The textile and garment industry proactively adapts to difficulties in 2023
Overview of the textile and garment industry in 2022
Despite being affected by the COVID-19 pandemic, efforts have helped Vietnam’s textile and garment export turnover reach around 44.5 billion USD, an increase of 10.4% compared to 2021. Exports to major markets such as the US and EU have increased, while exports to China have decreased compared to 2021.
This year, the textile and garment industry aims to export about 46-47 billion USD, an increase of about 10% compared to last year.
The changes and developments of the textile and garment industry in 2022
To achieve positive results in the volatile market conditions of 2022, the textile and garment industry relies on flexibility and sensitivity in forecasting and management. The sector has maximized orders, including short-term ones, to ensure production continuity and retain employees.
It continues to research the ability to switch products based on market demand and always prepares the best production workforce to seize opportunities when the market shows signs of recovery.
An example of adapting to the market is the structure of Vietnam’s textile and garment exports, which is trending towards every day, highly practical items such as shirts (+44%), and jackets (+42.2%).
These products have seen a strong increase in demand as consumer demand recovers post-Covid-19, helping businesses secure more export orders.
The US continues to be Vietnam’s largest textile and garment consumer market, with export turnover in the first 6 months of 2022 reaching 4.4 billion USD, a 24.2% increase compared to the same period, accounting for 50.3% of the total value of textile and garment exports.
In addition, the EU is Vietnam’s second-largest textile and garment export market with an export turnover in the first 6 months of 2022 reaching 2,104.9 million USD, a 38.8% increase compared to the same period in 2021.
Vietnam’s major export markets such as Germany (reaching a turnover of 521.4 million USD, an increase of 40%), France (reaching a turnover of 486.6 million USD, an increase of 49.3%), the Netherlands (reaching a turnover of 310.1 million USD, an increase of 25.3%), and Belgium (reaching a turnover of 243.6 million USD, an increase of 24.2%) all saw strong growth.
This demonstrates the strong influence of the Vietnam-EU Free Trade Agreement (EVFTA) in the context of the uncertain global economy.
Although the figures show significant growth, this does not guarantee that the textile and garment industry will maintain growth in 2023. Many objective factors are negatively impacting the industry’s growth.
Difficulties and challenges in 2023
According to a report by VIRAC, the textile and garment industry is predicted to continue facing low demand in the first 6 months of 2023. The number of orders in Q4/2022 will be lower by 25-50% compared to Q2/2022, equivalent to a revenue decrease of 15-20% compared to the same period.
The reasons are:
- Inflation pressure: Raising interest rates to control inflation has a significant impact on reducing textile and garment consumption, leading to a large inventory of goods.
- Exchange rate pressure: With efforts to stabilize the USD/VND exchange rate by the State Bank of Vietnam, the Vietnamese dong is tending to appreciate against currencies such as the Chinese yuan (CNY) and Indian rupee (IDR). Vietnam’s textile and garment exports are losing their competitive advantage while global demand remains low.
- Decreasing orders due to high inventory: The amount of textile and garment inventory in export markets is still relatively high since the outbreak of Covid-19.
The “green” challenge for the textile and garment industry
In the face of immediate difficulties, the long-term challenge for the textile and garment industry is how to create sustainable products that are aimed toward the “green” goal. In reality, the textile and garment industry requires a huge amount of water for production. Large amounts of emissions and solid waste are also major issues that need to be addressed.
However, the production level of Vietnam’s textile and garment industry is still at a low level. Therefore, Vietnam will face many difficulties in the coming years in meeting the very high standards for the hygiene, labor, and the environment of demanding markets such as the US and EU.
Specifically, the European Commission has presented proposals for the EU’s new Textile Strategy, which is part of the European Green Deal aimed at addressing global challenges such as climate change, biodiversity loss, and environmental pollution.
By 2030, textile products brought to the EU market must have a long lifespan and be recyclable, primarily made from recycled fibers, free of harmful substances, and produced in compliance with social and environmental rights.
Global “green” awareness is increasingly emphasized, so changing to develop in the textile industry is essential. Vietnamese businesses need to seize this opportunity to invest in technology and find solutions to reduce waste and environmental pollution.
Textile businesses adapt to difficulties
In the Q4/2022 report from VIRAC, a shortage of labor will continue to be a challenging issue for textile businesses in the industry in the latter part of 2022. Finding ways to retain labor to ensure livelihoods and avoid labor shortages when orders return is crucial.
Therefore, textile businesses need to be flexible in restructuring their product lines to ensure that orders meet market demands. Actively seeking new customers in niche markets and non-traditional markets.
Flexibly adjusting production plans on a weekly and monthly basis and reducing the size of orders in each order. Especially continuously improving product quality to convince discerning customers.
In the long run, solutions proposed to address challenges include strengthening research and development of products, applying new technologies, focusing on environmental protection policies, seeking new markets, and expanding internationally. Successfully implementing digital transformation, prioritizing digital transformation for core activities, based on reasonable resources.
REGISTER FOR TEXTILE INDUSTRY REPORT DEMO HERE
Vision for 2035 and development strategy for the textile industry
In the long term, textiles remain a major export industry of the economy. In the target-setting strategy for the period of 2021-2030 approved by the government, the average growth rate of textile and footwear exports is expected to reach 6.8 – 7% per year.
Specifically, the growth rate for the period of 2021-2025 is set to be 7.2 – 7.7% per year. The total export turnover of the two industries is expected to reach 77-80 billion USD in 2025 and 106-108 billion USD in 2030.
Notably, the textile industry will continue to promote investment in raw materials, accessories, and supporting industries for textiles and footwear, focusing on the production of fabrics, synthetic fabrics, and leather. The production of fabrics from domestically-produced fibers is encouraged to reduce imports, positively affecting the formation of value chains and complete supply in the industry…
Information about the Vietnamese textile industry is compiled from the “Q4/2022 Textile & Garment Industry Report” by VIRAC. The full report will provide customers with an in-depth analysis of the business environment, as well as the global and domestic market situation.
In addition, VIRAC also provides prospects, forecasts, and recommendations in the process of production and business. Register to receive a sample report HERE.
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Joint Stock Company for Industry Research and Consultancy is a reliable companion for your business on the path to conquering the Vietnamese market.
