Vietnam

From humble beginnings since the reunification of its northern and southern regions, Vietnam has become a major player in the global textile market. The country ranks fifth worldwide in textile and apparel exports and has a labour force in that sector of more than 2 million people, of whom 1.3 million are working in manufacturing.

Insights

  • Prior to 2002 very little of the country’s textile or garment production was manufactured for export. In 2002 the value of Vietnam’s exports was less than US$3 billion. In 2007, when Vietnam gained access to the World Trade Organization (WTO), exports of textiles and garments were just over US$5 billion. But since 2008 there has been significant growth in the market with exports almost trebling to approximately US$15 billion in 2012.
  • Vietnam’s garment and textile exports amounted to over US$24 billion in 2014, a 19% jump over last year. Of these, apparel exports accounted for US$21 billion.
  • Vietnam maintained its mark in 2014 as the second largest supplier of apparel to US after China. It is now the second largest apparel supplier to Japan also.
  • The Vietnamese textile and apparel industry’s customers include the top labels worldwide including, USA brands and retailers, JC Penney, Nike Inc., Gap Inc., PVH Corp., Liz Claiborne, Target Brands Inc. and Perry Ellis; European brands and retailers Marks & Spencer, C&A, The Otto Group, Pierre Cardin and Jacques Britt; and Japanese brands and retailers Itochu Corp., Marubeni Corp., Mitsui & Co. Ltd., Mitsukoshi Ltd. and Katakura Industries.
  • Vietnam has Free Trade Agreements (FTAs) with Japan, Australia, New Zealand, ASEAN, China, Chile and India. In 2014 the Vietnamese government signed FTAs with South Korea and the Customs Union of Belarus, Kazakhstan and Russia. It is expected that it will sign FTA with the EU and the TPP in 2015.
  • Vietnam is South Korea’s fourth largest destination for investment (US$1.46 billion was invested in 2014).
  • Nearly 20 new textile and apparel projects involving foreign direct investment (FDI) of around $1billion was approved by local provincial governments in 2014. FDI enterprises contributed up to $12 billion of the export in 2014.
  • Investment projects, along with government incentives for foreign investment, are deemed to be central to the improvement of the Vietnamese textile and apparel industry as Vietnam seeks to strengthen its competitive position in global apparel markets. Other contributing factors include low labour costs, skilled textile labour and a stable political environment. The future of the Vietnamese textile industry looks bright because of continuous efforts made by textile companies to upgrade their equipment to enhance their competitiveness.

Opportunity for Wool

  • The Woolmark Company aims to establish a complete supply chain in Vietnam, via its Out of Vietnam project. Since the project’s launch in 2012 it has gone from strength to strength and now has more than 50 manufacturing partners, including one retailer.
  • By virtue of its geographical position the climate in most of Vietnam is not conducive to the consumption of wool, yet offers an opportunity for developing it as an exporter of wool products. However, the cool climate of Hanoi has seen Vietnamese manufacturer and retailer CANIFA produce a 53-piece Woolmark and Woolmark Blend commercially available collection, and retailer Ivy Moda is also stocking wool apparel.
  • China is no longer a low-cost mass manufacturer. Volume retailers are moving away from 100% wool products to alternative fibres because Chinese ex-factory prices exceed their price points. With 75% of Australian wool being exported to China and the recent changes there, there is a shift of processing to other regions.
  • To mitigate the risk and offer alternatives to brands, new manufacturing supply chains are being established in low-wage countries like Vietnam.
  • Two of our manufacturing partners in Vietnam have received investment in machines from their Japanese partners (28C AGTEX received $8million investment from ITOCHU and NASILKMEX received machinery from TOABO).