Garmex Saigon Joint Stock Company (GMC) last weekend sent a document to the Ho Chi Minh City Stock Exchange (HOSE), providing information on its production and business situation.

Accordingly, this enterprise said that the business situation is not favorable, if it continues to produce at factories in the garment industry, it will lose a lot. Therefore, the company has reorganized its apparatus, continued to cut labor, and temporarily stopped production to minimize losses.

Garmex Saigon is known as a fairly large textile enterprise in Go Vap, Ho Chi Minh City with the number of employees around 4,000 people in the period from 2017 to 2021.

However, Garmex Saigon's number of employees decreased sharply from the second half of 2021, to about 2,000 people by the end of 2022, before dropping to only 37 people by the end of September 2023.

According to Garmex Saigon, this enterprise will continue to save costs as much as possible, and will not re-hire workers for the traditional industry. And when the market is favorable enough, whether the company will invest in restoring the garment industry or not will "depend on the market situation".

In addition, Garmex Saigon will optimize existing resources, seek partners to transfer and sell unused assets, and diversify its business lines to minimize risks. The company also said it will make new investments in Phu My JSC’s housing project this year (about 1.5 hectares in area).

So, the information about Garmex Saigon is quite clear. This company has stopped operating in its core textile sector and may not return to this industry. The company is also looking for opportunities in the real estate sector.

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Businesses in this industry have stopped operating in the core textile sector and may not return to this industry.

Despite receiving a lot of negative information, GMC shares increased quite strongly in the last 3 sessions, from 7,200 VND to 7,840 VND/share.

Garmex Saigon is a famous textile and garment enterprise in Ho Chi Minh City with many factories in several localities such as: Binh Tien (Ho Chi Minh City), Tan My ( Ba Ria - Vung Tau ) and Garmex Quang Nam (Quang Nam)...

In the third quarter, Garmex Saigon recorded a 99% decrease in revenue compared to the same period last year, down to a few tens of millions of VND, and a loss of 11 billion VND - the fifth consecutive quarter of loss. In the first 9 months, revenue decreased by 97% to more than 8 billion VND, a loss of 44 billion VND.

The reason why Garmex Saigon is facing difficulties and has to lay off most of its employees is because this business has no orders. In the first 9 months of 2023, GMC did not record revenue from its main partner, Binh Thanh Production, Trading and Import-Export Joint Stock Company - Gilimex (GIL). Meanwhile, in the same period last year, GMC earned more than 224 billion VND from GIL.

Textile industry still faces many difficulties

Garmex Saigon is in trouble as Gilimex falls into a dire situation after the shock from the giant Amazon. Gilimex no longer has large orders from Amazon, the result of GIL suing the e-commerce giant Amazon Robotics LLC.

Amazon has been Gilimex's main partner since 2014. During the pandemic, when e-commerce boomed, the company invested tens of millions of dollars in production facilities to build warehouses for Amazon, recruiting thousands of employees at many factories to produce huge orders for the American giant. Production activities for Amazon have increased dozens of times over the years.

In addition, to meet the needs of the giant Amazon, Gilimex has refused other major customers such as IKEA, Columbia Sportswear...

According to information from Gilimex, during the cooperation process, Amazon violated the commitment that the two parties had agreed upon. Specifically, in April and May 2022, Amazon "immediately changed and reduced the expected demand" for the remainder of 2022 and 2023 to only a small fraction of the previous forecasts, causing GIL to suffer from excess production capacity and raw materials.

The story of Gilimex and Amazon is an example of being too focused on one customer. And when an incident occurs, Gilimex immediately falls into a passive situation, severely affecting business results.

Recently, many textile and garment enterprises have also faced difficulties and lack of orders. In the third quarter of 2023, the Vietnam Textile and Garment Group also recorded a profit decrease of about 70% to 27 billion VND.

According to the Vietnam Textile and Apparel Association (VITAS), the total export volume of the textile and garment industry in 2023 is expected to decrease sharply compared to the previous year due to the impact of the Covid-19 pandemic still affecting the world, with large inventories due to decreased demand. Many major markets have recorded stagnation.

With UKVFTA, textiles and garments have many advantages in the UK market . In the coming time, the UK will continue to reduce garment imports from the EU market. Instead, the UK will promote imports from non-EU markets, including Vietnam.