The Apparel Digest Report Compilation
Vietnam has integrated into global value chains through the establishment of special economic zones (SEZs). In a short amount of time, Vietnam’s industrial sector which includes apparel and textile, has emerged as a frontrunner on the international stage, making a substantial contribution to the nation’s economic growth and placing Vietnam among the leading retailers of garments throughout the globe. In recent years, foreign individuals and organizations are moving towards the Vietnam Free Trade Zone to establish manufacturing businesses and take advantage of the tax advantages for product distribution and export.
Vietnam’s success in attracting huge amounts of foreign investment, notably from industrialized nations such as the United States, the European Union, and Japan, may be attributed to a number of factors, including strategic trade agreements, cheap labor costs, and an increasing emphasis on environmentally responsible practices. Vietnam has emerged as a significant player in the international textile trade as a result of its robust infrastructure, skilled labor pool, and growing demand for luxury textiles that are both ecologically friendly and environmentally conscious. Because of these characteristics, Vietnam has been able to surpass clothing manufacturers that have been there for longer. Because Vietnam places such a strong focus on innovation and sustainability, the country will be able to further solidify its position in the global market as the sector progresses.
The success of an industrial zone is frequently determined by its infrastructure. Since the country’s infrastructure has been developing rather slowly in the midst of rapid industrialization, industrial zones that have historically struggled to draw businesses frequently lacked competent management and infrastructure.
Industrial zones in Vietnam have been upgrading their infrastructure to meet international standards as the country continues to draw FDI. Improvements include better industrial parks overall, but investors should pay close attention to evaluating the standard of manufacturing facilities and warehouses, as well as the availability of water and electricity, wastewater treatment facilities, garbage disposals, fire suppression systems, improved telecommunications, access to banks and post offices, logistic services, and internal roads.
Many industrial areas are close to major roadways that connect to airports, ports, and rail stations for convenient transportation and other amenities. The provinces with the finest infrastructure are Binh Duong, Da Nang, Vinh Phuc, Hai Duong, and Ba Ria-Vung Tau.
During the first eight months of 2024, Vietnamese exports to Japan surpassed the value of sixteen billion dollars. This major achievement brings to light Vietnam’s strategic position as well as the strong business ties that it maintains with Japan. Success in the Japanese market is being driven by a number of reasons, including the followings:
- Quality and Compliance: Vietnamese garment manufacturers adhere to high-quality standards and compliance criteria, which makes their products appealing to Japanese consumers.
- Strategic Free Trade Agreements (FTAs): Vietnam’s involvement in a variety of trade treaties has led to significant reductions in tariffs and enhanced market access opportunities. Vietnam and Japan are both parties to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which is considered to be one of the most important accords. As a result of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), not only has the level of trade between the two countries expanded, but it has also enhanced Vietnam’s competitiveness in comparison to other exporting nations.
When compared to other countries that export clothes, such as China, Vietnam continues to be competitive in terms of labor costs, despite the fact that labor expenses have been on the rise. Because of this cost advantage, as well as the fact that Vietnam has skilled workers, it is an attractive alternative for Japanese importers who are looking for high-quality items at less expensive prices.
Comparing Vietnam’s garment export performance to that of its competitors across the world reveals a remarkable difference. Although China, the largest textile producer in the world, continues to be a powerful competitor, a number of consumers, like Japan, have been forced to diversify their sourcing strategy as a result of rising wages and geopolitical concerns. Another significant contributor is Bangladesh, which is well-known for its exceptionally low production costs. Nevertheless, Vietnam has a significant edge over its competitors due to its well-known reputation for quality and innovation, as well as its dedication to complying with environmental and labor rules.
Their export volumes to Japan are very low due to a number of circumstances, including higher production costs, logistical hurdles, and, in certain cases, less beneficial trade agreements with Japan. Despite the fact that India and Indonesia are key regional rivals, their export volumes to Japan are quite low. Enhanced competitiveness in this sector is a result of Vietnam’s robust free trade agreements (FTAs) and strategic position in Southeast Asia.
