Vietnam’s garments and textiles industry is showing signs of improvement as recovery in key export markets leads to a boost in orders. Rising labor costs in China also drive up product prices, giving Vietnam a good chance to become the next hub for manufacturing labor-intensive goods. Industries that used to thrive in China are now moving to Vietnam.
Statistics from the General Department of Vietnam Customs show that the export value of Vietnam’s clothing and textiles increased by 9.15 percent to $392 million and 3.2 percent to $3.2 billion in July this year, respectively.
Exports from the sector are expected to recover well in the rest of this year, leading to higher export volumes expected in the second half of the year compared to the first.
Thanh Cong Textile Garment Investment Trading JSC (TCM) believes that positive signs are appearing on the horizon as more foreign partners from the EU and across Asia have come to Vietnam recently to learn about the textile industry here.
In the first seven months of this year, TCM saw revenue of about $80 million, down 27 percent, and after-tax profit of $5.2 million, down 22 percent year over year.
The company’s revenue comes from three major segments, from which Garments account for 76 percent, Textiles for 16 percent and Yarn for the remaining 6 percent. The company received orders equivalent to 76 percent of its revenue plan for Q3 and 86 percent of expected revenue for Q4.
TNG Investment and Trading JSC (TNG) suggested that the most challenging times are over as the company posted an 11.5 percent increase in July revenue to $33 million compared to the previous month and a 2 percent year-on-year increase. In the first seven months of this year, TNG earned $173.6 million, up 3 percent year-on-year.
Currently, 98 percent of the company’s revenue comes from export markets, with the United States having the largest share at 47 percent, France at 15 percent, and Canada at 8 percent.
Song Hong Garment JSC (MSH) saw a better performance than other companies in its Q2 business as it became the only trader to post positive revenue growth year-on-year, and the company’s earnings before interest, taxes, depreciation and amortization exceeded 10.5.
According to World Bank forecasts for 2023, GDP growth in major export markets such as the US will grow by 1.1 percent, China by 5.6 percent, Japan by 0.8 percent, leading to rising incomes and a resurgence in consumer confidence.
With a more positive outlook, consumers are expected to loosen their purse strings in the coming festive year-end season. Inventories of major fashion brands like Nike, H&M, GAP, and Inditex are much lower this year than in mid-2022 and the need to replenish their stocks will see bright prospects for garment and textile exporters in the coming period.
Vietnam’s textile and apparel sector is expected to reach $40 billion this year, albeit down 9-10 percent year-on-year.
According to World Trade Organization data, in 2022 Vietnam exported $35 billion worth of ready-made garments.
Vietnam is the second largest apparel exporter to the United States, exporting $18.24 billion in 2022, up from $12.21 billion in 2018 and $14.37 billion in 2021. Vietnam’s share of total US apparel imports increased from 14.74 percent in 2018 to 18.26 percent in 2022.
