and air conditioning systems, and investing in modern equipment and automation to reduce manual labor, ensure safety, and increase productivity.

Mr. Do Van Thuan, Chairman of the Trade Union of Tien Hung Joint Stock Company (Tien Hung JSC), stated that the company’s labor safety practices have been highly appreciated by various organizations, such as Better Work program, Lab, and Hanoi Industrial Textile Garment University. Currently, the company is collaborating with Better Work program to train employees in fire protection and prevention, electrical safety, and equipment operation safety. As a result, workers’ awareness has significantly improved. The company now uses air conditioning systems instead of water spray systems to cool the workshops.

“Every year, the company organizes vacation trips for employees to rest and re-production of labor power. Customers highly value Tien Hung’s welfare policies, salaries, bonuses, working conditions, and social responsibility. Many of these policies exceed legal requirements, such as gasoline allowances and holiday gifts, resulting in a stable and consistent workforce,â€?Mr. Do Van Thuan explained.

Speaking about Tien Hung’s working conditions, Ms. Pham Thi Nga, Team Leader of Team 45 at Garment Workshop 5, Tien Hung JSC, shared: “Currently, working conditions are excellent and continuously improving. The company has upgraded the workshop, invested in modern machinery, and run air conditioning continuously. During hot summers, the company has also provided cool drinks and snacks like black bean sweet soup, green bean sweet soup, lemon water, yogurt, coffee, and smoothies. Working conditions at the company are better than at home for many workers. With a monthly income of over VND10 million, we feel secure in providing for our families. Most employees do not want to work elsewhere due to the good benefits, rights, income, and working conditions. Even young workers, who often change jobs frequently, intend to stay with the company long-term.â€?/span>

Prioritizing Meals to Ensure Employee Retention

Alongside ensuring benefits and policies for employees, companies within the Group always pay attention to the quality of meals, ensuring food safety and nutrition for their workers.

Ms. Nguyen Thi Dao, Chairwoman of the Garco 10 Trade Union, stated that in May, the union provided an additional fresh meal with nutritious dishes such as steamed chicken, fried meat, mixed stir-fried vegetables, bone marrow soup, and fruit for all employees across the system. The Garco 10 Trade Union believes that ensuring nutritious and safe meals will provide employees with the health and comfort needed to work effectively, thereby increasing labor productivity and work quality.

At Garco 10, the menu changes daily and weekly, offering a variety of dishes that are publicly announced to the workers. Each meal includes the four main food groups: carbohydrates, protein, fats, vitamins, and minerals (vegetables, fruits). The kitchens source food from reputable suppliers with food safety certificates. Fresh ingredients are used to prepare meals immediately, providing hot and delicious food compared to industrial meals ordered from outside. Additionally, Garco 10 has established a process for controlling meal provision, food safety, and preventing collective food poisoning across the system. Following recent collective food poisoning incidents in some provinces, Garco 10 has instructed kitchens to eliminate ready-to-eat, easily contaminated foods like sausage, fresh bamboo, and pickled vegetables, ensuring fresh, cooked foods with adequate nutrition.

At Hoa Tho, employees can register for a free breakfast buffet with a diverse menu, including banh beo, banh goi, banh mi, banh bot loc, fish or meat noodles, Quang noodles, sticky rice, mixed noodles, from 6:00 to 7:15 am. For lunch, the company serves a menu of four dishes, including two main dishes, one stir-fried dish, and one boiled vegetable dish, along with rice and soup, or employees can register for noodles or soup to vary their meals. For those working overtime, the company provides noodles or soup at 5:00 pm. Night shift yarn workers receive free meals such as curry, noodle soup, and pho. The yarn workers also have been provided free beverages and coffee in the factory’s coffee room.

“During the hot summer months, to increase resistance and strength for employees, the corporation leadership has directed the kitchen to collaborate with units to provide free cooling drinks like lemon water, sugarcane juice, bean soup, and yogurt on Mondays, Wednesdays, and Fridays. Hoa Tho serves 3,200 lunch meals and 1,500 breakfast meals daily, so food safety and hygiene are always a top concern of the company. Every day, medical staff inspect the food sources, record the results, and evaluate them. Food samples are kept according to regulations, and the corporation invites food safety experts from the Da Nang Food Safety Authority periodically to train all kitchen staff and update related regulations,�emphasized Mrs. Tran Tuong Anh.

