Vietnam and China are collaborating in the textile and garment sector. China and Vietnam hold a pivotal position in the global textile market. Industries in the two countries are highly complementary. China is the world’s biggest exporter and Vietnam is the second biggest. Vietnam is taking a path similar to China’s, both having communist leaders who turned toward export-led market capitalism in recent decades, and in terms of selling ever more footwear, clothes and bags to the world. Their industries compete for customers but they are also complementary in that Chinese factories supply much of the fabrics and other inputs needed in the business, while Vietnamese factory hands are increasingly supplying the labor as costs rise in China. Textile firms on both sides of the border are working together to turn a profit.

Amid the trade war with the United States, China has lost some of its business to Vietnam. On the other hand, it is not just foreign third parties moving factories from China to Vietnam. Chinese investors themselves deem it beneficial to relocate some of their supply chain to Vietnam. However Vietnam does not have as large and complex a network of textile suppliers and processors as China does. That is one reason the smaller country relies on the larger one as its biggest source of imported goods overall.