8-month trade
In January to April 2024 period, Vietnam’s textile (excluding yarn and fibre) and garments export rose 6.7 per cent to $10.416 billion y-o-y. However, exports decreased by 2.5 per cent m-o-m to $2.596 billion in April after a strong rebound in March 2024. The yarn exports saw an y-o-y increase of 8.8 per cent to $1,411.348 million. Volume-wise, 590,767 tons of yarn was exported during the period registering an increase 14.1 per cent. On a month-on-month comparison, the yarn exports eased by 8.2 per cent in value and 6.8 per cent in volume. The main markets for Vietnam’s textile & garments export were the US, at $4.404 billion accounting for 42.28 per cent of the total exports, Japan ($1,256.883 million) and South Korea ($1,014.018 million). For yarn export, China accounted highest with 48.19 per cent ($680.569 million) share of total yarn shipments, while exports to India were worth $18.991 million during the four-month period. By May 2024, Vietnam’s export turnover of textiles reached over $15.8 billion, increasing 4.3 per cent compared to the same period in 2023.
Vietnam’s economy grew 7.4 per cent in Q3 2024, driven by the manufacturing sector.
Exports increased by 15.4 per cent to $299.6 billion, with textile exports up 6.7 per cent.
Despite typhoon disruptions in September, textile export growth continues, driven by global demand and strategic investments.
The textile industry remains buoyant, supported by FDI, rising orders, and sustainability initiatives.
For the first half of 2024, the aggregate exports to foreign markets rose 5.04 per cent to $16.52 billion, of which exports to the EU accounted for 11.54 per cent and increased 1.63 per cent to $1.91 billion. Exports to the Netherlands showed strongest recovery of approximately $565.29 million, increasing 19.97 per cent and contributing 29.65 per cent to total export to the EU. Exports to the Czech Republic (up 48.98 per cent), Slovakia (up 55.32 per cent) and Luxemburg (up 24.76 per cent) also showed increase. The main export markets for Vietnam’s textiles, including the US, Japan, South Korea, and China, showed positive growth.
In July, textile export turnover reached $3.72 billion, marking a 17.6 per cent increase from the previous month. From January to July, the US imported $8.93 billion worth of Vietnamese textiles, a 5.5 per cent increase from the same period of last year.
For January to August period, the textile and garment exports rose 8.1 per cent to $24.3 billion.
In terms of imports, Vietnam’s cotton import increased 17.3 per cent to $999.910 million in the first four-month period compared to 2023. The volume of imported cotton was 504,198 tons, marking a 37.7 per cent increase y-o-y. The country imported 378,018 tons of yarn, worth $805.986 million, reflecting an 18.6 per cent rise in value and a 16.3 per cent increase in volume. Fabric imports totalled $4.492 billion, which was up by 8.6 per cent. For January to July period, textile imports surged 12.36 per cent.
VITAS (Vietnam Textile and Apparel Association) was reported to have lowered the 2024 export target for textiles, garments, and yarn to $44 billion.
Export growth drivers
In the first half of 2024, Vietnam’s textile exports accounted for $16.52 billion, which cumulatively reached $20.274 billion by July-end. Yarn exports rose by 6.8 per cent and 3.5 per cent in volume and value, respectively. China continued to be the biggest market for yarn whereas the US was the largest market for textiles, with imports of fabrics and cotton also increasing. The key reasons behind this growth included increased global demand, strategic investments in technology and innovation, as well as trade agreements and diversification of export markets.
The global demand in essential markets of the US, Europe and Asia expanded, led by post-pandemic restoration causing a surge in pent-up demand. The country’s textile and garments manufacturers are investing in automation, digitalisation and sustainable practices to enhance efficiency, productivity and quality in their production processes. At the same time, Vietnam continued to diversify its export markets beyond the US and EU, by tapping into rising markets in Asia, Africa and the Middle East. New trade partnerships have been forged in this regard and money making possibilities for the sector have been established. The strategic trade agreements also played a crucial role in the export growth. The trade agreements such as CPTPP (Comprehensive and Progressive Agreement for Tarns-Pacific Partnership and EVFTA (European Union-Vietnam Free Trade Agreement) ensured Vietnam with tariff discounts and expanded its market entry. All these helped Vietnam grow its textile marketplace percentage and in attracting new customers.
Yagi-hit manufacturing
In September, typhoon Yagi hit Vietnam’s manufacturing sector. The heavy rain and flooding delayed and closed production lines, and supply chains across businesses, resulting in decline in output, new orders, purchasing and stocks of inputs. The S&P Global Vietnam manufacturing PMI dropped from 52.4 in August to 47.3 in September, signalling a renewed deterioration in business conditions at the end of Q3, 2024 after a spell of solid growth. The typhoon caused a significant reduction in manufacturing production ending a five-month sequence of expansion. With a dip in new export orders, firms scaled back their purchasing activity for the first time in six months. However, those manufacturers that made purchases during the month faced a marked lengthening of suppliers’ delivery times as flooding disrupted transportation. As a result, stocks of purchases decreased rapidly. Stocks of finished goods were also down in September. The production line disruptions and company closures led to accumulated backlogs of work.