It is important to the global clothing industry because Bangladesh, which ranks second only to China in terms of garment exports, is the world’s second-largest garment exporter. Although Bangladesh’s garment exports to Vietnam are relatively low, the majority of Bangladesh’s commerce with Vietnam is concentrated on the importation of raw materials like cotton and textiles. These are the commodities that Bangladesh uses to support its enormous garment manufacturing sector. In spite of the fact that they compete with one another in the global garment business, both nations have found that trade benefits them in equal measure. This commercial relationship is bolstered by the complementary assets of both countries: Bangladesh’s low labor costs and substantial manufacturing capacity, and Vietnam’s strategic trade agreements and broad export markets. Both of these strengths provide Bangladesh an advantage over Vietnam. Both nations will continue to develop and adjust to the requirements of the global market, which will undoubtedly result in a strengthening of their trading cooperation in the garment industry. This will provide economic advantages and enhance regional collaboration.
Over the past several years, the textile and apparel industries throughout the world have made sustainability a priority, and Vietnam is not an exception to this trend. As a result of rising consumer demand and strengthened global regulatory frameworks, the nation has achieved tremendous headway in an effort to integrate its industrial operations with international sustainability requirements. In an effort to reduce the negative effects that their operations have on the environment, Vietnamese businesses are increasingly adopting environmentally friendly production practices. These technologies include water recycling systems, energy-efficient machinery, and garbage reduction techniques, all of which serve to lessen the environmental effect of the textile manufacturing industry, which has traditionally been one of the industries that produces the most pollution. Furthermore, the utilization of biodegradable materials and organic cotton is becoming increasingly popular, which is appealing to the desires of consumers in major countries like as Japan, where sustainability is an essential element in the decision-making process for purchases.
The utilization of internationally acknowledged certifications, such as the Better Cotton Initiative (BCI), the Global Organic Textile Standard (GOTS), and Leadership in Energy and Environmental Design (LEED), is a further demonstration of Vietnam’s dedication to the concept of sustainability. Companies all around the globe who place a high priority on environmentally responsible business practices in their supply chains are actively seeking these certifications. Through the implementation of these standards, Vietnam not only strengthens its position in the international market, but it also displays its dedication to the manufacturing of goods that are both responsible and environmentally friendly.
Additionally, the advancement of Vietnam’s sustainability agenda has been significantly aided by collaborations with groups from other countries. For the purpose of promoting environmentally responsible manufacturing practices and improving working conditions in the textile and apparel sectors, Vietnam has worked closely with organizations such as the International Labor Organization (ILO) and the International Finance Corporation (IFC). These partnerships aim to reduce carbon emissions, enhance working conditions, and guarantee that Vietnam’s textile sector is in line with global sustainability standards. By doing so, Vietnam will be able to position itself as a leader in the production of ecologically responsible clothing.
There are a variety of factors that will determine the future of the trade connection between Vietnam and Japan, but it is anticipated that it will get stronger in the future. The development of new technologies is a significant trend that is fuelling this surge. Vietnam intends to boost its investments in manufacturing systems that are driven by artificial intelligence and automation, which will result in increased production efficiency and decreased costs. In order to maintain Vietnam’s competitive advantage in the global garment industry, particularly in the manufacture of high-tech clothing, which is gaining rising popularity in Japan, these technical breakthroughs will be of utmost importance. Vietnam is able to ensure that its products continue to be popular in the Japanese market by using cutting-edge technology. This is especially important given Japan’s growing need for technologically sophisticated and innovative textiles.
Another trend that will have an effect on the future economic connections between the two nations is the rising desire for items that are favourable to the environment. It is projected that Vietnam would boost its production of environmentally friendly textiles, such as those made from organic and recycled materials, as this trend in consumer preferences toward sustainability continues. As a result, this is in line with the environmentally aware market in Japan, which has a significant demand for products that are not only of high quality but also ecologically friendly. This will help Vietnam satisfy these expectations, which will further solidify its position as a key garment supplier to Japan. Vietnam’s proactive push to embrace sustainable practices will help meet these expectations.
The outstanding success that Vietnam has had in the global garment industry, notably in Japan, may be attributed to a mix of smart trade agreements, quality assurance, and efficient logistics. Another factor that helps the nation stand out in the rapidly evolving global textile environment is the country’s emphasis on sustainability. Bangladesh continues to reap the benefits of trade with Vietnam, particularly in the area of raw materials, while simultaneously maintaining its position as a worldwide powerhouse in the garment industry. As a result of the changes that are occurring in the trade dynamics of these two nations, it is anticipated that their respective positions in the global garment industry will improve, which will make them key factors in determining the future of global textile trade.
