Vietnam, once a popular destination for textile and other industrial pfer a year ago, is now facing an economic crisis.

Shanghai Securities Daily reporter recently learned that Vietnam's turbulent economic situation has caused some textile enterprises in mainland China and Taiwan to suspend investment plans in the region, and some enterprises have suspended construction in local factories.

Many industry experts and business owners in an interview with Shanghai Securities News reporter said that the Vietnamese crisis will surely slow down the pfer of low-end textile processing industry to Vietnam, but the impact on China's textile industry will not be too great.

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The pace will slow down.

In recent years, due to the cheap labor and preferential policies of Vietnam, many labour intensive industries in the Pearl River Delta and the Yangtze River Delta and Taiwan funded enterprises in Hong Kong have taken Vietnam as an ideal place for industrial pfer.

Among them, the textile industry is particularly "high" in Vietnam.

In 2007, Vietnam's textile exports amounted to US $7 billion 800 million, and it was expected to reach US $9 billion 500 million in 2008.

According to the Vietnam Textile Association, there are more than 2000 enterprises in Vietnam's textile industry, 500 of which are foreign-funded enterprises, and more than 200 textile enterprises in mainland China, and 150 in Taiwan, China. The number of textile workers in Vietnam has reached 500 thousand, accounting for 22% of the total number of industrial workers.

Today, under the continuous depreciation and severe inflation of Vietnam's currency, the comparative advantage of its low labor cost has been greatly reduced, and the investment environment is still in crisis. This will undoubtedly cause greater risks to the textile enterprises and traders who are investing in Vietnam, so that many textile enterprises preparing for the pfer of industry to Vietnam will be more cautious.

"As a competitor of China's labor-intensive products export, the crisis will make the pfer of funds and pfer of orders will be affected, this is affirmative."

Zhao Yumin, director of the international marketing department of the Ministry of Commerce, clearly stated, "but this is a short-term result, or is it hard to say in the medium to long term?"

Zhao Yumin's view that Vietnam's depreciation will benefit Vietnam's exports is not only the Vietnam shield's devaluation, but also whether the supply of raw materials and pportation can be followed. For example, social instability will cause greater losses, and the export effect of currency depreciation will not always be enjoyed.

"If the price of Vietnam itself is soaring, it may offset the exchange rate difference.

Vietnam's textile machinery and equipment, raw materials and garment accessories are mainly imported from China, Japan and South Korea. Part of the cost is relatively rigid, and the total cost of exports will not drop significantly.

Trend is hard to reverse

Is the slowdown in textile industry to Vietnam conducive to China's textile industry?

Guo Jin securities analyst Zhang Bin believes that this will not have much positive impact on China's textile industry. "In addition to Vietnam, the largest substitutes are India and Vietnam is only a small part."

The cost of labor in textile production is very important. China's labor costs will not have any advantages. The loss of low-end products will not be reversed simply because of the Vietnam crisis. "

The deputy general manager of a garment factory in Zhejiang also told reporters that "these processing trade oriented capacity even reflow to China is not a good thing for the upgrading of China's textile industry."

However, "Vietnam crisis may also be an opportunity for the development of China's textile industry. If China's textile enterprises can actively carry out market research in this period and make adequate preparations for entry, it will open up new living space for future development and better participate in inter national competition."