Vietnam’s Textile Industry: Challenges and Opportunities Ahead

Vietnam’s textile industry is shaping fashion businesses all over the world. The impact of Vietnam’s textile exports and products is felt across the global fashion market. The industry itself has been on a steady growth trajectory and is expected to continue to grow in the coming years.  

Let’s explore its growth and challenges in 2023.

 

According to the Vietnam Textile and Apparel Association (VITAS) in 2020, Vietnam’s textile exports are expected to reach $55 billion in 2025 from $39 billion in 2019. This growth opportunity is driven by the rising demand for Vietnam’s textile products from the United States, Europe, and Japan. These key textile markets are looking to diversify their supply chains and reduce their dependence on China, in the aftermath of pandemic COVID-19.

 

Another growth opportunity for Vietnam’s textile industry comes from international trade agreements. Vietnam has participated in regional trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA). Vietnamese textile exporters will then be provided with preferential access to key markets (US, EU, Japan). These trade agreements will enable Vietnam to compete on a level playing field with other major textile exporters such as China, India, and Bangladesh.

 

Despite the growth opportunities, Vietnam’s garment and textile industry also faces a number of challenges currently in 2023. One such example is the increasing competition from other major textile exporters such as China, India, Pakistan, and Bangladesh. As of 2020, there are demands to expand the supply chain in Asia from key textile markets such as the US and Europe. This competition puts pressure on Vietnamese textile exporters to lower their prices since other exporter countries have lower labor costs and larger scale of textile industries.

 

The trends of diversifying supply chain due to pandemic COVID-19 not only affect textile key markets, but also Vietnam itself. The pandemic has caused disruptions to Vietnam’s textile supply chains as factories and ports shut down, including major supplier China. The shortage of raw materials caused by this fragile supply chain has led to production delays and reduced capacity for Vietnam’s textile manufacturers. To combat this, Vietnam also needs to look for expanding its raw materials supply chain to its neighboring countries such as Indonesia. 

 

Overall, Vietnam needs to climb the global value chain and become a hub for textile manufacturing industries by improving infrastructure, workforce skills, and innovation. By investing in the development of a more diverse and innovative ecosystem, such as the digital textile supply chain, Vietnam’s textile industry could maintain their competitiveness in the global textile market.