Vietnam emerged in second spot in global garment and textile export turnover in 2018. However, the country has had to import around 80 per cent of its materials for production. Currently, Việtnam imports up to 99 per cent of cotton, 70 per cent of fiber and 80 per cent of its fabric.
The heavy dependence on imported materials has become a serious problem for the industry. The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) which took effect in Việtnam earlier this week, is expected to bring huge opportunities. However, there are many challenges as well. The biggest shortcoming is that only 10 per cent of the fabric is imported from Japan and countries that are part of CPTPP. Việtnam is unable to produce fabrics for export.
The ongoing US-China trade war threatens to dent exports from the world's two largest economies but other countries may see Chinese and American demand diverted their way. Vietnam is expected to benefit the most from the trade war-inspired buying. The Southeast Asian nation has been touted as a possible winner in the US-China trade war because of its low cost of manufacturing. Some companies have already begun shifting production out of China to avoid tariffs imposed by America.