Vietnam’s textile and garment exports have slowed to their slowest pace of growth since 2010 owed to global market entrants continuing to snag share.
For the first six months of the year, Vietnam’s exports increased just 5.1% to $10.7 billion, meaning the country will likely miss its $31 billion export target for the year, according to Thanh Nien Daily.
Buyers are still sourcing with Vietnam, but they are increasingly eyeballing opportunities in nearby low-cost labor nations like Bangladesh, Cambodia, Laos and Myanmar, where import tariffs can be lower.
Currently, textiles made in Vietnam face an average 17 percent tariff when headed for the U.S. and nearly 10 percent to the EU.
High present tariffs aside, Vietnam’s textile and apparel exports to the U.S. are still up 3.59% year over year to $4.47 billion as of May, according to OTEXA. Last year, those exports to the U.S. totaled $10.56 billion, and Vietnam’s overall exports in apparel and textiles to all markets was $27.2 billion, a 10 percent jump from the previous year.
Though the country’s in work trade deals—one with the EU and the larger Trans-Pacific Partnership, which includes the U.S.—are expected to boost exports, it will be another two years at least before any effects start to show, especially since the TPP is still pending approval by the 12 member nations.
If Vietnam is to successfully accommodate what it hopes will be an influx of apparel and textile production orders as a result of these trade deals, the country will have to turn its facilities more high-tech.
Knowing the necessity of that upgrade, Vietnam’s Textile Machinery Association (VDMA) and the Vietnam Textile and Apparel Association (VITAS) brought in German companies and delegates this week to showcase the latest in German machinery.
“Vietnam is a very important market in the area of textile, there is a need for Vietnamese textile industry to invest to modernize the technology and machinery,” VDMA’s director of exhibition and export marketing, Boris Abadjieff told Vietnam News. “German companies and VDMA member companies are leading in this area, and that is the reason we are here.”
The country is on track to continue investing in the machinery upgrades, and has another similar event being held now in Ho Chi Minh City.