U.S. quotas snarl Vietnam clothing shipments
HANOI - Millions of
dollars in clothing shipments from
Vietnam to U.S. retailers such as J.C.
Penney (nyse: JCP - news - people)
have been stranded as a result of new
quota arrangements under a textiles
pact with the United States.
The pact, signed in April, set quotas on
38 types of apparel and textile from
Vietnam and capped exports to America
at $1.7 billion in 2003.
U.S. textile makers led the charge on
the curbs, citing fears that rapid growth
in cheaper imports from an old war foe
would cause job losses.
Under the agreement, Vietnam set
quotas on factories. But some factories
contracted to fill U.S. orders did not get
quota allocations.
Clothes were stacking up at
Vietnamese ports as Hanoi moved to
allow manufacturers to trade quota to
better match orders, industry officials
said.
Giant department store operator J.C.
Penney is the biggest buyer of Vietnam
clothing, taking up about 10 percent of
the exports in 2002.
"This is a significant problem Vietnam
is facing," Rodney Birkins, J.C.
Penney's director of sourcing, told
Reuters on a recent visit to Hanoi.
He said the operator of 1,100
department stores had $130 million in
apparel that needed to be shipped in
the next 75 days, much of it knit cotton
tops and pants, Vietnam's dominant
textile categories.
In the first half of 2003, textiles and
garments earned Vietnam $1.75 billion,
just behind crude oil at $1.97 billion.
School clothing
The J.C. Penney shipments are for the
retailer's back-to-school line, one of the
most lucrative seasons for stores. The
firm sourced more than $80 million
worth of apparel from Vietnam last year.
Seventy percent of the quota allocations
for 2003 were given to 396 producers
who exported the most in 2002. Around
20 percent were provided to first-time
exporters. Rural and other factories
were given the balance of 10 percent.
Vietnamese factories have been
pleading for help.
Le Quoc An, the chairman of the
industry group Vietnam Textile and
Apparel Association (Vinatas), said
nearly half the 2003 quotas were
shipped out in May and June alone.
He said the Vietnamese government
would allow factories that have been
awarded quotas but have no orders to
trade those to manufacturers who have
orders but no quotas.
U.S. stores are racing against time.
Commissioning the orders takes at
least four months. Stores are already
looking to their autumn and winter
lines.
Another buyer for a U.S. women's
clothing chain said her company has
stopped taking orders.
"After August we have nothing to ship,"
she said, adding that boxes of apparel
"are stacked up at ports" in Vietnam.
This year, the buyer's company was
expected to ship $60 million worth of
apparel from Vietnam. "But we could
easily have done $100 million," she
said.
Vietnamese clothing exports to the United States leapt to $950 million last year from just $50 million in
2001. For many years after the Vietnam War U.S. firms were banned from buying the Southeast Asian
country's products.
Vietnam was considering borrowing quotas from 2004, the textile group's An said.
"We are explaining our situation with our big buyers and trying to find quotas as much as possible for
them," he told Reuters.
For the others, "we just have to apologise", he said.
By Christina Toh-Pantin - Reuters - July 9, 2003.
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