Vietnam’s garment and textile sector has reached the 2021 export target. The high growth rate in the fourth quarter helped Vietnam’s garment and textile sector complete its export target of $39 billion, equivalent to 2019. However, it is confronted with ever-growing competition from the Asian continent and other markets. Currently, China, Bangladesh, Cambodia, and Pakistan are the main competitors of Vietnam in exporting textiles to the world, and all have a more complete domestic supply chain than Vietnam.
Le Tien Truong, chairman at the Vietnam National Textile and Garment Group, said that the growth of 11.2% compared to 2020 does not indicate an “improvement in market share.” According to him, Vietnamese garment and textile groups “do not know what to do when the world stops and does not know what to do when the world trades again.”
Labor costs at garment companies in Bangladesh currently account for about 20% of the cost of goods, while this figure in Vietnam is 26-30%. Labor costs in Pakistan and Cambodia are also lower than in Vietnam. According to the US Office of Textiles and Apparel, Bangladesh currently ranks third in exporting ready-made garments to the US, up about 27% over the same period in 2020. China’s exports to the States reached $16 billion with a growth rate of 25%, followed by Vietnam and Indonesia at 14 and 10%, respectively.
Despite this harsh competition, Vietnamese garments and textiles could remain competitive if they make good use of existing advantages. For example, Vietnamese businesses could take advantage of the EU-Vietnam Free Trade Agreement with the EU market to increase their market share. The Vietnam Textile and Apparel Association (Vitas) has developed three growth scenarios for 2022. The most favorable scenario is to strive for an export turnover of up to $43.5 billion, and the lowest would be a maximum of $39 billion.
