Prospects abound for Vietnam to become PPE hub

Illustration photo. Source: internet

According to the latest findings by the International Finance Corporation, Vietnam’s personal protective equipment (PPE) manufacturing capacity surged with a 6-fold jump in production in 2020.

There are a wide variety of categories in PPE such as respirators, head and face protection, hearing protection, eyewear, and high visibility clothing, and these solutions are ever more critical in people’s daily lives either for industrial, healthcare, or the consumer market.

According to Jacky Kang, country leader of 3M Vietnam, there has been a growth in PPE demand in Vietnam recently, indicating that people have become more conscious about their health and safety. Nevertheless, the numbers pale in comparison with the working population of the country. There remains, as a result, an enormous untapped potential market in the PPE industry.

As one of the leading global PPE manufacturers, 3M is continuing to innovate and create new products to support wellbeing and safety during the pandemic. Some of them entail new advanced filtering masks and respirators for consumers and businesses.

Elsewhere, Top Glove Corporation Bhd last year announced its plan to develop its first glove factory in Vietnam at Bau Bang Industrial Zone in the southern province of Binh Duong. Estimated capital expenditure for the first phase is about $70 million, while the factory’s annual initial production capacity is approximately 4.8 billion gloves from its 20 production lines.

Meanwhile, the Japanese government has assisted a number of their companies to make medical devices, face masks, and protective clothes in Vietnam. Japanese apparel maker Matsuoka Corp. plans to invest around $28 million into its Vietnamese manufacturing unit An Nam Matsuoka Garment Company to produce protective clothing.

Other Japanese investors also secured Japanese government subsidies to expand PPE production in Vietnam, like Nitto Denko Corporation producing materials for N95 masks, Shingoshu Co., Ltd. producing PPE and its material fabric, and Showa Co., Ltd, making medical masks, as well as Able Yamauchi making medical protective clothing.

In addition to foreign players, some local manufacturers also identify business in this field. As traditional suppliers struggled to meet the growing worldwide demand, Vietnamese textile manufacturers – who in 2020 saw their orders drop – decided to leverage their expertise and untapped production capacity to start producing PPE, according to Filippo Bortoletti, senior manager of International Business Advisory at consultancy firm Dezan Shira & Associates.

Data by the Ministry of Industry and Trade showed that Vietnam is home to more than 6,000 garment and textile factories employing about three million workers. Such significant industrial capacity makes it well positioned to take an important role in the global PPE supply chain and results are so far moving in the right direction.

Bortoletti said that PPE manufacturers first targeted the domestic market due to restrictions imposed on exports. But as such restrictions were lifted over a year ago, the PPE made in Vietnam started circulating worldwide.

“This happened naturally, and the diversification of the PPE supply chain worldwide is beneficial to avoid future shortages and disruptions, as COVID-19 taught us. Therefore, there is an interest – not only locally – to foster the development of Vietnam’s PPE industry to smoothen the manufacturing process,” he said.

According to insiders, it is likely that the global demand for PPE will stay robust and some even forecast a steady increase in demand until 2025. When the pandemic is over, the demand for PPE will likely drop, but not plummet, as governments and consumers are likely becoming more sensitive towards health and prevention.

Pham Xuan Hong, chairman of the Association of Garments-Textiles-Embroidery-Knitting in Ho Chi Minh City, said that many textile manufacturers had shifted production to PPE in response to the health emergency and to mitigate losses caused by cancelled orders for garments.

Another potential sector for PPE manufacturers is the development of respirators. Kang from 3M Vietnam pointed out that they can be considered as a highlighted category observing significant changes and growth, and there are many factors leading to the growth of this category.

“Firstly, it is the impact of the pandemic and media endorsements that help promote a better understanding of respirators to ordinary consumers,” Kang said. “Secondly, the fast growth of Vietnam’s middle class makes respirators more accessible for far more consumers. Finally, some companies have expanded their distribution to end-users, enabling consumers to easily purchase high-quality respirators in their residential areas.”

While PPE manufacturing is not likely to be a long-term business for most current producers, it could become a core business for some. Bortoletti from Dezan Shira & Associates added, “I see the opportunity of manufacturing PPE as very short-term solution to utilise untapped production capacity and exploit a ‘new’ market. A few local players might seriously consider switching towards PPE for the long-term.”