Itochu, a prominent trading house in Japan, has strengthened its hold over a state-owned textile firm in Vietnam.
The company has spent nearly US $ 46.9 million in Vietnam National Textile and Garment Group (Vinatex) to increase its stake to 15%.
With this increase, Itochu has become the second-biggest stakeholder in Vinatex after the Government of Vietnam.
Itochu further intends to transform Vietnam into a big ‘textile export destination’ for European countries. This holds more significance considering the pace at which the labour costs are increasing in China.
Notably, Vietnam is also an important part of Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) signed recently and thereby stands as the better alternative to China.
Well, it’s unusual to see an overseas company holding over 10% of any state-owned company in Vietnam.
It is worth noting that in last three years, Vinatex has invested about US $ 200 million in its bid to enhance facilities for the production of threads and garments. Today, Vinatex runs around 200 sewing factories across several locations in Vietnam.
Ever since Itochu invested back in 2015, it has closely collaborated with Vinatex on suits and shirts and now also plans to enhance the manufacturing of high-performance garments in the country.
Further, the company intends to export the quality garments to US and Japan as well. Currently, it exports clothes that are worth slightly more than 60 billion yen from Vietnam every year. Interestingly, half of it is manufactured by Vinatex.
Itochu now plans to further its exports to impressive 100 million yen by the year 2021.