From the marketplace to the world: Vietnam's textile and garment industry on the export race.

1. The situation of the textile and garment industry in Vietnam.

Textile and garment is a leading industry, contributing to sustainable export growth averaging from 8% to 15% per year, playing an important role in the country's economic development strategy. Currently, this sector employs over 2 million workers, exports over 40 billion USD annually, with an average income of around 8.5 million VND per person per month. On the morning of April 5, 2023, at the International Exhibition on Textile and Garment Industry Equipment and Raw Materials 2023, Deputy Minister of Industry and Trade Phan Thi Thang stated: "Recently, the Vietnamese textile and garment industry has affirmed its role in job creation, social welfare, significant foreign exchange contribution, and reputation in the socio-economic landscape of Vietnam and the world. Despite being greatly affected by the Covid pandemic and global political fluctuations, Vietnam remains the third largest textile exporter in the world, with export values reaching over 40.4 billion USD in 2021, 44.4 billion USD in 2022, a 9.7% increase from 2021, with a trade surplus of 18.9 billion USD. The development strategy for the Vietnamese textile and footwear industry sets a target of achieving textile export turnover of 68-70 billion USD by 2030."

2. Challenges for Vietnam.

In the context of international trade fluctuations, a sharp decrease in demand for textile and garment products, enterprises in the industry are facing difficulties in finding and maintaining markets, raw material supply, and product consumption. Factors affecting the domestic textile and garment industry include:
-Rigorous market: Vietnam's textile and garment industry faces fierce competition from other countries in the region and globally. Regulations on quality, labor safety, and environmental protection also require compliance to participate in the global supply chain.
-Increasing raw material and labor costs: Rising textile and garment raw material prices and labor costs continue to pose challenges for Vietnam's industry, especially for small and medium-sized enterprises. Adjusting costs and increasing labor productivity will be pressures amidst rising prices.
-Underdeveloped technology: Despite the potential for technological development and innovation in the textile and garment industry, investment in technology development has not been aggressively pursued concurrently with international competition. This may pose challenges in increasing productivity and competitiveness of Vietnam's textile and garment industry in the future.
Furthermore, Bangladesh poses the biggest obstacle threatening Vietnam's current textile market, being a formidable competitor in this field. Bangladesh is currently one of the world's largest garment exporters, directly competing with Vietnam. In the last two months of 2022, while orders from Vietnamese enterprises plummeted by 70-80%, orders continued to flow into Bangladesh, helping the country maintain impressive growth.

So, what are the reasons behind Bangladesh becoming such a potential and prosperous garment export market?
Bangladesh quickly recognized the situation and swiftly proceeded with renovating its image, implementing a "greening" strategy in the textile and garment industry. Previously, their factories and production facilities were in poor condition, severely downgraded, and even experienced labor accidents, but now many of their factories have been upgraded to meet world-class "green" standards. Specifically, 75% of the world's largest "green" textile factories are located in Bangladesh. This is a valuable competitive advantage for Bangladesh, helping them move closer to the top spot in the ranking of garment-exporting countries. Currently, the primary global concern is towards ESG-oriented solutions - sustainable green supply chain models. With the global green trend, countries are moving towards logistics operations with eco-friendly and living space-protecting objectives, minimizing negative environmental impacts. The more modern equipment, clean energy usage, recycled materials, and eco-friendly practices invested in factories, the more attractive they are to investors, thereby attracting "big fish" orders.

3. Is there any opportunity left for Vietnam?

Alongside immediate challenges, the door of opportunity remains wide open for Vietnam in this key industrial sector.
Deputy Minister Phan Thi Thang also emphasizes the need for changing mindsets and strategies in the vision for the development of Vietnam's textile and garment industry, focusing on developing a complete textile and garment production chain on a large scale, investing in modern equipment, high automation, real-time automated management, clean production, and environmentally friendly practices. At the same time, businesses in the textile and garment industry need to seek suitable directions to ensure employment and social welfare for workers, tackle difficulties related to diseases, and aim for sustainable long-term development. This can be clearly seen through opportunities such as:
- Potential export markets: Vietnam's textile and garment industry has opportunities to access large export markets such as the US, EU, Japan, South Korea, and China. Especially, Vietnam has signed many free trade agreements like CPTPP and EVFTA, creating favorable conditions for accessing these potential markets.
- High-tech investment: Investing in high technology in textile and garment production can enhance labor productivity, reduce production costs, and improve product quality. The application of automation, digital technology, and artificial intelligence can provide a competitive edge for Vietnam's textile and garment industry in the international market.
- Global supply chain shifts: Global supply chain shifts, especially from China to other countries, can create opportunities for Vietnam's textile and garment industry. Leveraging advantages in cheap labor and the ability to supply a diverse and flexible range of textile and garment products can help Vietnam attract investments from international companies.

4. Summary

In addition to participating in the implementation of 15 free trade agreements (FTAs) covering over 60 countries and territories, including some of the world's largest markets, Vietnam is also intensifying FTA negotiations with the European Free Trade Association (EFTA).
Furthermore, Vietnam is one of the 14 countries involved in negotiations on the Indo-Pacific Economic Framework (IPEF). Particularly, Vietnam has become one of the regional leaders in forming multilateral economic cooperation frameworks.
Currently, Vietnam is among the top 3 largest textile and garment exporting countries in the world. The United States is the largest market, followed by the EU, South Korea, China, and Japan, each accounting for around 10% of the total export turnover of the entire industry.
To achieve the goals desired by the Party and the State, for Vietnam's textile and garment industry, building a sustainable, green Vietnamese textile and garment brand, closely linked and streamlined supply chains is essential in the foreseeable future. In this process, logistics operations must be optimized, moving towards green solutions such as reducing carbon emissions, achieving net zero, and effectively minimizing negative environmental impacts so that businesses can confidently pursue sustainable development.
Author: InterLOG synthesis and editing.