Additionally, Hoa Tho conducts regular inspections at off-site kitchens and frequently monitors the input food sources at kitchens to ensure food standards with invoices, food safety certificates, and competitive prices. Thang Binh Yarn Factory even grows some clean vegetables for workers. The factory also focuses on improving the working and resting environment for employees, with a coffee area featuring a Koi fish pond and green garden, creating a relaxing space during breaks. The canteen is equipped with fans and air conditioning, offering free coffee, soft drinks, movie screenings, and music during breaks. The medical department actively monitors and updates the situation of seasonal diseases, providing health guidance and prevention tips for employees.

At Hue Textile and Garment Joint Stock Company, Chairman of the Trade Union Nguyen Tien Hau shared: “All employees receive company-supported industrial meals during shifts at rates of VND18,000 per meal for shifts 1, 2, and administrative hours, and VND 24,000 per meal for shift 3. The menu is designed to ensure adequate nutrition for employees. All food comes from reputable suppliers with clear origins, ensuring food safety. The cooking area is safe and hygienic, with all cooking equipment properly arranged. Cooking staff are regularly trained in food safety. Drinking water is tested monthly to ensure safety and quality.�/span>

Tien Hung Joint Stock Company consistently improves and provides the best conditions for employees to feel secure in their work. The menu is continuously updated weekly. “To ensure food safety, the company has agreements with reputable suppliers certified for safety. Provincial authorities regularly inspect the company’s food safety practices. Every Friday, the supervisory team meets to plan the menu for the following week. In summer, the menu is adjusted accordingly, and employees receive free cool drinks, milk, and supplements. The company always listens to employee feedback to ensure meals are suitable and of high quality,â€?emphasized Chairman of the Trade Union Do Van Thuan.

Ms. Tran Thi Quyen, Tien Hung JSC kitchen staff, shared: “I have been working in the company’s kitchen for nine years. The kitchen team has about 20 members, and we start working at 7 am every day to prepare meals for the workers until around 12:20 pm. To ensure food safety, we choose reliable suppliers and regularly clean the kitchen, carefully process ingredients, and follow proper procedures for washing vegetables and other foods. We continuously clean dining tables and floors. When serving cooked food, we always wear gloves and masks to ensure hygiene. Since the company began operations, there have been no food poisoning incidents, but we always prioritize food safety and nutritional quality for the workers’ meals.â€?/span>

Dr. Nguyen Huy Tuan �Occupational Medicine Department, Textile Garment Hospital Medical Center

To prevent occupational diseases, workers and employers should implement the following measures:

• Providing protective equipment and maintaining workplace hygiene to ensure sanitary conditions free from harmful and hazardous factors for workers.
• Adhering to safety regulations.
• Conducting regular environmental monitoring.
• Participating in regular health check-ups and screenings for occupational diseases.
• Using personal protective equipment correctly.
• Establishing a balanced diet and reasonable rest schedule.

To minimize the risk of food poisoning, adhere to the following 10 principles published by WHO:

Principle 1: Principles of Choosing safe

Principle 2: Cook food thoroughly

Principle 3: Eat immediately after cooking

Principle 4: Carefully store cooked food

Principle 5: Reheat food thoroughly before eating

Principle 6: Do not mix raw and cooked food

Principle 7: Always keep your hands clean when processing food

Principle 8: Always keep processing surfaces and kitchen dry and clean

Principle 9: Protect food from the invasion of insects, rodents, and other animals

Principle 10: Use clean water

Reporters

Translated from the article published in the June 2024 issue of Textile-Garment and Fashion Vietnam Magazine.

