Representatives of Vinatex and Itochu sign a frame work agreement to promote projects in dyeing and material production in Viet Nam. – Photo Vinatex

HA NOI (Biz Hub) – Japanese trading firm Itochu and the Vietnam National Textile and Garment Group (Vinatex) have signed a framework agreement to support several projects in dyeing and materials production in Viet Nam.

The agreement, announced on the Vinatex website, has been hailed as a watershed opportunity in the business relationship between the two groups as it also opens up opportunities for training in Viet Nam's dyeing sector and utilises the capacity of Vinatex's dyeing factories in the central region.

The agreement, which was signed on January 15, marked a step forward for the two groups after Itochu decided to spend more than US$9million to buy a five per cent stake in Vinatex through a subsidiary company last October.

Shimizou Motonari, general director of Itochu Prominent in Asia, was quoted by the Investment Review as saying that Viet Nam was an important country in Asia for investing in garments and textiles, particularly since free trade agreements (FTAs) and the Trans Pacific Partnership (TPP) will soon take effect. In light of the impending finalisation of the TPP and an FTA with the European Union, the group's investment in Vinatex is aimed at maximising its investment opportunities.

As a shareholder and year-long business partner of Vinatex, Itochu will conduct joint projects between the member companies of the two groups.

These projects are expected to raise total revenue of $60 million in five years and to create thousands of new jobs for the locals in the Nghe An and Quang Binh provinces.

Of note, Itochu's investment in Vinatex is considered to be good leverage for the group to further invest in its core business of producing and exporting garments and textile products.

Sharing this view, Le Tien Truong, Vinatex's general director, added that cooperation with Itochu would help Vinatex invest in advanced technology and build comprehensive materials for the group as well as for the national garments and textiles industry.

Itochu is currently doing business with 100 Vietnamese garment and textile companies. The group deals with diversified items, from raw materials to fashionable garments, in Japan, the United States and Europe.

Although the capital invested in these projects has not been revealed, the Investment Review estimates that the investment runs into hundreds of millions of US dollars.

Established in 1858, Itochu is among the largest economic groups in Japan. It employs more than 4,200 personnel, excluding those working in offices outside Japan and with its affiliates. With $2 billion in charter capital, the group is doing business in 139 countries.

Established in 1995, Vinatex is the largest textile group in Viet Nam. It has 83 subsidiaries and affiliates, with approximately 120,000 employees and handles both upstream and downstream operations in the textile industry.

Itochu and Vinatex have maintained a steadfast relationship that stretches back to the 1990s.

A source on the Itochu website claims that the Japanese group has positioned Viet Nam as one of its most important operation bases because the country has attracted a lot of attention in its bid to become the next major manufacturing locale, after China. –VNS