Current Situation of Vietnam's Textile and Apparel Industry (I)
In 2020, Vietnam replaced Bangladesh as the world's second-largest exporter of textiles and apparel, after China.
According to data from the General Directorate of Statistics of Vietnam, in the first quarter of 2022, Vietnam’s gross domestic product (GDP) increased by 5.3% year-on-year, higher than the data for the same period in 2021 and 2020. The processing and manufacturing industry continued to play a leading role in economic growth, with a year-on-year increase of 7.79%. As of 2021, the contribution of manufacturing has accounted for nearly 40% of Vietnam's GDP.
According to the data released by Vietnam Customs, from January to May 2022, textile and apparel, the fourth pillar industry of Vietnam's foreign trade, exported 15 billion US dollars in the first five months, with a year-on-year increase of 22.2%. The products are mainly sold to the United States, the European Union, Japan, and South Korea.
In recent years, the supply chain layout of international clothing brands in Vietnam, Bangladesh, Indonesia, and other Southeast Asian countries is also expanding.
For example, the supplier list updated by Fast Retailing Group, the parent company of Uniqlo in March 2018, shows that more than half of its fabric and sewing suppliers are in China. But compared with the supplier list announced in 2017, its Vietnamese suppliers have increased by 40%.
Since Vietnam joined the WTO in 2007, the country has signed several bilateral and multilateral free trade agreements with Japan, South Korea, the European Union, and other countries, so that its textile products enjoy Zero-Tariff treatment in many countries. Meanwhile, the Vietnamese low labor cost has also made its exports more competitive.
In addition to international apparel companies, Chinese leading textile and apparel companies also increased their investment in Vietnam and other Southeast Asian countries.
For example, in 2014, Shenzhou International, the main supplier of Uniqlo, Nike, Adidas, and Puma, built a new garment and fabric factory in Vietnam. At present, its garment production capacity in Southeast Asia accounts for 40% of the total production capacity.
However, there are still shortcomings.
Firstly, the clothing produced in Vietnam is mainly basic styles.
Secondly, processes like digital printing and environmentally friendly fabrics are difficult to achieve in Vietnam.
Thirdly, mature upstream and downstream industrial clusters are also lacking. For example, the raw materials required by the industry still rely on imports. According to data from the Vietnam Textile and Apparel Association (VITAS), 55% to 60% of the raw materials and accessories come from China, especially the raw materials, yarns, and fabrics.