INTRODUCTION - 5 522522 22 S2 2 2 2x ren rườn 1 1 Ratlonale of the research - + + 5+ +++++x+x+x+x+tztrtrtexrxrxrxrrrrrrrrrrrrrrrrxre 1 2 Objectives and missIlons of researchh . - +22 ++s+s+s+z+zzzz+zzz+zzzzzs+ 2 2.1 Objectives of research 8
Missions of researchh + 5+ 2z 252 S 2E 2x28 SE SE E2 2E xe crcrrcrr re 2 3 9)01198:0i 80000: 0
To accomplish the above research purpose, the thesis has the following research missions:
— Generally analyze research related theories, empirical studies on factors affecting Vietnam textile and garment exports
— Systematize theoretical bases on factors affecting Vietnam textile and garment exports
— Analyze the garment and textile export situation of Vietnam
— Analyze factors affecting Vietnam textile and garment exports from a macro perspective;
— Policy implications to promote Vietnam textile and garment exports
The thesis focuses on analyzing the factors affecting Vietnam textile and garment exports and propose policy implications
Research SCOpeC AT
—Scope of research in terms of content: The thesis studies specifically in the factors affecting Vietnam textile and garment exports and provide policy implications to improve the situation
This thesis investigates the export factors influencing Vietnam's textile and garment industry, focusing on the country's trade with 35 major importing nations, including the USA, China, Japan, and several European countries The research analyzes data related to three specific HS codes—61, 62, and 63—providing insights into the dynamics of Vietnam's textile exports within the global market.
—Scope of research in terms of time: The study uses secondary data in the period 2001-2020
— What are the the factors affecting Vietnam textile and garment exports?
— What are the impacts of the factors on Vietnam textile and garment exports?
— What measures should be taken to promote Vietnam textile and garment exports?
Research Methods
The author uses the following methods:
Firstly, the classification and systematization of the theory method
Secondly, the analysis-synthesis method
Thirdly, the descriptive statistics method
Use the statistical tests to choose the method that fits the model, check the defects of the model, and fix them
Firstly, summarize the theories related to the factors affecting export
Secondly, as a reference for future studies
Thirdly, this will be the foundation for further studies based on additional factors and new factors
The structure of the research thesis consists of 5 chapters:
This chapter provides general information about the reason for choosing the topic, research objectives and questions, research object and scope, research methods, significance, and contributions of the study
This chapter presents theories, empirical studies at home and abroad on factors affecting export and evaluates those empirical studies Thereby building a suitable research model
Presenting methods to carry out research steps such as research process, research methods, data sources, analysis tools, model testing
Chapter 4: Research results and discussions
This chapter examines the current status of Vietnam's textile and garment exports, highlighting key factors influencing export turnover It includes an analysis of statistical hypothesis testing results and discusses limitations while suggesting directions for future research The author outlines the research objectives, questions, and scope, providing a comprehensive overview of the topic and the methodologies employed Additionally, it reviews relevant theories and models related to international trade, systematically organizing research findings on export determinants to select an appropriate model for studying the factors affecting Vietnam's textile and garment export turnover.
2.1.1 Definition of export activity and export turnover
Firstly, the definition of export activity
Export is a business activity that extends beyond national borders or is an international trade between one country and another country (Nguyen Van Tuan, Tran Hoe, 2008)
Exporting goods involves transferring products from one country to another for sale, utilizing money or bartering for goods of equivalent value Essentially, exports serve to deliver goods to foreign markets, enabling their use and enhancing their value globally.
Article 28 of the 2005 Commercial Law defines the export of goods as the act of transporting goods out of the Socialist Republic of Vietnam or into designated special zones within the country, recognized as exclusive customs zones under legal provisions.
Exporting goods involves the exchange of products and services between countries through market relationships, allowing a nation to leverage its advantages and generate benefits for its economy.
Secondly, the definition of export turnover
The General Statistics Office defines export turnover as the total value of goods exported, expressed in USD For declarations made in currencies other than USD, the conversion to USD is based on the foreign currency exchange rate announced by the relevant authorities.
Currently, export activities are diverse and occur in various forms According to the practical processes of enterprises and Vietnamese laws and regulations, these activities primarily focus on three main forms.
