Vietnam's textile and garment industry has experienced astonishing growth, surpassing China to become the largest supplier to the U.S. market. However, can Vietnam maintain this advantage in the global textile industry, or is it merely benefiting from current market fluctuations?
In recent years, Vietnam's textile and garment sector has achieved remarkable growth, becoming a significant force in global textile exports. According to data from the Vietnam Textile and Garment Association, in the first seven months of this year, Vietnam's textile and garment export value reached $23.64 billion, an increase of 4.58% compared to the same period last year. This performance has allowed Vietnam to overtake China as the largest garment supplier to the U.S.
With the easing of inflation in major global markets, purchasing power in the U.S. and Europe has improved, providing favorable conditions for Vietnam's exports. Particularly as major competitors like Bangladesh face factory closures and insufficient production capacity, more international brands are choosing to shift their orders to Vietnam. Vietnamese exporters are not only receiving orders for the end of the year but are also negotiating supply contracts for 2025.
Despite the impressive performance of Vietnam in the textile and garment sector, the country's competitiveness largely relies on the devaluation of its currency. The Vietnamese dong has depreciated by 5% against the dollar, significantly enhancing the price advantage of Vietnamese products.
At the same time, the signing of free trade agreements has also provided important support for Vietnam's textile industry. Vietnam has signed 16 free trade agreements with over 60 countries, resulting in significantly reduced or even zero tariffs, allowing Vietnamese textiles to enter major markets such as the U.S., EU, and Japan with almost no tariffs.
The success of Vietnam's textile industry cannot be separated from significant investments by Chinese companies. The influx of Chinese technology and capital has enabled Vietnamese textile factories to make rapid progress in automation and smart manufacturing. This collaboration has helped Vietnamese factories improve production efficiency and product quality, quickly enhancing Vietnam's position in the international supply chain.
However, this dependence on external technology raises questions about the innovation capabilities of local Vietnamese companies. If Chinese companies reduce their investments in Vietnam or shift their capital to other markets, the growth of Vietnam's textile industry may be adversely affected.
Meanwhile, the rise of Vietnam's neighbor, Cambodia, cannot be overlooked. Cambodia has attracted significant foreign investment due to its cheap labor and stable political environment, resulting in continuous growth in its textile and garment exports. Especially in areas like Phnom Penh and Sihanoukville, several large industrial clusters have formed, producing goods for international brands. Cambodia's rapid development may further intensify competitive pressure in the region, forcing Vietnam to seek new competitive advantages.