Successful Positioning of Vietnam as Textile & Garment Manufacturing Hub

Vietnam has emerged as a manufacturing hub for the textiles & garments sector with the backdrop of skilled & low cost labor. Vietnam’s textile industry has received a further boost, through the free trade agreements recently signed with the European Union and United States. As per reports, cotton spinning in Vietnam has more than tripled in the last 4 years, with total use expected to reach 5.1 million bales in 2015-16

Net yarn exports have increased at an annual rate of over 40 percent from 2011-2012 to 2015-2016. During this period, Vietnam accounted for half of the total world growth in cotton demand. Currently China accounts for 80-90 percent of Vietnam’s total yarn exports. China’s domestic cotton policy which has increased the internal price of cotton, has contributed to the inflation in the Vietnam’s export figures.

Some of the leading textile and apparel companies such as Tommy Hilfiger, Lee Cooper, Victoria's Secret, JC Penney, Wal-Mart, Kmart, Sumitomo, Itochu, Kowa, Li & Fung source their apparel from Vietnam.

With the plan to get investments around US$25 billion by 2020, the Vietnamese apparel and textile industry has ambitious growth plans. In April 2016, Vietnam has already exported 21.5 million pairs of footwear, earning US$900 million. The footwear export in the first four months of 2016 has attained US$3.68 billion, up 4.8%. The textile and garment export in April 2016 was estimated at US$1.7 billion, a year-on-year increase of 5.2%. Total export turnover in these four months rose by 6.2% to US$6.82 billion. U.S., Japan, EU & the Republic of Korea are the big markets who placed the majority of the orders that accounted for this growth. Also, Vietnam’s domestic yarn utilization has more than doubled since 2011-2012.

According to Victoria Kwakwa, the World Bank Country Director for Vietnam “Stronger domestic demand, robust export performance, low inflation and improved confidence have enabled Vietnam to create firmer foundations for mid-term growth.” 

Source: Businesstimes, Chinhphu, Textileworld & World Bank