Vietnam is becoming an increasingly valuable trading partner, especially with the US, as bilateral apparel and textile trade continues to see steady growth.
According to an American Chamber of Commerce (AmCham) Vietnam report released Dec. 1, trade between the US and Vietnam is expected to reach $28.7 billion for 2013, a 15.3% increase over 2012, with Vietnam’s apparel exports to the US climbing to $8.5 billion, a 10.4% increase over last year’s $7.7 billion.
The minimum wage adjustment in Vietnam for 2014 was a moderate 15% increase, considerably lower than the Vietnam General Confederation of Labour’s proposed 26%-34% rise, and lower than this year’s 17.5% spike. Experts say growth in the apparel industry is due in part to this slowdown in labor cost increases. The rise in the Vietnamese consumer price index (CPI) was 5.8% in November.
The anticipation of the Trans-Pacific Partnership (TPP) has spurred foreign direct investments in textile and apparel supporting industries also contributing to growth in the sector.
One expert said, speaking to AmCham, she expects the TPP will “change the sourcing landscape drastically;” and that “Vietnam’s share of the US apparel import market could go from 10% to 35% very quickly.”
Apparel and textile exports account for 36% of Vietnam’s total trade with the US, and the up and coming country is currently the second largest apparel supplier to the US after China. The most recent Office of Textiles and Apparel (Otexa) report showed that the dollar value of US apparel and textile imports from Vietnam as of the end of October are up 13.76% over the same time last year.
As of October, China’s textile and apparel exports were up 2.4% over last year and Bangladesh, one of Vietnam’s major competitors in the industry, saw an 11.7% rise in apparel exports to the US.
Nate Herman, Vice President of International Trade for the American Apparel & Footwear Association (AAFA) said, “Overall apparel import growth used to come from China and Bangladesh, but today Vietnam is the main driver. I don’t think you will see that trend abate in the short term,” according to AmCham.