Online seminar

Dr. Truong Van Phuoc presented the Financial – Monetary trends in the last 6 months of 2024

Providing some information on financial-monetary trends in the last six months of 2024, Dr. Truong Van Phuoc stated that the FED focuses on three main indicators: inflation, unemployment rate, and GDP growth to make decisions about interest rates. In the context of the second estimate of US GDP growth in Q1, 2024 increased by only 1.3% annually, a decrease of 0.3% compared to the first estimate (1.6%) and significantly lower than that in Q4 2023 growth (3.4%), leading a decline in personal consumption, and inflation remaining around 3 �3.7%, etc. This could lead to the FED’s decision to cut interest rates earlier than planned in September 2024.

In Vietnam, the USD/VND exchange rate has increased by nearly 3.97% compared to the beginning of the year. However, if the FED cuts interest rates earlier than expected, the pressure on the USD/VND exchange rate will likely be eased. Dr. Truong Van Phuoc forecasts that by the end of 2024, the USD/VND exchange rate will increase by about 1%, fluctuating between VND25,700 and VND25,800.

According to Dr. Phuoc, although the national currencies of textile and garment exporting competitors have stabilized and are no longer being devalued as much as in 2022, some countries such as Mexico, Bangladesh, Turkey, and Indonesia may continue to devalue their currencies to increase competitiveness against Vietnamese textiles in the rest of 2024. Additionally, Dr. Phuoc predicts that the deposit interest rate of the VND, which is on an upward trend, will likely maintain at 6.5 �6.8%.

Concluding the seminar, Mr. Le Tien Truong, Chairman of the Board of Directors of Vinatex, stated that based on Dr. Truong Van Phuoc’s insights and the forecast information from the Group’s research department on financial and monetary market trends in the near future, member units need to calculate financial plans, capital sources, and bank loans for the business plan in the second half of 2024. Specifically, with the current USD/VND exchange rate, businesses need to consider appropriate conversion plans suitable for their business conditions.

Regarding the Japanese Yen, the JPY/USD exchange rate is likely to increase by about 10% by the end of the year, so orders from this market should be signed within a sufficient timeframe, not too far in advance, to respond to market fluctuations. For the US market, if long-term orders can be signed, businesses should take advantage of opportunities to secure orders.

However, to compete with other countries that might continue to devalue their local currencies, the “narrow path” for Vietnam’s textile and garment industry is high-end, technically sophisticated, and high-value products. At the same time, businesses need to tighten the quality and origin of products instead of chasing the output.

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The residual value after the effort to “overcome the market storm”

We have discussed the difficulties of 2023 extensively. The challenges were identified quite early on, but these impacts still took the enterprises by surprise, leaving them unprepared for unprecedented situations. 

Continuous instability from global geopolitical conflicts, the unresolved Russia-Ukraine tension followed by the war between Israel and Hamas, conflict in the Red Sea, etc, has plunged the global economy into a prolonged crisis. This resulted in a more than 10% decrease in global demand for textiles and garments compared to 2022, with significant drops in purchasing power in major markets of Vietnam textile and garment industry. Low demand combined with extremely fierce price competition, as Vietnam’s interest rates are 2-3% higher than those of competing countries; the currencies of competitors depreciated significantly against the USD to boost exports, while the VND only depreciated by 5%. In addition, competition from China became increasingly intense as the Chinese government implemented numerous measures to support the textile-garment industry to recover after the pandemic.

In such a market situation, the global yarn industry has had a dismal year of losses. Vietnamese yarn enterprises’ selling prices were not enough to cover variable costs, and some companies have had to reduce production. The garment industry has seen a decrease in orders and prices of 30-50% compared to the previous year. Therefore, Vietnam’s textile and garment export turnover in 2023 reached only $39.6 billion, reduced by 11.3% compared to 2022 – this was the highest decline in 30 years of exporting, even during the Covid-19 pandemic or periods of regional or global economic crisis, textile and garment exports have never declined.

