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Despite TPP’s Bleak Future, US Gets “Intimate” with Vietnam

The Trans-Pacific Partnership may be off the table, but that hasn’t stopped Vietnam from becoming an increasingly important source of intimate apparel for U.S. brands and retailers.

U.S. imports of women’s intimate apparel totaled $5.8 billion in 2016, a 2 percent drop compared to 2015, according to the most recent data from the Office of Textiles and Apparel (OTEXA). Total imported intimate apparel units fell 2.5% to 2.75 billion. The average cost in dollars per unit remained essentially flat.

China is still the number one trading partner, representing 46 percent of total imports, down by more than one percentage point from more than 47 percent in 2015. Total U.S. imports of intimate apparel from China were $2.6 billion last year, down 4.5% from 2015.

Sri Lanka was the second largest intimate apparel trading partner in the year, with 10 percent of U.S. imports, a 0.8% share increase. Imports in the category from Sri Lanka totaled $575 million in 2016, nearly 6 percent above the 2015 total.

Sri Lanka is home to several major intimate apparel manufacturers, including MAS Holdings and Brandix Apparel Solutions, which produce products for Victoria’s Secret, Pink, PVH’s Calvin Klein, Nike, Ralph Lauren, Gap, Spanx, Marks and Spencer, Hema and a host of others. Sri Lanka was not a member of the TPP and many industry experts felt that put companies in the country at a disadvantage when stacked against Vietnam. Apparel accounts for more than 40 percent of Sri Lanka’s exports and the industry employs a large percentage of the country’s skilled workforce. Intimate apparel represented more than 40 percent of the country’s apparel exports to the U.S. last year.

Vietnam has been the number three intimate apparel trading partner of the U.S. for the past several years, and in 2016 it was the fastest growing of any top 10 trading partners in the category. The country saw the dollar value of its intimate apparel exports to the U.S. grow by a sizeable 26.4% in 2016, to $460 million, resulting in a 1.8 percentage point share gain. Despite the rapid growth, intimate apparel remains only 4 percent of total U.S. apparel imports from Vietnam.

Several major textile and apparel companies had invested in Vietnam in anticipation of TPP. Best Pacific, TAL Group, Texhong and Hyosung have all reportedly made significant textile and apparel investments in Vietnam.

There is much speculation about whether the growth will continue now that the U.S. has abandoned TPP, a trade deal that would have given Vietnam better access to the U.S. market. Even without TPP, however, Vietnam remains competitive among Southeast Asian countries and even—in some segments—China. With its favorable tariff rates, lower labor, electricity and other costs, and convenient location.

U.S. innerwear giant Hanesbrands opened its first Vietnam factory in 2007, and has expanded further since then.

India also enjoyed above-average growth in its intimates exports to the U.S. last year, while Cambodia and the Dominican Republic saw their shipments to the U.S. decline the most of any top 10 trading partner in the category.

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