Stitching up a success story

The plan to expand production at Hung Yen Garment Joint Stock Corporation (Hugaco)’s Gunyong Garment Enterprise will be extended to 2013 instead of late 2012 as earlier declared.

The step was taken, not due to Hugaco’s financial strains, but a flexible move to lessen pressures on production and business amid a low textile and garment consumption in the global market.

Accordingly, in 2013 Hugaco will pump VND40-50 billion ($2 million) into enlarging Gunyong Garment’s factory space to accommodate 24 garment lines with scope of 1,500 labourers.

“In the next five years, Hugaco will invest in five to eight plants with 60 additional production lines to bring export value to $300 million per year. Besides, the firm will mull further acquisitions to shortly perfect its production and supply chain,” said Hugaco’s general director Nguyen Xuan Duong.

One year ago, Hugaco spent $1 million tantamount to VND20.6 billion on taking over South Korea-backed Gunyong Garment. This was one of rare cases in which a local firm bought out a foreign-invested business in Vietnam, particularly in textile-clothing field.

At this time, industry players assumed taking over an enterprise with state-of-the art production lines and 5,000sqm total space including 4,000sqm workshop with over VND20 billion only was a good investment.

After the buy-out, Hugaco embarked on restructuring Gunyong Garment to soon resume production. Currently, the enterprise consists of six jacket and trouser production lines employing 350 labourers from 75 initially.

Specifically, albeit resuming production for a short time, Gunyong Garment has become one of important links to help Hugaco fulfill export orders. The average income of labourers has exceeded VND3 million ($145) per month which is 2.5 fold more than in the period before the take-over.

In the acquisition, Hugaco benefited from active support by parent company Vinatex as the move matched the garment sector’s development trend.

In mid-August, Minister of Industry and Trade Vu Huy Hoang asked the Department of Light Industry to work with relevant state bodies in making proposals to the State Bank sourcing medium and long-term capital support for firms operating in textile-garment, footwear and wood processing areas to enable purchase of cutting-edge foreign-made equipment.

Vinatex may consider acquiring some new plants in the forthcoming time serving domestic and export market demands, according to Vinatex deputy general director Le Tien Truong.