This Annual General Meeting Season is an opportunity for us to look back on the most challenging year in the Group’s history. Besides the damages to efficiency, alongside our efforts to fulfill the business plan, Vinatex and its member units – as a leading group in Vietnam’s textile-garment industry with over 60,000 employees – have always operated with a principle of balancing the interests between “employees, shareholders, and society.” The most significant achievements of 2023 include:

• Maintaining and stabilizing the workforce of nearly 62,000 people in Group 1 companies, reaching 97% compared to 2022, despite the difficult situation. To ensure employment for workers, and prioritize stabilizing the production force until the market recovers, businesses have to accept small orders with demanding technical requirements and tight delivery schedules at very low prices, reduce productivity, and not focus on efficiency. This demonstrates that Vinatex always prioritizes responsibility to society, and it is also an important strategy that enables the entire system to be ready to recover whenever favorable market signals emerge.
• The interests of workers are also taken care of. The average income across the Group reached VND 9.45 million/person/month, equivalent to 97.6% compared to 2022 and 94.9% compared to the 2023 plan.
• Although the business results did not meet the plan, enterprises in the system always prioritize the interests of the shareholders. Most units paid dividends equal to or higher than expected, only a few companies have lower dividend rates than planned business, mainly yarn companies with loss-making business results.
• The difficult decisions of 2023 were all “brave” decisions of the managers with the highest positions the Chairmen/CEOs of the businesses. We cannot maintain the production force and the management team if there is no “bravery” from the business leaders.

Leveraging the opportunity of 2024 – To regain what was lost

Although it is predicted that the difficult phase is not yet over, 2024 has shown positive signs from the market, stemming from more optimistic forecasts for global economic growth, with some central banks of major countries planning to cut interest rates by 0.75 to 1% from mid-2024. The domestic economic situation is also more favorable than in 2023, with Q1 GDP growing by 5.66% compared to the same period and higher than the growth rate of Q1 from 2020-2023; the total estimated export revenue reached $178 billion, increased by 15.5% compared to the same period.

The textile and garment industry also sees some support factors as the textile and garment demand in 2024 is forecasted to reach $717 billion, an increase of 5.6% compared to 2023; inventory levels of major brands have decreased compared to the same period; the implementation of some regulations related to green and sustainable production has slowed down due to the global economy not yet fully recovered. In addition, the Vietnamese textile and garment industry also has the potential to access better market opportunities, with less competitive pressure as competing countries have almost exhausted to continue depreciating their currencies to support exports and are unable to maintain their exchange rate advantage as they did in 2022-2023. At the same time, Vietnam also has the opportunity to capture orders diverted from other countries due to political-social instability, tightening of forced labor regulations, etc.

These signs are also evident in the first four months of the year, with profuse garment orders, although the processing price is still at a low level; in the yarn industry, although the selling price is still unprofitable due to weak demand and large fluctuations in raw material prices, these have shown a clear improvement in efficiency. The export revenue of Vietnam’s textile industry in Q1/2024 reached 9.4 billion USD, grew 9.2% compared to the same period in 2023.

Thus, it can be predicted that market opportunities are approaching, as well as the usual pattern of forming growth waves after a prolonged downturn. We should not be overly optimistic but need thorough preparations to receive and take full advantage of the opportunities if these forecasts become reality.

In the spirit of seeking truth at the shareholders’ meetings of member units, we should take a frank look at shortcomings and potential weaknesses to determine appropriate direction. These include:

• Management practices are not flexible enough, not fully utilizing all resources to optimize efficiency as well as cope with the continuous fluctuations of the market.
• Low ability to diversify products, mainly focusing on basic and traditional products.
• Lack of proactive market activities, limiting the ability to expand the customer data.
• Productivity and quality are not optimized and unstable.
• Connection in the production chain within the Group’s system is low. 

