Small textile groups left behind as big brands take on recycling

July 17, 2022 | 10:00
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Some of Vietnam’s biggest textile groups are picking up on the worldwide trend of utilising recycled materials, with several largest global brands increasingly switching to greener methods.
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.

Vu Duc Giang - Chairman Vietnam Textile and Apparel Association

Vietnamese textile exporters are facing some challenges given the country’s major export markets, like the European Union, the United States, Japan, and South Korea, have regulations related to environmentally-friendly production processes such as renewable energy usage, water-saving, and wastewater treatment.

Sustainable development has been a major trend in the global textile industry and Vietnamese businesses are not immune to this trend. Thus, they need to incorporate sustainability into operations to increase their exports to major markets. This helps them to unveil opportunities from free trade agreements. For example, the EU is currently importing $4.5 billion of textile and garment products from Vietnam.

We have set a target that by 2023 the members of our Sustainability Committee will reduce their energy consumption by 15 per cent and water consumption by 20 per cent. We also encourage local textile and garment enterprises to invest in equipment, technology, premises, and factories to comply with the environmental and water requirements of various international organisations.

MARC BECKMAN - FABRIC Asia project manager German Development Agency

Climate change response requires the joint efforts of global brands in order to increase the capacity of the factories in the entire supply chain. This is because factories can have the largest impact on the environment and also cause the highest emissions. This collaboration is vital and of the utmost importance.

We have held a training course named ‘Climate Action’ course to provide basic and specialised knowledge for the fashion industry on climate change, including solutions to cut greenhouse emissions as well as promote energy efficiency and renewable energy.

The course content was developed in cooperation with the United Nations Framework Convention on Climate Change and 13 brands, including Decathlon. Decathlon is one of over 120 fashion brands and retailers committed to complying with the principles and goals in the Fashion Industry Charter for Climate Action.

These novel methods will improve the factory’s capacity to safeguard the environment, contributing to an improvement in overall competitiveness.

By Ky Anh

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