| Number | Index | Details |
| 1 | The number of businesses in the industry | Over 5000 (in 2015) |
| 2 | The number of labors in the industry | Over 2,5 million labors (in 2015) |
| 3 | Export turnover 2015 | ~ 25,8 billion USD |
| 4 | Import turnover 2015 | ~ 13,3 billion USD |
| 5 | Main export markets | USA, EU, Japan, Korea |
| 6 | Main import markets | China, Korea |
| 7 | Main export products | Jackets, T-shirts, trousers, shirts |
Source: The Textile and Garment Association and The General Department of Customs
Up to now, the textile and garment industry of Vietnam consists of more than 5000 enterprises operating with more than 2,5 million labors. In 2015, the export turnover of the industry is 25,790 billion USD (specifically: textiles account for 22,81 billion USD, fibers and yarns account for 2,54 billion USD), increasing 4,45% in comparison with that in 2014; in the first three months of the year 2016, export turnover increases approximately 6% in comparison with that in the same period of the year 2015. Chart 1. The textile and garment export turnover of Vietnam in the 2011 - 2015 periodUnit: USD
Source: The General Department of Customs
Chart 2. The textile and garment import turnover of Vietnam in the 2011 - 2015 period
Unit: USD
Source: The General Department of Customs
- Products
+ Cotton yarns: 5000 tons
+ Synthetic fibers: 400000 tons
+ Filament fibers: 182000 tons
+ Spun fibers: 6.2 millions of spindles, 900000 tons of spinned silk yarns
+ Woven textiles and knitted textiles: 1500 million square meters
+ Printed textiles and finished textiles: 1500 million square meters
+ Clothes: 4 billion products
1. An Analysis of the Textile and Garment Industry of Vietnam Over the past years, the Textile and Garment Industry is one of the leading export sectors of Vietnam. With the development of techniques and technology, an increasingly large proportion of high-skilled labors and the incentives from the government policies, the textile and garment industry achieved a number of encouraging results, simultaneously creating export values and ensuring demands for domestic consumption and exportation.
Manufacturing capacity
The Textile and Garment Industry of Vietnam has high manufacturing capacity. Currently, the garment sector includes 4,424 enterprises (data has been calculated until 31st December 2013) using 2,5 million labors. Garments achieve 4 billion units. The textile and garment industry also consists of other products, including fiber cotton (8000 tons), yarns (900 tons), cloth (1,5 billion square meters). Localization rate of the whole industry achieves 50%.
Export capacity
Export capacity of the textile and garment industry is also very impressive. Up to 2012, textiles and garments are the leading exports of Vietnam, since 2013, textile and garment products have stood at the 2nd place (after mobile phone). In 2014, Vietnam is the world’s fourth largest textile and garment exporter, accounting for 4,92% of the global export value of the textiles and garments, standing behind China, Bangladesh, Italia. Over the country, there are more than 3.100 enterprises exporting textiles and garments, include 1,2% of enterprises with export turnover of over USD 100 million, 3,25% of enterprises with export turnover of over USD 50 million, 30% of enterprises with export turnover of over USD 1 million. (Data of the year 2014)
Vietnam’s textiles and garments which are high-qualified and prestigious meet the requirements of the big orders and orders with flexible volumes. Vietnamese enterprises mainly export under the two modalities including CMT and simple FOB as follows:
- CMT (Cut-Make-Trim): is the simplest export modality. When cooperating under this modality, buying customers, agencies and organizations provide companies all of inputs including designs, materials, and logistics for production. Manufacturers just carry out stages of cutting, making and completing products. Businesses doing export modality of CMT are just required to have ability to manufacture and basic ability to design for pattern making.
- FOB (Free On Board): FOB is an export modality that is higher level than CMT. The FOB term in the textile and garment sector means “buy all raw materials – sell products”. Under FOB modality, businesses are active in the process of production from material purchasing to product completion. Unlike CMT, producers following FOB actively purchase necessary input components instead of being provided materials directly by their customers. Activities under FOB have significantly changed based on forms of the actual contract relations between providers and oversea buyers.
Currently, exportation of textiles and garments of Vietnam mostly is undertaken under the simple CMT (cut, make, and trim). Export proportion of this modality occupies 70% of export turnover of the total textile and garment industry. Therefore, the growth speed of the industry is high but the added value of the industry is still low.
Components
Vietnam’s textile and garment industry has not been active in generating a domestic source of high-qualified components for meeting the requirements of production of exports but it still depends on imported components (approximately 60%-70%). Vietnam’s textile and garment industry mostly imports components from China, Taiwan and Korea.
Vietnam’s textile and garment industry currently imports 90% of cotton materials, 100% of synthetic fibers, 50% of cotton yarn and 80% of large size cloths.
