Vietnam is a member of the TPP and China is not. To counter the adverse impact of the treaty, Chinese textile groups are investing in Vietnam in a big way. Execution of the TPP will pose new challenges to China's textile and apparel enterprises, so companies are building their Vietnam operations with respect to the cost advantages. Even without the TPP, the competitiveness of Vietnamese operations is strong among all Southeast Asian nations and even compared to Chinese production bases. Vietnamese production has several advantages for Chinese companies besides the TPP.

One is relatively favorable trade relations with the world vis-a-vis China. Even before the TPP, tariffs on yarns exported from Vietnam to Japan, South Korea and Europe were lower compared with exporting them from Chinese factories. Production costs are another advantage. Compared to China, labor, electricity and other costs are lower in Vietnam.

Texhong, one of the world's largest yarn suppliers, has been aggressively building up yarn production capabilities in Vietnam. Upon completion, the company's yarn production in Vietnam is expected to become almost on par with its Chinese operation. Manufacturing is going downstream beyond yarn. Production equipment with an annual capacity of 60 million meters of gray fabric, 40 million meters of woven dyed fabric, and seven million pieces of garments will be installed by around November and begin full operation early next year.