Direction and essential solutions

To control and improve the above shortcomings, the Group’s Executive Board has identified several key solutions that the entire system needs to focus on implementing in 2024:

• Effectively implementing the approved restructuring plan, reviewing inefficient investments, enhancing risk management, and thoroughly handling “hot spots”.
• Applying digital management across the whole system. Initially use the yarn management app for all yarn companies within the Group. Digital management will provide more flexibility in organizing production, meeting the continuous change requirements of customers, optimizing when producing small, fast-delivery orders
• Strengthening product R&D work, collaborating with research units, and technology partners, focusing on specialized products requiring high techniques to build the core products of the Group. For the units, improving the diversified product’s ability through research and application of technology, in-depth investment, and ensuring supervise to market requirements.
• Enhancing the role of the Business Production Departments in market development, obtaining orders that bring high efficiency, and focusing on reasonable coordination according to the advantages of each unit.
• Investing in key projects according to the approved strategy, in parallel with strengthening deep investment, prioritizing new technologies to increase productivity, reduce labor dependence, and reduce costs (electricity, energy…).
• Having a policy of using each other’s products among units in the Group, especially forming a closed production chain for some new specialty products like fire retardant fabrics, towelsâ€? as a foundation for system-wide chain linkage in the future.
• Practically competing in good production- high productivity, saving, improving the working environment for workers, enhancing the efficiency of production and business, and meeting the increasingly high and diverse needs of customers. Ensuring employment, actively caring for the material and spiritual life of the workers… 

Harmonized interests �Shared risks

2024 is the sprint year – the pivotal year of the 2020-2025 plan period and also the foundation for the new 2025-2030 period. More than ever, Vinatex needs the understanding and cooperation of the units in the Group, all the employees and the shareholders.

It is necessary to share with employees about the difficulties that the enterprise is facing to have mutual agreement with the medium- and long-term development strategy with visible harmonious benefits. Only then will the employees be ready to shoulder the heavy tasks ahead, willing to reduce benefits in the short term to aim for long-term stability and sustainable development, ready to fully exploit the capabilities of individuals and the collective to get through this extremely important period.

For shareholders, we hope for trust in strategic decisions, support for short-term investment decisions, and sharing of the difficulties that Vinatex and its member units are striving to overcome, with the sole desire to ensure benefits for all parties: sustainable development of the enterprise – workers have a stable and increasingly improved living conditions – shareholders achieve optimal investment efficiency.

Vietnam Nation Textile and Garment Group believes that 2024 will create the momentum for enterprises to gradually overcome the prolonged difficult period, stabilize at a new level, ready for the development pace of the next stage. ” Calamity is man’s true touchstone “, the recent market wave can somehow be considered “positive” when it helped us detect and improve existing shortcomings, creating conditions for enterprises to mature and continue steadfastly on the challenging road ahead to achieve the strategic goals set out.

Mr Le Tien Truong, Chairman of the Board of Directors of Vinatex

• What is your assessment of the current difficulties that textile and garment exporters face in accessing loans?

First of all, the difficulty in accessing loans originates from the poor business performance in 2023 of textile and garment enterprises, particularly yarn and weaving enterprises. Therefore, commercial banks, with regulated standards, will review loan requests more strictly than in previous years.

However, we should also reconsider the situation in 2023. For the first time in 30 years, textile and garment exports decreased by over 10% compared to the previous year, even during the COVID-19 pandemic or the economic crisis in Asia and the global economic crisis, the textile export has never decreased so drastically.

The decline of over 10% in export turnover resulted in job shortages, but more importantly, a global unit price decline led to the very poor business performance of textile and garment companies in 2023 compared to previous years. Particularly for yarn enterprises, these difficulties have continued from July 2022 to the present and are clearly reflected in the financial reports of 2023. This is the main reason why yarn enterprises are finding difficult to access bank loans.

• How does the difficulty in accessing loans affect the operations of enterprises in the yarn industry, Mr. Chairman?

The global yarn industry experienced a downturn in 2023. Yarn manufacturers in China, Bangladesh, and other countries faced difficulties, not just in Vietnam, due to low demand. This is a unique situation for the yarn industry.

However, in the first quarter of 2024, we have seen a more positive outlook in the yarn market. While the industry is not yet profitable overall, the level of losses has decreased by 90% compared to the first quarter of 2023. The market is recovering, demand is gradually increasing, and textile exports grow over 10% compared to the same period last year. This is the time to recover the losses from 2023. To recover, enterprises urgently need cooperation and loans from credit institutions and banks to implement production.

