Amidst a challenging economic landscape, Vietnam’s textile and garment industry is steadfast in its pursuit of an ambitious export target, despite facing multiple obstacles that have impacted its performance in the first half of the year. According to the Vietnam Textile and Apparel Association (VITAS), the country’s garment export revenue dropped by 17.6 per cent year on year (YoY) to $18.6 billion in H1 2023.
The industry’s key export markets, including the United States, Canada, and the European Union (EU), experienced a notable decline in textile exports during the first five months, with the U.S. market alone witnessing a staggering 27.1 per cent decrease. Moreover, Vietnamese textile exporters are encountering fierce competition from neighboring China, while high lending rates ranging from 9 per cent to 11 per cent have exacerbated production costs compared to international competitors.
A significant challenge hampering Vietnam’s competitive edge is the comparatively higher average monthly wage for textile workers, standing at approximately $300. This is significantly higher than wages in other textile manufacturing countries such as Bangladesh ($95), Cambodia ($190), and India ($145). This wage disparity has put Vietnamese exporters under pressure to remain cost-effective while maintaining a skilled and motivated workforce.
Despite the challenges posed by the global economic slowdown and intense competition, Vietnam’s textile industry has managed to weather the storm with resilience. Imports into the country declined by 20.5 per cent YoY in H1 2023, leading to a trade surplus of $7.9 billion—though slightly lower than the previous year.
The outlook for global textile demand remains uncertain, with projections suggesting a potential drop from $757 billion to around $712 billion, and possibly as low as $687 billion. This drop in demand underscores the growing pressure on textile manufacturers to adopt more sustainable production practices, which adds both effort and cost to Vietnamese exporters’ operations in securing new orders.
To meet its lofty export target of $39-40 billion this year, VITAS has laid out several key measures to support the country’s textile and garment industry. Retaining skilled personnel, investing in employee upskilling, fostering customer loyalty, and optimizing business expenses are among the strategies that will be employed to bolster the industry’s competitiveness and adaptability.
As Vietnam’s textile and garment industry perseveres through these challenging times, it remains determined to carve its path towards success. By embracing innovation and sustainable practices while nurturing a skilled workforce, Vietnam’s textile exporters are poised to emerge stronger and more resilient in the global market.
With ongoing efforts to navigate the shifting landscape of global trade, Vietnam’s textile industry stands as a testament to the nation’s determination and adaptability in the face of adversity.