Export-oriented garment units in Ho Chi Minh City have seen a spurt in orders in the fourth quarter of 2020, especially from the US. While this is good however, rising prices have meant raw materials have become scarce, and costs have increased 15-20 per cent in associated industries like packaging, adhesive tapes and chemicals, leading to rising production costs and lower profits. In fact for many enterprises revenue just about covers their costs.

The Vietnam Textile and Apparel Association (VITAS) states, the country’s garment and textile industry imports raw materials, including yarn, fabric, and auxiliary materials, mainly from China. Fabric imports account for nearly three-fifths of the total imports of $13.5 billion in 2019, and fibre imports 55 per cent. With new free trade agreements (FTAs), Vietnam can use raw materials from many countries, as companies have been using raw materials from China for a long time, they reportedly become passive in raising production when orders rise due to scarcity of raw materials. Moreover, raw materials from India, South Korea and European nations do not match either in quality or prices with China.

As per VITAS in 2020, demand from Europe and the US decreased 45 per cent and 40 per cent respectively for garments, and 27 per cent and 21 per cent for footwear. In future, the country’s garment and textile industry is expected to face difficulties when supply of raw materials is inadequate and imbalanced, and there is a blockage in the phases of weaving and dyeing.