As a result of the poor business performance in 2023, the credit funding trend for 2024 is expected to be lower than in 2023. Specifically for the yarn industry, credit in 2023 was also lower than in 2022, but due to low total demand in 2023, that low funding could still maintain normal production. However, in 2024, yarn manufacturers are only approved for a credit limit 20% lower than in 2023, so when the market warms up, enterprises fall into a shortage of working capital to import raw materials and organize production. If we do not accompany enterprises with specific policies at this time, especially for yarn enterprises, we will miss the recovery opportunity of the yarn industry. Yarn manufacturers will naturally face compounded difficulties when production is narrowed down, and the opportunity to recoup the losses of 2023 will be even further away.

• So, what solutions do we need to enable enterprises to access bank loans and simultaneously facilitate the credit flow of the entire economy, Mr. Chairman?

When we have identified 2023 as a particularly difficult year with unusual market movements that no one could have predicted, we also need flexible policies, especially at this time.

The lesson learned from 2020, when the COVID-19 pandemic emerged, many preferential credit policies and tax reductions from the Government were effective, helping enterprises overcome the difficulties, preventing bankruptcy, and offering a chance to recover. The year 2021 was a year of strong recovery for the textile and garment enterprises, a year with peak profits for the entire industry.

Because of many fluctuations and crises, the economy in 2022 and 2023 faced difficulties, and the textile industry also struggled. However, this does not mean the textile-garment market disappeared. Therefore, supporting businesses to overcome this difficult period in order to retain the industry, maintain jobs, and keep market share is necessary to create conditions and opportunities to recover.

With a scale of 10 million yarn spindles, the yarn industry in Vietnam is also a large-scale industry, among the top 5 in the world, currently employing 150,000 workers, with annual wage payments of about $1 billion, electricity costs about $500 million /year, and other expenses in Vietnam about $600 million/year. If we do not timely recover the yarn industry, we will lose the ability to dominate the market. This is because countries around the world such as China, Bangladesh, India, and others are ready to fill the gap in yarn supply that Vietnam has lost.

Therefore, during this period, commercial banks, with the management of the Central Bank, should adopt a policy of supporting businesses by working closely with them to analyze their individual situations. By this way, it can be seen that the Return on Sales and the number of orders of each company is improving better than last year. Instead of evaluating credit limits based on the poor business performance of 2023 and cutting them by 20-25%, banks should assess credit limits based on a company’s potential for recovery and the profitability of individual orders. Currently, some banks have cut credit limits by 16-17%, while others have reduced 30-40%. This approach makes it very difficult for businesses to recover.

Similar to the Vietnam National Textile and Garment Group, we have efficient enterprises but also have units that only produce yarn products. As a result, they face more difficulties when the market fluctuates. Therefore, we hope to have a common credit package for the whole Group so that good enterprises can share with enterprises that are still in difficulties, thereby together taking advantage of business opportunities that are showing signs of recovery. This year, Vinatex forecasts that the minimum growth rate of the yarn industry will be around 10% compared to last year, which means that working capital will need to increase by at least 10% compared to last year, not be cut by 20% as announced at the beginning of 2024.

Thank you for your attention!

Reporters

Translated from the article published in the May 2024 issue of Textile-Garment and Fashion Vietnam Magazine.

