Small textile groups left behind as big brands take on recycling

High input prices and sustainability trends in the garment and textile industry are challenging businesses, Photo: Le Toan

Nguyen Phuong Chi, chief strategy officer at Century Synthetic Fiber Corporation, told VIR that high demand for recycled materials is coming from foreign-invested companies producing garment products for world-renowned brands.

“Since 2016, we have initiated the production of recycled yarn in collaboration with Unifi, one of the world’s leading innovators of recycled yarns headquartered in the United States,” Chi said.

Century Synthetic Fiber is selling recycled yarn 20-40 per cent higher than virgin yarn depending on each product, which is nearly $3 per kg. According to Chi, price is not the main concern for major brands when changing from virgin to recycled materials.

For example, Nike sells a shirt using recycled yarn at over $60, with material costs ranging from 50-60 US cents per shirt.

“New supply capacity is the greatest concern for buyers. It means the supply chain should cover traceability, environmental standards, social obligations, chemical content, and labelling,” Chi said. “Customers only purchase recycled GRS-certified yarn, a voluntary product standard for tracking and verifying the content of recycled materials in a final product.”

Vietnamese manufacturers around the country are turning to recycled materials as major fashion brands including Nike, Adidas, Decathlon, Puma, H&M, and Uniqlo are switching their focus to sustainable development to protect the environment.

While Vietnam is attracting investment into the fibre segment, few projects use new technologies to produce recycled fibres from plastic waste. The country’s fibre production capacity is not as large as other countries in Asia, such as Indonesia, Bangladesh, and also Pakistan.

Many factories in Vietnam are using obsolete technologies manufactured by many companies with different standards. This has led to them churning out traditional fibres with low added value and low quality.

The country has so far developed 10 million spindles, of which 65 per cent come from foreign-invested firms, 25 per cent from private firms, and the remainder from state-owned enterprises, according to data from the Vietnam National Textile and Garment Group.

Century Synthetic Fiber is only the second company in Vietnam with the capability to produce recycled fibres. Another company is Formosa Hung Nghiep, a wholly-owned Taiwanese company with an output of 39,000 tonnes of synthetic fibres per year.

The global recycled textiles market size was valued at $5.6 billion in 2019 and is anticipated to generate $7.6 billion by 2027, according to Allied Market Research. The market as a whole reached a value $5.02 billion last year, according to market researchers IMARC Group.

As per a report by securities firm VCBS published in March this year, Vietnam has a chance to increase its export of fibres, especially recycled ones, into the US and the EU. As the world’s two largest textile import regions, the US and EU tend to reduce textile material imports from China while increasing imports from other countries.

In 2021, the value of imported fibres, yarns, and textiles from China to the US fell from 23.5 to 19.1 per cent, while the value in the EU fell from 52 to 45 per cent.

Investments in Vietnam’s textile and garment industry are often more attractive than elsewhere, mainly due to a more affordable workforce and tariff reductions under new-generation free trade agreements.

The rules of origin under these agreements support the production shift trends in apparel as well as upstream manufacturing activities such as yarns and recycled fabrics.

The Vietnam Textile and Apparel Association estimates that the industry in Vietnam will need 10 billion metres of fabric, equivalent to $10 billion in investment capital by 2025.

Thanks to the manufacturing relocation trend, Vietnam’s textile and garment industry can increase the proportion of domestic fabrics to 67-68 per cent, address the supply shortage and increase the order value by 2025.

Currently, the localisation rate of Vietnam’s textile and garment industry stands at around 47-48 per cent.