Direct export involves a seller and buyer engaging in direct communication through meetings, correspondence, and telegrams to negotiate goods, prices, and terms This method fosters a personal relationship between the parties, enhancing the negotiation process and ensuring clarity in the transaction.
Eliminating the middleman allows for higher profits compared to other sales methods However, sellers must quickly gather market information and adopt appropriate strategies to mitigate risks associated with fluctuating exchange rates and changing trade policies in importing countries.
International sales and purchases of goods often involve third-party intermediaries, such as agents and brokers, who facilitate the transaction for a fee.
Intermediaries are widely utilized in the market due to their deep understanding of market dynamics, which increases the potential for high profits However, this approach can diminish the seller's earnings, as they must compensate intermediaries for their services.
Re-exporting involves purchasing goods in one country and selling them to other countries without any processing in the re-export country This transaction aims to capitalize on price differences, allowing businesses to earn profit by reselling these goods at a higher price in international markets.
The role of exports is shown in several aspects below:
GDP is gross domestic product
The Keynes equation (1963) shows that if exports increase, gross domestic product also increases Export turnover is one of the four factors that directly affect the gross domestic product
Exports play a crucial role in economic restructuring by fostering product development that maximizes resource efficiency and leverages national strengths The ongoing scientific and technological revolution significantly influences global production and consumption patterns, leading to substantial changes Consequently, adapting to these shifts through economic restructuring during industrialization and modernization is an essential journey for all nations.
Export serves as a crucial source of capital for importing advanced technology, which is essential for the industrialization and modernization of a country To accelerate development and compete globally, nations need capital to acquire modern machinery and equipment While capital for imports can originate from various sources, such as government spending and debt, export remains the most significant contributor.
Export activities play a crucial role in job creation and income enhancement for workers By focusing on producing goods for export, Vietnam can attract a significant workforce, leading to higher wages and improved living standards With its abundant labor supply, increasing export production not only addresses unemployment but also ensures more stable incomes for individuals in the labor market.
Fifthly, exports contribute to expanding and promoting foreign economic relations, enhancing the country's economic position in the world market
2.2.1 The Heckscher-Ohlin theory and revealed comparative advantage
The Heckscher-Ohlin theory, proposed by economists Eli Heckscher and Bertil Ohlin, explains comparative advantage through national variations in the availability of production factors such as land, labor, and capital Countries possess different levels of these resources, leading to varying factor costs; typically, the more abundant a production factor, the lower its cost This theory predicts that nations will export goods that heavily utilize their locally abundant resources while importing goods that rely on scarce factors Unlike Ricardo's theory, which focuses on productivity differences, Heckscher-Ohlin emphasizes the role of factor availability in shaping international trade patterns, advocating that free trade is advantageous for all involved nations.
RESEARCH METHODS .Ẳ 2222225 S2 SE cz szxczcrcreerec 23 E3 he
Qualitative research methods +2 +5 szs+zz£+zSzzSzzczzczxczzczczrccec 24 1 Classification and systematizatlon ofthe theory method
3.2.1 Classification and systematization of the theory method
The classification method organizes scientific documents into a coherent system based on shared characteristics and developmental trajectories of knowledge and problems This approach simplifies the complex structure of scientific content, making it more accessible and usable for researchers focused on specific topics.
The theoretical systematization method organizes scientific knowledge into coherent frameworks based on theoretical models, enhancing the clarity of research objects This approach adopts a system-structure perspective in scientific inquiry, aggregating diverse information from various sources and documents By employing this systematic methodology, researchers can establish a well-structured foundation to develop entirely new theories.
Classification and systematization are interconnected methods essential for developing profound and comprehensive knowledge Effective classification incorporates elements of systematization, ensuring that the classification process is thorough and precise Together, these steps lay the groundwork for deeper understanding and insight in any field of study.
The classification and system method is applied by the author in section 2.1 to present export issues and trade theories
Scientific research methodology involves a theoretical analytical approach that examines various documents related to a subject, breaking them down into components to achieve a comprehensive understanding over time This method aims to identify trends and research perspectives of different authors, allowing researchers to extract relevant information for their topics Theoretical synthesis methods connect various aspects of the gathered information to form a cohesive and in-depth theoretical framework on the research topic While analysis and synthesis are distinct processes, they are dialectically unified; analysis lays the groundwork for synthesis, which, in turn, enhances the depth of analysis.
