Chinese yarn company Texhong is shifting its production line to Vietnam, partly due to the US boycott of cotton items originating in China’s Xinjiang province. It recently started recruiting labourers in the Quang Ninh province for its latest $214-million project, Texhong Knitting Vietnam Ltd, part of its $500 million investment plan in Vietnam this year.
The first phase will get operational in late 2021, and the second phase will be constructed 20 months after that.
The Quang Ninh Economic Zones Management Authority granted investment certificates in May to the company, which will have an estimated annual production capacity of 82,500 tonnes.
According to Texhong Vietnam Industrial Zone (IZ), the company simultaneously went ahead with land clearance, infrastructure development and investment, a Vietnamese media outlet reported.
In Xinjiang, the yarn producer has been running a subsidiary named Xinjiang Texhong Foundation Textile Co., Ltd. Moreover, most of Texhong’s Chinese cotton supplies are reportedly sourced from Xinjiang. Hence, under the US ban, cancelled orders for Texhong are a strong probability.
Texhong is also operating a garment company named Texhong Thai Binh Garment Co Ltd, whose current production capacity is 35 per cent of that seen last year. In September, the company manufactured about 400,000 items, far less than the previous average of 900,000. Since the health crisis broke out, its earnings have dropped by 30 per cent compared to previous years.
The establishment of Texhong’s new garment manufacturing hub in Vietnam could aim to solve the origin issue of its garment products, for easier export to other markets.