"Having developed textile operations in 1958 in Northern region and in 1970 in Southern region, Vietnam’s textile industry has come a long way, dominating global textile dynamics today. In 2016, Vietnam was recognised as the third top garment exporter in the world where the top two were China and Bangladesh. Apparel exports account for 16 per cent of the country’s total exports (2017). Today there are about 6,000 textile and apparel manufacturing companies working with 2.5 million employees while the population in Vietnam is about 90 million."
Having developed textile operations in 1958 in Northern region and in 1970 in Southern region, Vietnam’s textile industry has come a long way, dominating global textile dynamics today. In 2016, Vietnam was recognised as the third top garment exporter in the world where the top two were China and Bangladesh. Apparel exports account for 16 per cent of the country’s total exports (2017). Today there are about 6,000 textile and apparel manufacturing companies working with 2.5 million employees while the population in Vietnam is about 90 million.
Apparel and textile products of Vietnam are exported to 180 countries and territories around the world. Garment manufacturing accounts for 70 per cent of the total businesses in this sector in Vietnam with CMT (Cut, Make, Trim) being the main method (85 per cent) of export. Main market for Vietnam textile and garment products are US, Europe, Japan and South Korea. The US has retained its position as the largest importer of Vietnamese textiles and garments, followed by Europe, which has led to rapid development of the country’s textile and garment industry.
Even after facing challenges like the abolition of the Trans-Pacific Partnership (TPP) trade deal in 2017, the country was able to exceed its 2017 target of $30bn with an export turnover of over $31bn, an increase of 10.23 per cent over previous year. Le Tien Truong, Deputy Chair of the Vietnam Textile & Apparel Association (Vinatas), says major markets of the US, the European Union, Japan and South Korea maintained good growth, while there were breakthroughs in exports to other markets such as China, Russia and Cambodia. The South Korean market grew and came close to the Japanese market, reaching an export value of $2.7 billion in 2017 while Vietnam’s textile and garment exports to China reached $3.2 billion, the same as the export value to Japan.
Meanwhile Vietnam’s domestic market demand too is growing powered by young consumers, increasing urbanization, and growing disposable incomes. These markets are attracting major international brands. Country’s retail sales are rising at 20 per cent annually, and spending on apparel is the second highest in Vietnam, following spending on food items. As Vietnam Textile & Apparel Association stats show, the domestic textile and garment market has grown year-on-year at 10 per cent in 2017.
A recent report by Textiles Intelligence forecasts the country’s textile production capacity will rise 12-14 per cent per annum from 2016-2020 and export potential is forecast to increase 15 per cent per annum. Owing to such expanse, the Vietnamese textile and apparel industry will reach $50 billion by 2020. Le Tien Truong opined that the balance in development of the domestic market and the foreign market has been an important point for the local textile and garment industry to ensure jobs for the employees and to maintain development of the enterprises.
The first 11 months of 2017 witnessed a steep 11.9 per cent spurt in FDI in Vietnam as compared to the previous year, shows a government release, where Vietnam received a sum of $16 billion in FDI, mainly driven by manufacturing sector. FDI in Vietnam’s flourishing textile and apparel industry is increasing rapidly, which is making the country one of the most popular destinations in Asia for textile investment. According to the data from Vietnam’s Foreign Investment Agency (FIA), FDI investments in Vietnam were up 152.78 per cent year-on-year in the first two months of 2017, and investment in Vietnam’s textile and apparel industry now accounts for 21 per cent of the country’s total FDI.
FIA also reports that Chinese investors have registered 123 investment projects in Vietnam between January and February of 2017. One of the largest among these Chinese investments is the $220 million invested in a Vietnam polyester synthetic fiber plant in central Tay Ninh province. Chinese investment in Vietnam’s textile plants will enable it to have more advanced technology and increased capacity in its textile and apparel productions. Additionally, textile investment from South Korea in Vietnam is also on the rise. By early 2017, South Korea’s Sea-A Group has committed a total of $2 billion in capital in Vietnam’s textile and garment industry.