 2024 Annual General Meeting of Vinatex

Overcoming difficulties, Vinatex completed the 2023 business plan

Mr. Cao Huu Hieu, General Director of Vinatex stated that 2023 was an unprecedentedly difficult year, with textile-garment export turnover decreasing by over 10% for the first time, and business efficiency on revenue being the lowest in the past 10 years. Unit prices of various products dropped by over 20% while input costs surged. In the face of these challenges, implementing the Board of Directors’ strategy, the Group’s Executive Committee has vigorously implemented a number of synchronous solutions: (1) Market research focused on evaluating, selecting customers and developing new customers: member units actively searched for and developed new markets to balance and reduce dependence on mainstream markets; Organizing monthly market workshops and regular seminars of the Yarn and Garment Manufacturing Teams to timely update information on the macroeconomy, textile and garment market, discuss appropriate business plans based on the actual context; (2) Innovating management platforms and digital transformation: Continued development and application of new management solutions to maximize the utilization of human resources across the Group to address issues beyond the capacity of a single enterprise, based on a centralized data platform and operating software systems being built and continuously improved for various fields, e.g. yarn production, finance and accounting, human resources management, etc. (3) Investment and development: Based on the recommendations of the Production and Business Departments and proposals from enterprises, the Group has continuously carried out in-depth investment and upgrading to ensure the automation, optimization to effectively exploit the existing production capacity system, at the same time forming new investment directions to ensure balance and connection of the production system in each unit and between units within the Group; (4) HR development: Focusing on tranning specialized HR to ensure the requirement of management in the context of science and technology development and the market fluctuations; developing succession staff; attracting and recruiting young and capable staff; (5) Research and development: Implemented research on technology, machinery, and trial production of new items such as filament core yarn and new blended yarns to flexibly meet the changing market demands; developing new markets for products with special features such as fire retardant, puncture resistance, and waterproofing.

The Group’s Board of Directors determines that in the short and medium term, the market will still contain many risks when Vietnam’s competitive advantages are weaker than other textile-garment manufacturing countries worldwide. In that context, in 2023, the Board of Directors of Vinatex organized 13 meetings, issued 22 Resolutions, and 4 Decisions with the following contents: (1) Strategy and investment: Developing Vinatex Restructuring Project for the period 2021-2025, with a vision to 2030; Approving investment projects at member units; Directing the divestment at units according to the approved restructuring project; Organizing the development of regulation system in the Group to ensure the operation of legal corridor. (2) Human Resources: Participating in the development and implementation of internal training activities within the Group; Coordinating with the Executive Board to organize the Human Resources Conference, and human resource management program at the units. (3) Market, risk management: Updating, analyzing, evaluating, and forecasting the global textile and garment market; regulations on new trends affecting the industry and macroeconomic factors; Identifying, warning risks, monitoring business results and quarterly inventories of major fashion brands that are customers of enterprises within Group; Closely coordinate with the Group’s Board of Supervisors to evaluate manufacturing activities and the capital representatives activities at the units.

The Board of Directors’s activities focus on several highlights: (1) Focusing on R&D, production of special and high-tech products, signing a cooperation agreement on manufacturing of fire-retardant fabrics with the Coats Group (UK) and will have the first export shipment to the US market in July 2024; Trial production of filament core yarn. (2) Market promotion and focusing on high-value-added products and shifting to meet new demands, compensating for the decline of traditional products: Introducing Phong Phu towels into the US market, preparing to build a towel production chain in the North (Ha Dong Textile and Nam Dinh Textile); Shifting to the blended fibers production with a high recycled component to meet market demand: average of over 25% in the Vinatex system (over 50% at Phu Bai Yarn). (3) Extending the supply chain towards a closed-loop supply chain: Yarn to the weaving & dyeing – Viet Thang reached 70% of yarn through weaving, 35% in Nam Dinh; connecting the yarn sector with domestic manufacturers (especially FDI); consolidating the weaving – dyeing industry to increase the use of grey fabric. (4) Digital transformation to enhance management efficiency: Complete basic digitalization at the Group’s Office and yarn sector; Cost management through digitalization data. (5) Taking human resources as the foundation for development: Phase 2 of the Young Talent program training; On-demand training for management staff at key units: Viet Thang, Phong Phu, Phu Bai, Natexco.

With synchronous and effective solutions, Vinatex has completed and surpassed the targets set by AGM 2023. Specifically, consolidated revenue reached VND 17,612 billion, equivalent to 106.7% of the plan, with the separate financial result reaching VND 2,008 billion, equivalent to 105.7% of the plan; Consolidated profit reached VND 538 billion, equivalent to 145.5% of the plan, with the separate financial result reaching VND 133 billion, equivalent to 102.9% of the plan.