The method of analysis - synthesis is applied by the author in section 2.2 to synthesize empirical studies at home and abroad on export, and evaluate these empirical studies
This method outlines the fundamental characteristics of data collected during the thesis research By analyzing criteria such as mean, maximum, minimum, and standard deviation, the author aims to provide a comprehensive overview of garment and textile export activities, along with the factors influencing Vietnam's textile and garment exports.
Thus, the descriptive statistics method is applied by the author in section 4.2.1 of the thesis
This study employs a comparative method to analyze the fluctuating trends in Vietnam's textile and garment export activities over recent years By evaluating changes in quantity and turnover across various research markets, the research aims to identify key patterns and insights within the textile and garment sector This approach is commonly utilized in social science research to assess and interpret dynamic phenomena.
Thus, this comparative method is applied by the author in section 4.1 of the thesis
3.2.5 Quantitative research method using the panel data model
This is a method to find out the dependency relationship of one variable (dependent variable) with other variables (independent variable)
Panel data integrates both time series and cross-sectional data, as highlighted by Hsiao and Cheng (1986) In the regression analysis of panel data, three primary models are utilized: Pooled Ordinary Least Squares (OLS), Fixed Effects Model (FEM), and Random Effects Model (REM).
This article builds upon the empirical research of domestic and international studies concerning export factors, specifically adapting the model established by Chan et al (2007) The rationale for this adaptation includes the focus on the garment and textile industry, which is consistent with Chan et al.'s original study, and the shared natural, social, and cultural conditions of Vietnam and China Additionally, the author modifies the model by eliminating certain variables to better align with the specific context of Vietnam.
The model is written in natural logarithmic form as follows:
Ln(EXjjt) = Bo + B,Ln(GDPVN,_1) + B2Ln(GDPNK,_;) + 8ạLn(PGDPVN,¡)
+ B,Ln(DIST;,) + Bs;Ln(POPGRATE;) + BgLn(RER,) + uit
EXijt: Vietnam textile and garment export turnover to importing country j in year t GDPVN:‘1: actual GDP of Vietnam in year t -1
GDPNK,.1: actual GDP of importing country in year t -1
PGDPVN:-1: actual GDP per capita of Vietnam in year t-1
DIST: geographical distance from Hanoi to the capital of the importing countries POPGRATE;,: population growth rates of importing countries in year t-1
RERjj: the real exchange rate of VND to the currency of the importing country in year t
Explaination of research variables and hypotheses e GDPVN.+
In the previous year, Vietnam's actual GDP (in million USD) indicated a rise in the total value of goods and services produced within the country, suggesting an enhancement in supply and export capacity Consequently, it is anticipated that the size of Vietnam's economy will positively correlate with the export turnover of its textile and garment sector This leads to the hypothesis proposed by the author.
H: The variable GDPVN 1 has a positive correlation with the variable of garment and textile export turnover of Vietnam eô GDPNK¿Ă
In year t-1, the actual GDP of major importing countries (measured in million USD) indicates a rising demand for goods, suggesting a positive correlation with the value of Vietnam's textile and garment exports Therefore, the author hypothesizes that an increase in the GDP of these importing nations will lead to higher export values for Vietnam's textile and garment industry.
H: The variable GDPNK;-1 has a positive correlation with the variable of garment and textile export turnover of Vietnam e PGDPVN:‘.1
In the previous year, Vietnam's actual GDP per capita, measured in thousand USD per person, reflects the country's capital wealth This metric is anticipated to have a positive correlation with the export turnover of Vietnam's textile and garment industry Consequently, the author proposes the following research hypothesis.
3: The variable PGDPVN;,.1 has a positive correlation with the variable of garment and textile export turnover of Vietnam e DIST
The geographical distance from Hanoi to the capitals of importing countries significantly impacts transportation costs, with greater distances resulting in higher expenses This increase in transportation costs can restrict the export and import of goods, suggesting a negative correlation between geographical distance and the value of Vietnam's textile and garment export turnover Therefore, the author proposes the following research hypothesis.
