Seizing Investment Opportunities in Vietnam’s Garment and Textile Industry

 ASEAN Briefing, March 8, 2021

The garment and textile industry is one of the key industries in Vietnam with the second-largest export turnover in the country. In 2019, the industry’s export value contributed to 16 percent of the total GDP. In the past five years, the textile industry has continuously grown at an average rate of 17 percent annually.

In 2019, Vietnam’s garment and textile industry earned US$39 billion from exports, a year-on-year increase of over 8.3 percent, according to the Vietnam General Statistics Office. Garment manufacturing accounts for the majority of businesses, at 70 percent. Major factors driving the growth of the market are low labor costs and growing textile exports to the EU, the US, Japan, and South Korea.

Industry overview: 3 sub-sectors

Vietnam’s garment and textile industry consists of 3 sub-sectors: upstream sector (fiber production), midstream sector (fabric production and dyeing), and downstream sector (garment manufacturing).

Sub-sectors that produce fibers or fabric are mainly used for domestic consumption because of the low quality. The downstream sector of garment manufacturing accounts for around 70 percent of the total apparel and textile sector in Vietnam with Cut-Make-Trim (CMT) models being the main activities. In 2019, CMT accounted for about 65 percent of total exports, while the more advanced business models, like Original Equipment Manufacturer (OEM) and Original Design Manufacturer (ODM) accounted for only 35 percent.

The US, Europe, Japan, and South Korea are the main export destinations of Vietnam’s textile and garments products. Although Vietnam has a huge potential for cotton cultivation and production, the textile industry imports most of the cotton inputs. In 2019, Vietnam imported up to 89 percent of fabrics, of which, 55 percent were from China, 16 percent from South Korea, 12 percent from Taiwan, and 6 percent from Japan.

 

In full: https://www.aseanbriefing.com/news/seizing-investment-opportunities-in-vietnams-garment-and-textile-industry/