Chairman of the Board of Directors of Vinatex, Mr. Le Tien Truong, shared that the common spirit of textile workers is always steadfast, united, brave, and creative in all situations. The efforts of the Group’s Executive Committee and member units during recent times are highly commendable because the decisions of the leaders are all crucial ones. The Board of Directors understands that the decisions of 2023 were all difficult. Most yarn and weaving enterprises had to sell below production cost. Without the bravery, passion for the job, and ultimate responsibility towards the enterprise they manage, just stopping production for 1-2 months would have made it impossible to achieve the business results of 2023. We need to maintain this spirit to overcome difficult periods and if any element is missing from the slogan “RESILIENT – BRAVE – UNITED – CREATIVE” it will also be an obstacle to achieve success.

Determined to achieve 5 key goals and tasks

The Vinatex leadership assessed that the market in 2024 is still full of uncertainties and unpredictable while signs of recovery from the market are not sustainable and risky. Therefore, Vinatex has set a target of consolidated revenue for 2024 of VND 17,900 billion, accounting for 101.63% of the same period, of which the revenue of the Holding Company is VND 2,070 billion, equivalent to 103.06% of the same period; Consolidated profit reached VND 550 billion, equivalent to 102.13% of the same period, profit of the Holding Company reached VND 150 billion, equivalent to 112.17% of the same period in 2023.

Setting out the missions throughout 2024, Mr Chairman clearly stated 5 key tasks including:

1. Closely following the Group’s development orientations in the medium and long term;
2. Frankly recognizing the position in the supply chain;
3. Transparency of difficulties and development opportunities;
4. Thoroughly analyzing market information and competitors to direct and manage;
5. Innovation, creativity, and flexibility in production to seize opportunities and adapt to the market.

At the same time, continue to implement 5 commitments including:

1. Implementing commitments and initiatives on environment, society, and corporate governance (ESG);
2. Participating in the supply chain with a firm position, being a preferred partner of major manufacturers and distributors in the world;
3. Continuously forecasting the market and providing adaptation solutions;
4. Building the strategic goal within the Group of ” One-stop destination for comprehensive textiles and fashion solution”;
5. Training staff to meet new market and technology requirements.

2024 Annual General Meeting of Vinatex

General Director Cao Huu Hieu stated that in 2024, the Vinatex Board of Directors’ Office will also focus on implementing a number of key tasks and solutions to improve productivity and product quality;  in-depth investment, technical innovation, and enhance production capacity based on existing infrastructure; strengthening the capacity of the garment industry in design and marketing to increase the proportion of high-value export goods such as OEM/FOB in total revenue; continuing research and development programs for new products like fire-retardant fabric, filament core yarn, and yarn and fabric with special features; accelerating the operation and implementation of digital transformation; completing and updating the risk management handbook to prevent and provide timely operational solutions, limiting risks for the Group and its member units; continuously updating regulations and mandatory requirements on sustainable development and green production to proactively apply into the manufacturing; monitoring the compliance of units regarding environmental protection, occupational safety and health, and carbon emission management.

Regarding the challenges of Vinatex as a labor-intensive enterprise, Mr. Pham Van Son �General Director of the Department of General Affairs, Commission for the Management of State Capital at Enterprises, highly appreciated the management results of the Board of Directors and the Executive Board of Vinatex in 2023. The state capital at Vinatex, managed by SCIC, was preserved, and a dividend of 3% was distributed, which was a success when many businesses struggled with an unfavorable market. As a labor-intensive Group, with social security responsibility for more than 62,000 direct employees of level 1 and over 150,000 employees of level 2, ensuring the living and income of employees with an average of nearly VND 9.5 million/person/month was one of the highlights of Vinatex in 2023.

“Many economic experts predict that 2024 and 2025 will still face many risks and unpredictable developments. Therefore, Vinatex needs to consolidate resources and build quick, efficient, and decisive policies to effectively implement the restructuring plan for the 2021-2025 period, orientation to 2030, and stabilize the living conditions and employment for employees through salary and income solutions. Most importantly, given the characteristic of the textile-garment industry where profits depend on labor productivity, this will be the guiding principle for Vinatex to propose to the Government regarding the salary mechanisms for management staff and employees,” Mr. Pham Van Son emphasized

Reporters

Translated from the article published in the May 2024 issue of Textile-Garment and Fashion Vietnam Magazine.

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