Vietnamese garment giant Garmex Saigon has seen its revenue shrink by 90% this year. Vietnam originally relied on textile exports as its main economic pillar, but due to the global economic downturn, global consumption power has been greatly reduced. This ultimately led to a significant drop in the number of orders received by Vietnam’s garment industry. Faced with this dire situation, Vietnamese garment giant Garmex Saigon continues to lay off employees on a large scale, with nearly 2,000 people laid off this year. According to Garmex Saigon, the recent order reception situation is very bad, and there were even no orders in the third quarter of this year. Only other service businesses have a small amount of revenue, and they have lost money for four consecutive quarters.
Garmex Saigon said that due to deep losses, it is considering selling non-essential real estate and considering manpower requirements, which can ultimately reduce operational pressure. Amid the global economic downturn, Vietnam’s garment industry is facing an urgent situation. Official statistics from Vietnam show that in the first five months of this year, the number of unemployed people in the local garment industry reached 70,000. The Vietnam Textile and Apparel Association (VITAS) said that in the first five months, the export value of Vietnam’s textile industry dropped by 21% year-on-year. Garmex Saigon is a leading garment manufacturer in Vietnam with five factories. It still had thousands of employees in 2019, and its annual profits at that time could reach tens of millions of dollars. After 2022, due to the impact of the global economy, big brands such as Gap, Nike and Adidas have been affected and have reduced orders, causing Vietnam’s garment industry to be severely hit. Ultimately, Garmex Saigon’s export orders in 2022 decreased by 93% compared with the previous year. In the first nine months of this year, Garmex Saigon’s cumulative revenue decreased by 96.7% compared with the same period last year.
Since large companies in Vietnam such as Adidas and Nike have no orders this year, they are also gradually reducing their scale. In order to withstand the cold winter, these companies may lay off thousands of people. Vietnam’s largest clothing manufacturer, which employs thousands of people, is also facing a drop in orders. So it had to take some small orders to maintain the economy. It was difficult to see orders of this size appearing in such a large company before. The Vietnam Textile and Apparel Association (VITAS) also conveyed a similar message. In the first five months, clothing exports fell by 21% year-on-year, even 5% lower than the same period in the middle of the epidemic in 2021. VITAS said they are also cutting expenses and even selling some assets to survive. In order to make ends meet, the company also had to accept unusual orders. To some extent, taking small orders and finding new markets helps companies avoid layoffs due to a lack of orders. VITAS predicts that Vietnam’s total clothing exports will reach $40 billion this year, 12-15% lower than the target.
Due to the impact of the global economy, Vietnam’s garment industry can be said to be struggling. A sharp drop in orders and consumers paying increasingly lower prices for their products have companies taking some steps to survive. Some companies have chosen to lay off employees to reduce costs. There are also some companies that choose to accept small orders or unusual orders to maintain profits. In this era of economic downturn, how to continue to survive has become something that many large companies need to think about. The way each company should respond and the subsequent plans are crucial to the company’s survival.
