The local textile industry stands to reap great benefits from the EU-Vietnam Free Trade Agreement, as demonstrated by Phong Phu JSC becoming a supplier to global fast-fashion brands like Zara, H&M, and Levis.
|Phong Phu may supply denim to Advance Denim, entering the supply chains of Zara and H&M. Source: vnexpress.net |
Phong Phu JSC has just signed a co-operation agreement with China-based Advance Denim Ltd. to establish Advance Sico Textile Ltd. The partnership will help the firm reach the annual export target of 12 million metres of denim, said Pham Xuan Trinh, Phong Phu’s general director, at the ceremony of summarising business activities in the first half of 2019.
“Advance Denim previously supplied goods for Zara, H&M, Levis, and others via its venues in Thailand and China, now they chose Vietnam to produce goods,” said Trinh.
The company plans to visit Phong Phu’s factory in September and the Vietnamese firm is completing denim samples for the company’s appraisal. Trinh said, “If the samples reach Advance Denim’s standards, the company will utilise our goods instead of imports.”
|In 2019’s first six months, Phong Phu hit VND1.934 trillion ($84.1 million) in revenue and VND106 billion ($4.6 million) in profit. Its export turnover reached $24.4 million, with 67 per cent coming from towels, 12.3 per cent from fibres, 18 per cent from garments, and 2 per cent from fabrics. |
It could be seen that thanks to the EVFTA, the local textile firm has been blossoming and saw a lot more successful tie-ups with overseas partners. Accordingly, foreign investors tend to keep increasing their business in Vietnam to enjoy the 0 per cent tariff rate of the EU, and Advance Denim is one of these investors.
Accordingly, as soon as the agreement comes into force, the EU will eliminate 85.6 per cent of tariff lines, covering 70.3 per cent of Vietnam’s export turnover to the EU. After seven years since the agreement’s entry into force, the EU will abolish import duties on 99.2 per cent of tariff lines, covering 99.7 per cent of Vietnam’s export turnover, the EU also pledged to provide Vietnam with 0 per cent tariff-rate quota.
On the other hand, the new partnership may be a motivation behind Phong Phu’s target of expanding exports to Australia and North America.