However, due to temporary nature of the disruption, the firms remained confident and optimistic in their production outlook. The new orders in prior months led manufacturers to expand their staffing levels slightly in September after a fall in August.
Meanwhile, cost pressures remained relatively muted causing the output prices to increase at a marginal rate. With rising transportation costs and higher raw material prices, the input costs saw an upward trend. Despite this, the inflation rate remained under check. As of selling prices, some firms increased prices owing to higher input costs while others offered discounts to their customers thanks to muted cost inflation.
Orders’ status
Export of textiles and garments is projected to grow by up to 10 per cent amid abundant orders. Most firms were reported to have signed export orders by the end of the fourth quarter of 2024, and even up to the first quarter of next year. Thus, majority of garment companies of the Vietnam Textile and Garment Group have enough orders.
For example, TNG Investment and Trading JSC reported a second-quarter revenue of VND2.174 trillion (~$85 million), up 8.8 per cent. The company which produces for brands like Decathlon and Asmara, reported a post-tax profit of VND86 billion ($3.35 million), up 57.1 per cent y-o-y. The company secured enough orders to last through the year and continued negotiating for next year’s contracts. The surge in orders for TNG was partly driven by heightened demand ahead of the Paris Olympics.
However, despite the positive trend in orders, the industry’s profit margins remained under pressure due to rising labour costs. The minimum wage in Vietnam increased by 6 per cent in July, posing a challenge for many companies. Among the 30 textile firms listed on two stock exchanges, only about half reported profit growth in the second quarter.
FDI in the sector
In Vietnam, FDI accounts for 65 per cent of the garment-textile industry export turnover. As of May-end, the country had attracted 3,500 FDI garment-textile projects with a combined value of $37 billion, as per VITAS. Many large corporations from China, Japan, India, South Korea and Taiwan are investing in building modern factories in Vietnam. For instance, Singapore’s Sanbang Co. Ltd. began construction of a plant for towels, fabrics, DTY yarn at Rang Dong textile industry park in the northern province of Nam Dinh in late September. The plant with a total investment of $30 million (VND 673.5 billion) is expected to become operational in the fourth quarter of the next year. The other major projects underway include a $203 million textile dyeing factory at the park by Japan’s Top Textiles Co. Ltd. of Toray Group. Early in the year in February, an investment license was granted to Hong Kong’s Crystal International Limited Group to modernise the Yi Da Denim Mill Co. Ltd., with a total investment of nearly $60 million (VND 1.47 trillion). Later in March, SAB Industrial (Vietnam) Company Ltd. of the Weixing Group inaugurated a $6 million plant in the Bim Son industry park in the northern central province of Thanh Hoa, to produce clothing accessories.
Sustainable development
Supported by the German government, the Green Tech Landing Pad initiative unveiled five pilot projects, focused on green technology in Vietnam’s textile and garment industry, on June 18, 2024. To advance this initiative, the GIZ (German Corporation for International Cooperation GmbH) has been collaborating with the NIC (National Innovation Centre) and Vietnam’s Ministry of Planning & Investment. Inclusive of the technologies such as Io Team VN’s energy management solution, Hoang Ha’s waste heat recovery system, Enedig Kft’s cloud-based labour cost calculation tool timeSSD, ECOSOI’s pineapple-based fabrics and fibres, and Block Texx’s recycling solutions for polyester and cellulose, these pilot projects demonstrate a strong commitment to sustainable practices aligned with the European market standards.
Vietnam’s Energy Efficiency & Sustainable Development Department signed an MoU with the Netherlands-based Sustainable Trade Initiative (IDH) to support sustainable development of the textile and footwear industry in the country. The collaboration is between the country’s Ministry of Industry and Trade (MoIT), IDH and associations within the textile and footwear sector. The domestic textile and footwear industry of Vietnam contributes significantly to the nation’s economy but has faced competitive pressures and challenges in the resource and energy use, environmental pollution and greenhouse gas emissions. The MoU will help promote the application of sustainable development models, expand the market for eco-friendly products and enhance the competitiveness of domestic textile and footwear enterprises, contributing to the implementation of Vietnam’s international commitments on sustainable development and climate change.
First edition of VIATT
The inaugural edition of Vietnam International Trade Fair for Apparel, Textiles and Textile Technologies (VIATT), held from February 28 to March 1, 2024, attracted 409 exhibitors and 17,262 visitors from 17 countries and 55 regions, respectively. The VIATT, organised by Messe Frankfurt (HK) Ltd and the Vietnam Trade Promotion Agency (VIETRADE), covers the entire textile industry value chain. Various textile and garment segments benefitted from the event. The second edition of the VIATT fair is scheduled for February 26-28, 2025 at the Saigon Exhibition and Convention Center (SECC).
Fibre2Fashion News Desk (SB – WE)