H4: The variable DIST; has negative correlation with the variable of garment and textile export turnover of Vietnam e POPGRATEj
In year t, higher population growth rates in importing countries correlate positively with an increase in customer numbers, which boosts consumption and subsequently raises the demand for imported Vietnamese garments and textiles This relationship suggests that as the population growth rate of importing countries rises, so does the export turnover of Vietnam's textile and garment industry Therefore, the author proposes the following research hypothesis.
Hs: The variable POPGRATEj has a positive correlation with the variable of garment and textile export turnover of Vietnam e RERj
The real exchange rate of the Vietnamese Dong (VND) against the currency of importing countries significantly influences export prices A depreciation of the VND relative to foreign currencies results in lower prices for exported goods in foreign currency, thereby increasing demand and boosting export output Consequently, it is anticipated that the real exchange rate will positively correlate with Vietnam's textile and garment export turnover This leads to the formulation of the following research hypothesis.
H6: The variable RER, has a positive correlation with the variable of garment and textile export turnover of Vietnam
3.2.5.2 Methods of estimating the panel data regression model
Firstly, the Pooled OLS (Pooled ordinary least squares) model
The Pooled OLS method operates under the assumption that there are no differences among cross units, applying a single constant across all of them This assumption holds true only when the cross units are identical, a scenario that is seldom encountered in real-world applications.
RESEARCH RESULTS AND DISCUSSIONS
Overview of Vietnam textile and garment export acfIvities
4.1.1 The structure of garments and textiles products in export
Despite the abundance and diversity of textile and garment products, many offerings in new markets remain basic, such as cotton towels and gloves High-quality combed cotton yarn is essential for shirts and premium knitted items, utilizing OE yarns to minimize input costs While the export market for cotton towels is significant, its overall share remains limited There is a notable scarcity of sports knitwear and jeans crafted from high-elasticity materials like lycra and spandex Additionally, high-density jackets made from microfiber yarn are currently unavailable, as are suit items produced with a blend of modified acrylic and wool.
Vietnam's product design, particularly in the garment industry, suffers from inadequate investment in fundamental resources, information, and market access While the Vietnam Fashion Modeling Institute handles much of the design work, research efforts are limited due to the absence of a dedicated team for research, design, and trial production within production and business establishments This gap includes a lack of technological experts in textiles and finishing treatments, as well as skilled designers and fashion models Consequently, the limited capabilities in design and production quality hinder the competitiveness of Vietnamese goods in the global market.
In addition, the shortage of domestically produced raw materials for the garment industry in terms of quantity, type and quality (50% of goods exported to the
EU must import materials from abroad) has made the price of our products more expensive We are much higher than some countries like China, India, etc
— Cotton production does not meet 1% of domestic demand
Vietnam's cotton growing and spinning industry has a rich history, but it has emerged as a significant sector only in the past two decades amid the country's industrialization and modernization efforts The Vietnam Cotton and Spinning Association (VCOSA) reports a decline in national cotton production, which reached 12,000 tons in 2000 but fell to just 3,500 tons by 2010, representing only 30% of the 2000 output.
In 2000, domestic cotton satisfied approximately 20% of spinning demand, but by 2010, this figure plummeted to just 1.3% This decline is alarming, particularly given the erratic fluctuations in global cotton prices, which surged nearly 2.2 times in 2011, posing a significant threat to the stable growth of Vietnam's spinning and textile industries.
— Most of domestic cotton is imported
The textile industry in the country has a domestic demand exceeding 1 million tons of cotton; however, local supply meets less than 1% of this demand Consequently, the vast majority of cotton is imported from countries such as the United States, India, Brazil, Australia, and several African nations, including South Africa, Mali, and Burkina Faso.
In the first half of 2021, Vietnam's cotton imports reached approximately 886,000 tons, valued at $1.596 billion, reflecting a 13.5% increase in volume, 26.5% in value, and an 11.4% rise in unit price compared to the same period last year Foreign Direct Investment (FDI) companies, including Texhong, Brotex, Kyungbang, Tainan, and Huafu, consistently accounted for over 50% of Vietnam's total cotton imports The United States remains the top exporter of cotton to Vietnam, followed by Brazil and India, with major suppliers such as Sunray, Bros, Paul Reinhart, Louis Dreyfus, Olam, and Viterra collectively representing more than 50% of the market share.