Labor quality of the textile and garment industry
According to a research of the Ministry of Labor, every 1 billion USD of textile and garment export of Vietnam generates additional 250.000 jobs. Currently, with over 90 millions of Vietnamese population, of which 49% of working-age population, becomes a diverse source of labors for the textile and garment industry. Moreover, labor costs of the textile and garment industry of Vietnam are relatively low compared with many countries in the region. The advantage of cheap labors results in decreasing production costs and lowering price, which brings price competitiveness to textile and garment enterprises.
However, Vietnam’s textile and garment industry lacks skilled labor force and highly-competent technicians in textile and dying sectors. Furthermore, although labor costs are low, average costs per one product unit are still 30%-40% as much as average costs in India, China, and Indonesia. Vietnam’s labor productivity is low and 2/3 as low as labor productivity of countries in the region. Therefore, Vietnam businesses need to further increase labor productivity with the aim of price reduction.
2. SWOT
2.1. Strengths (S)
- With abundant and low-priced workforce, Vietnamese textile and garment companies are able to produce highly qualified textiles and garments.
-90% of equipment in the textile and garment is modernized, which meets the requirements of oversea importers. And able to comply with management and social criteria. In addition, these companies also have close and stable relationships with a number of importers and retailers in the world.
-Vietnam has proximity with sources of components (cloth and main accessories for the textile and garment industry) in the world.
2.2. Weaknesses
- The supporting industry for the textile and garment industry is weak, 70% of materials provided for this industry must be imported from overseas. As a result, production is passive and puts a restraint on ability to make quick responses.
- Technology and production managements are weak, labor productivity is low, and products are not diverse.
- Most of enterprises in the industry are small and medium enterprises (SMEs) with low investment capital fund and limitation on equipment and technology innovation. Abilities to train the senior and mid-level human resources and fashion design are low.
-Marketing and trade promotion are limited. Fashion design, brand building and brand development are not paid attention to.
2.3. Opportunities
- The trend of the shift of textile and garment production sites from developed economies (such as Taiwan, Korea and even China) to developing economies in the Southeast Asian region including Vietnam, which opens opportunities to attract investment capital, technology and management experience for the development of the textile and garment industry.
- Abilities to access new markets increase when Vietnam signs FTAs such as: Vietnam – Korea FTA, Vietnam – Eurasia Economic Union FTA, EVFTA, TPP, etc.
2.4. Challenges
- Many trade barriers and technical barriers such as regulations on chemicals, safe products… cause higher costs to providers.
- Increasingly severe competitiveness from international rivals, especially big textile and garment providers from China, India, and Bangladesh.
3. Development Master Plan of the Textile and Garment Industry of Vietnam to 2020, with a vision to 2030
Minister of Industry and Trade granted the Decision No. 3218/2014/QĐ-BCT dated 11th April 2014 on ratification of development master plan of the textile and garment industry of Vietnam to 2020, with a vision to 2030. This decision clearly states a viewpoint to develop the textile and garment following a modern, efficient and sustainable direction; Strong shifts from handling to sourcing, selling finished products, ensuring quality enhancement, diversifying export products…
The development target: Turning the textile and garment industry of Vietnam to be one of the main industries, directing to exportation and having ability to meet the demand for increasingly domestic consumptions; generating more jobs; improving ability to compete, integrate firmly into the global and regional economies, etc.
The period of 2013-2015: the growth rate of the whole industry in terms of values of industrial production achieve 12% to 13% per year, of which the textile industry increases to 11%-12% per year and the garment industry increases to 13%-14% per year. The rate of export growth reaches 10% to 11% per year. The growth rate of domestic market achieves 9% to 10% per year.
The period of 2016-2020: the growth rate of the whole industry in terms of values of industrial production achieves 12% to 13% per year, in which the textile industry increases to 13%-14% per year and the garment industry increases to 12%-13% per year. The rate of export growth reaches 9% to 10% per year. The growth rate of domestic market achieves 10% to 12% per year.
The between 2016 and 2020 period: The growth rate of the whole industry in terms of values of industrial production achieves 9% to 10% per year, in which the textile industry increases to 10%-11% per year and the garment industry increases to 9%-10% per year. The rate of export growth achieves 6% to 7% per year. The growth rate of domestic market reaches 8% to 9% per year.
The structure of the textile sector and the garment sector in the structure of the whole textile and garment industry: Up to 2015, the textile sector occupied 45%, the garment sector took up 55%; in 2020, the share of the textile sector will increase up 47%, the proportion of the garment sector will down to 53%; in 2030, the ratio of the textile sector will increase up to 49% and the share of the garment sector will decrease to 51% in the structure of the total textile and garment industry.
Industrial development master plan
Analysis & Reports