Will Vietnamese textile and garment enterprises thrive in the US after the Covid-19 epidemic?

Will Vietnamese textile and garment enterprises thrive in the US after the Covid-19 epidemic?

Although heavily influenced by Covid 19, it can be seen that Vietnamese textiles play an increasingly important role in the US apparel market.

he US is the largest consumer market for textiles and clothing in the world. In 2019, textiles and garments imported into the US market reached 111 billion USD, accounting for about 10% of the global market share. The US is also the most important customer of Vietnamese textiles, accounting for nearly half of the total export value.

In 2019, the Covid 19 epidemic broke out and spread strongly in the US, and fashion businesses in this country were severely affected. A lot of big American fashion companies have to file for bankruptcy such as J.Crew (2019 revenue is 2.5 billion USD), Meiman Marcus (2019 revenue is 4.9 billion USD), JC Penney, Brook Brothers, RTW Retailwinds ... In that context, many Vietnamese textile and garment enterprises also struggled when the situation of canceling orders, extending orders, not earning money ... happened more often.

Most of the textile and garment enterprises on the stock exchange recorded a sharp decline in business results. In the first 9 months of 2020, TNG's profit decreased by 26%, MSH decreased by 54%, VGT decreased by 65%, VGG decreased by 76%, GMC decreased by 84% compared to the same period last year.

Although heavily influenced by the Covid 19 epidemic, Vietnamese textile and apparel are increasingly taking up a large market share and playing an important role in the US market.

The trend of transferring orders from China to Vietnam

Since the end of 2018, the US-China Trade War has helped American fashion firms shift more and more textile and apparel orders made from China to Vietnam. In 2019, the value of Vietnam's textile and garment exports to the US reached US $ 14.4 billion, a strong growth of 11% compared to 2018. This trend continues until 2020. Although affected by the Covid 19 translation but Vietnam's textile and garment exports still fell at least among the major textile and garment exporting countries to the US.

In the first 9 months of 2020, the value of US textile and apparel imports worldwide decreased by 24.5% over the same period last year, while imports from Vietnam decreased by only 9.2%, while, in China decreased by 38, 4%, Bangladesh down 13.3%, Indonesia down 20%, India 22.7%.

Will Vietnamese textile and garment enterprises thrive in the US after the Covid-19 epidemic?  Photo 1.

The trend of increasing the market share of Vietnam's textile and apparel in the US has continuously increased from 2015 to present. However, thanks to the US-China trade war, Vietnam's market share will increase sharply in 2019 and 2020 to 20%, approximately equivalent to China (23.4%) and outperformed the third country. is Bangladesh (8.4%).

Will Vietnamese textile and garment enterprises thrive in the US after the Covid-19 epidemic?  - Photo 2.

According to a recent survey by the American Fashion Association, 95% of the fashion businesses in the US are choosing Vietnam as their main supplier of goods. This rate also increased sharply from 83% in 2019.

Also according to this survey, 40% of US fashion businesses will continue to increase their imports from Vietnam in the future and 45% will continue to remain the same as at present. Meanwhile, 75% answered that it would reduce the import with China in the near future and 25% would remain the same as at present.

The trend of fashion firms now has more diversification of supply, not too focused on one country to limit risk. The trend of "China plus Vietnam plus other countries" is becoming more and more popular, in which China and Vietnam will be the key, accounting for 40% -60% of the order value. This shows the great position of Vietnamese textile and apparel with American fashion companies.

The strengths of Vietnam textile

The textile and garment industry is employing nearly 4 million people, accounting for about 8% of Vietnam's labor force. This is also the industry that brings the third most foreign currency after exporting phones, electronic components and machines, 33 billion USD (2019). Scale of Vietnam's textile and garment exports currently ranks 3rd in the world, just behind China and Bangladesh. In the US market, Vietnam ranked second, approximately equal to China.

The trend of moving orders from China to Vietnam has been quietly taking place when the skills of Vietnamese workers have been gradually improved, labor costs are not too high, delivery speed has been improved thanks to the logistic system. more complete, the ability to respond to large orders is also better… The US-China trade war only helps this transition happen at a faster rate. And in the trend of moving orders out of China, Vietnam seems to be the country that is benefiting the most.

According to the American Fashion Association, Vietnam's garment and textile have many advantages with rival countries.

Will Vietnamese textile and garment enterprises thrive in the US after the Covid-19 epidemic?  Photo 3.

The American Fashion Association scored on 5 aspects, including: Delivery speed, Labor costs, Competence and flexibility, Human and social compliance, Risk of environmental pollution. The scale is from 1 to 5, the higher the better and the lower the worse. Specifically, the score above 4 is above average, from 3 to 3.9 is on average, and the scale below 3 is below average.

According to the above table, Vietnam scored 16 points out of 25 maximum points, just behind China with 17 points and better than the rest of the countries like Indonesia 14 points, Bangladesh 13.5 points, India 13.5 points or better. Cambodia with 13.5.

In addition, the geographical location near China is also a great advantage of Vietnam textiles. China is the country that supplies the most textile materials to the world. Near China is also close to the source of raw materials, contributing to reducing logistics costs and delivery time.

Although heavily influenced by the Covid-19 epidemic, it can be seen that Vietnamese textiles play an increasingly important role in the US apparel market. According to the writer's point of view, when the epidemic is over, the economy recovers, the business situation of Vietnam's textile and garment enterprises will return strongly.

https://cafef.vn/doanh-nghiep-det-may-viet-nam-se-but-pha-manh-tai-my-sau-dai-dich-covid-19-20201110161825365.chn
Source: cafef.vn