Rising operating and labour costs in China are forcing many Western apparel brands and retailers to explore new sourcing destinations while cutting back on sourcing in China. The new report by Textiles Intelligence titled ‘World textile and apparel trade and production trends: South-East Asia, June 2014’, points out that in looking for alternative production locations, western buyers have found that their options are limited as no other single country can provide the capacity, quality, skills, variety, and complete supply chain which the Chinese textile and clothing industry possesses.
Concerns over factory safety, and adverse publicity associated with these concerns, are known to have deterred buyers from sourcing in Bangladesh and many buyers are also wary about sourcing from Cambodia, a potential low cost alternative to Bangladesh and China, because of recent labour unrest and reliability issues. Among all these destinations, Vietnam is emerging as a better prospect for western buyers, as it has a well-developed textile supply chain and has not faced criticism that’s plaguing the industries in Bangladesh and Cambodia.
In fact, Vietnam is expected to be one of the fastest growing suppliers of textiles and clothing to Western markets over the next few years. In 2013 US textile and clothing imports from Vietnam grew in value by 14.6 per cent, which represented the fastest growth rate among imports from the USA’s 10 largest suppliers. And imports continued to grow strongly in the first four months of 2014, having increased by 15.5 per cent compared with the corresponding period of the previous year.
Vietnamese exporters also stand to gain from a successful conclusion to negotiations aimed at establishing a Trans-Pacific Partnership (TPP) free trade agreement. This would provide imports of Vietnamese products into the US market with significant tariff benefits and flexible rules of origin.