Kelvin Le and Andrew Dennis visiting Hantex for Australian wool trade promotion, a wool spinning mill located in Tay Ninh Province, Northern Vietnam
I am Kelvin Le, based in Ho Chi Minh City Vietnam, I am pleased to contribute this months blog for the WoolProducers Australia newsletter to outline some of the work that I have been undertaking, and to introduce you to the Vietnam textile sector and the opportunities that Vietnam presents for Australian wool.
Following ATMAC phase 2 “Ensuring a sustainable future for Australian’s wool supply chain”, the release of the roadmap for Vietnam and pursuing recommendations of the action plan, WoolProducers Australia has entered a partnership with AusHub/AusCham to establish a Wool Trade Polocy Office, based in HCMC, Vietnam. The ATMAC Phase 2 work identified Vietnam as an ideal location for upstream expansion of the existing wool processing activities to establish early-stage processing activities (top-making).
Currently Vietnam has demand for approximately 9,850 metric tons of wool tops, all of this is currently imported from China. The establishment of top-making capacity in Vietnam would allow direct trade of scoured wool from Australia to Vietnam to supply spinners based in both Vietnam and third countries. Vietnam has extensive worsted weaving and circular knitting capacity, which is ideal in supplying both traditional and contemporary garment markets.
As many readers would be aware, the wool industry has been in a period of consolidation, as such, the relocation of used top-making machinery is a key consideration for potential investors, rather than purchasing new machinery. Vietnam has stringent regulations concerning the importation of used machinery. The government restricts the importation of certain types of machinery to protect local industries and due to safety and environmental concerns. I have implemented consultations with industry stakeholders, provincial governments, industrial parks, customs officers, and warehousing service providers to identify solutions to facilitate the importation of used top-making equipment.
As part of my work I travelled extensively throughout Vietnam, meeting with wool industry stakeholders, textile industry leaders, and visiting industrial parks to foster and promote trade for Australian wool to Vietnam (currently via China). During my travels have observed the rapid progress of wool processing projects, including wooltops dyeing facilities and wool spinning mills, such projects often receive support from attractive investment policies of local governments.
A new wool spinning project with an annual capacity of 6,500 metric tons is currently nearing completion and will integrate with the existing Vietnamese textile system to meet the demand of domestic weaving and knitting facilities, this project is expected to commence mass production by the end of 2024 or Q1 2025. It has also been reported that there will be one more wool spinning project in 2025 in southern Vietnam’s central highlands, Daklak province, where the climate is ideal for wool processing, this project will have a wool spinning(?) capacity of 3,345 tonnes per year. These 2 projects will bring the Vietnamese demand for fine wool to almost 20,000 metric tons annually!
It has become clear to me that the Vietnamese textile companies have an appetite to expand their existing wool processing capacities, despite the short-term market downturn. This desire is driven by their clients' commitments to supply chain diversification strategies. International fashion brands are increasingly favoring sourcing wool materials from Vietnam over other countries due to a number of commercial and regulatory factors.
I have also been engaging with local banks to determine finance facilities that could support the development of wool processing facilities in Vietnam. The Vietnamese textile industry has been actively advancing the development of a green and sustainable supply chain to meet the increasingly stringent quality standards of financers and its clients. It terms of sustainable fibres, wool sets the benchmark!
Looking forward, I am working on a program for an Australian delegation to attend the upcoming Vietnam Textile and Apparel Association (VITAS) General Meeting from 13-14 December 2024. The meeting will be held in Hoi An, Quang Nam Da Nang province with the theme "PROACTIVE ADAPTATION - SUSTAINABLE CONNECTION - INTEGRATION FOR DEVELOPMENT. The event will also mark the 25-year development journey of VITAS. The delegation’s attendance will seek to strengthen the connections between the Australian wool industry and the Vietnamese textile industry. The event gathers leaders from ministries, local authorities, top economic and labor experts from renowned international organizations, distinguished scholars, businesses, and brands.
An industry tour before and after the conference will also engage with existing wool processing companies to enhance the understanding of investment opportunities in the Vietnam market and assist prospective investors with ongoing information exchange, with a view to working toward securing joint investments in an early-stage processing plant in Vietnam
I hope that this exceptional trip will provide the Australian delegation with a thorough understanding of the Vietnam Textile Industry, while also giving them a unique experience of Vietnam's four distinct seasons in December: normal, hot, hotter and hottest from North to South!
I look forward to providing you with further details in future editions of the WoolProducers newsletter.
Best regards
Kelvin Le
AusHub Industry Representative
WoolProducers Australian AusHub Vietnam Representative
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