Vietnam’s Apparel Industry: Transparency in All Global Activities

This confirmation comes from Mr Le Tien Truong, Deputy General Director of the Vietnam National Textile and Garment Group (Vinatex), in an interview with the Vietnam Business Forum about the group’s business development strategy to stand firm in the global market, especially the high potential US market that businesses worldwide want to penetrate.

 The Vietnamese garment and textile industry has many advantages in comparison with other countries. In 2010, Vietnam was the second largest apparel exporter to the US, the third largest to Japan and the fourth largest in the European market. This proves that the Vietnamese garment and textile industry has gained a firm foothold in the world market.

 

Despite the global financial crisis in 2008-2009, Vietnam’s apparel industry export turnover remained stable and even raised its market share in the three markets. During the period, the world garment and textile industry fell 12 -15 per cent. In the crisis, Vietnam bettered itself to become the second largest apparel exporter in the US market. When the global market recovered, Vietnam’s apparel industry’s export turnover increased 21.7 percent in 2010. Before the crisis, the country’s textile and garment export turnover hit just US$7.7 billion in 2007, and US$9.1 billion in both 2008 and 2009. Due to the global financial crisis, the country’s apparel sector reported no growth in exports in 2009 (only US$9.1 billion). However, the export turnover of the sector recovered and gained US$11.2 billion in 2010. This meant that with the export turnovers gained in 2010, the sector covered the on-year losses due to the financial crisis. This year, the sector will continue to develop with its set targets 2011-2015, aiming to obtain export turnover of over US$13 billion. Remarkably, with 2010 export turnover, the Vietnamese apparel industry was named among the five largest apparel exporters in the world, fulfilling the target for four year earlier.

 

The Vietnamese garment and textile sector has built a strong trademark in the global market thanks to its long-term development strategy when penetrating the global apparel market. In order to further gain foothold in the US market, Vinatex has overcome many tariff barriers. Before the Bilateral Trade Agreement between Vietnam and the US was signed, Vinatex had to export apparel products through a third country to the US. But since the Bilateral Trade Agreement was signed in 2001, the Vietnamese apparel sector has strongly developed in the US market, driven by its reasonable development strategy and targeted markets. In 2001, Vietnam gained apparel export turnover of US$1.9 billion. The figure reached US$2.7 billion in 2002 when the BTA was inked and US$3.6 billion in 2003. Notably, in 2007 when Vietnam became an official member of the World Trade Organisation (WTO), Vinatex reported a strong growth rate with export turnover of US$5 billion in 2008.

 

 Currently, the US is the biggest partner of the Vietnamese garment and textile sector, which accounts for 55 percent of the country’s total export turnover. In 2010, the country’s apparel export turnover hit nearly US$11.2 billion, with over US$6 billion from shipping apparel products to the US market, up 22 percent against 2009. However, Vietnamese apparel businesses are facing fierce competition in the US market because enterprises from China, India and Bangladesh have more advantages than Vietnamese ones. To gain a firm foothold in the market, the Vietnamese apparel industry should prepare well and work out measures to improve its competitiveness, raise product quality and utilize its strong points to stand firm and expand its market share.

 

To stand firm and gain a larger share in the US market, the Vietnamese garment and textile sector should also meet standards and commitments in quality, technology, safety and after-sale services and develop the sector under the motto “FASHION – QUALITY– ENVIRONMENT FRIENDLY– LABOUR HARMONY” and further improve its transparency in all activities, as well as abide by bilateral and multilateral agreements.

 

With the stable growth over the past year, the Vietnamese apparel sector aims to gain export turnover of between US$18 billion and US$20 billion in 2011-2015. In 2011, the sector aims to obtain export turnover of around US$13 billion. To fulfil these targets, Vinatex will pour more investment into building key factories, especially factories for raw materials production; purchasing equipment, technology and relocation of plants to stable, labour-incentive areas, generating jobs for local people, improving the local economic structure, improving the verification of export apparel product quality to prevent tariff barriers, and boosting production of factories with high margin. In 2011, Vinatex would focus production on high-end veston products with the inauguration of four new plants. To adapt to the new development period, Vinatex will restructure and change the development model to target more investments into improving business administration capacity and applying modern technology to raise productivity. Vinatex would scrutinize inner city factories and relocate them, and implement development strategies approved by the Government, especially strategies to improve human resources development, expand raw materials cultivation areas and raise the localisation rate.

 

For the Vietnamese garment and textile sector, the US is the most important market, making up 55 per cent of the country’s total export turnover. However, to stand firm and gain a larger share in the market, the apparel sector as well as other industries need the US to grant the Generalised Systems of Preferences (GSP). The success of negotiation rounds of the Trans-Pacific Strategic Economic Partnership (TPP) Agreement talks with the US, Vietnam’s most important partner, will greatly help the sector.