Polyester is mainly imported from abroad Polyester is a petroleum product Currently, Vietnam has projects to exploit oil such as Nghi Son (Thanh Hoa), Vung
Vietnam's textile and garment industry relies heavily on imported polyester inputs, primarily sourcing around 250,000 to 300,000 tons of polyester fiber annually from Taiwan and other Southeast Asian nations Despite having local crude oil production in regions like Phu Yen, Ba Ria Vung Tau, and Quang Ngai, the focus remains on crude oil rather than producing inoculants like PET resins, resulting in a significant dependency on imports, especially from China.
The Dinh Vu synthetic polyester fiber factory stands as Vietnam's first and largest high-quality fiber production facility, utilizing PTA (pure terephthalic acid) and MEG (monoethylene glycol) as primary raw materials, alongside TiO2 (titanium dioxide) sourced from the country's refining and petrochemical sectors Despite its significant capacity, the factory has faced ongoing financial losses since its inception in 2012, struggling with product quality issues and consistently higher selling prices compared to competitors, which has hindered its ability to supply the domestic spinning industry effectively.
Vietnam's spinning industry comprises approximately 96 enterprises operating 7.5 million spindles, representing about 2.5% of the global capacity of 250 million spindles The industry also features 100,000 rotors with an annual spinning capacity of 2.05 million tons Experts predict that the implementation of spinning projects initiated in 2016 will maintain the spindle count at 7.5 million in 2017 Notably, only four companies in the sector utilize Chips spinning technology, characterized by low initial investment and smaller production scales However, products made using this technology are not intended for mass production due to their higher costs and lower capacity compared to China's Direct Spinning technology Consequently, Vietnam's long fiber products primarily target the mid to high-end market.
In the first five months of 2021, Vietnam's spinning exports reached 818,000 tons, generating a revenue of USD 2.168 billion, marking an impressive increase of 136% in volume and 160.5% in value compared to the previous year Additionally, the average export unit price in May saw a significant rise of 19% compared to the beginning of the year.
In 2021, Vietnam's yarn imports increased by 32% compared to the previous year, with China being the largest supplier, holding a 54.4% market share South Korea, the US, Taiwan, Japan, Indonesia, Turkey, and Malaysia contribute smaller shares, ranging from 1% to 9.2% Currently, China accounts for approximately 60% of global yarn demand, a figure that is expected to rise Additionally, the Indian textile and garment sector is facing disruptions due to the ongoing effects of the Covid-19 pandemic.
Despite challenges like fluctuating raw material prices, unstable yarn demand, high transportation costs, and market blockages due to the Covid-19 pandemic, the yarn market in the first half of 2021 has demonstrated strong upward momentum since late 2020, offering significant profit margins for manufacturing enterprises.
In the latter half of 2021, the yarn market is anticipated to face challenges due to a decline in upward momentum, compounded by a recent rise in cotton prices exceeding $2/kg, which will reduce profit margins compared to earlier in the year However, with countries ramping up Covid-19 vaccinations, there is potential for a recovery in the demand for textiles and garments, which could subsequently boost yarn demand in the near future.
Yarn prices are unlikely to drop to the lows seen in 2019 and 2020 To navigate the volatile market effectively, yarn manufacturers must develop strategies to balance production resources and restructure their products and markets This approach will enable them to optimize production and business outcomes.
Vietnam's yarn industry faces a unique challenge, experiencing both surplus and shortage simultaneously Despite this, the textile and garment sector continues to rely heavily on imports, fulfilling half of its yarn consumption needs, with 900 tons imported out of a total domestic requirement of 1,700 tons.
Testing the ft and type of model 2-2 + + ++s+s+++zzxzxzezzzzxzxzzzre 58 “ơ ' Y.^
This is a test to choose the fit between REM and FEM models
The test hypothesis is as follows:
HO: Cov(e;, Xs) = 0 (Used REM model)
H1: Cov(e;, Xs) # 0 (Used FEM model)
Based on the Appendix 07, we get
In which, p-value=0.0072