Vietnam’s textile and garment market in 2025  is predicted to face significant risks and uncertainties due to political factors from major importing countries and intensifying competition.

Vietnam has set an ambitious export target of up to US$48 billion for the sector in 2025. Photo: Khac Kien/The Hanoi Times

According to a recent study by the Vietnam National Textile and Garment Group (Vinatex), one of Vietnam's leading textile and garment manufacturers, the sector is expected to continue its recovery path in the first half of 2025, following the trend observed at the end of 2024.

Hoang Manh Cam, Deputy Chief of Vinatex Office, noted that there are positive growth signals as key markets such as the US and EU show signs of economic upturn. He highlighted that consumer income and spending are likely to increase as interest rate cuts continue.

By the end of the year, many Vietnamese manufacturers had secured orders for the first quarter of 2025, with some firms even receiving orders for April and May this year.

He stressed the need for Vietnamese businesses to diversify their sources of orders across different markets to ensure stable production and higher profit margins.

Looking ahead, the US could impose tariffs of 10 to 20% on imports, and Vietnam could face an additional 10% tax on its goods entering that market, the deputy chief said.

 "Cumulatively, Vietnam holds nearly 20% of the US textile market, while China leads with over 20%. However, if Chinese textile exports to the US are subject to tariffs as high as 60%, there is potential for Vietnam to capture a larger market share, especially by complying with rules of origin and supply chain traceability," he added.

The Vietnam Textile and Apparel Association (Vitas) reported that Vietnam has set an ambitious export target of up to US$48 billion for the sector in 2025. This target comes amid stricter requirements for sustainability and social responsibility in international markets.

To achieve this goal, the association plans to attract high-tech dyeing projects to industrial zones, invest in eco-friendly natural raw materials, and develop the fashion segment of the industry.

In terms of market strategy, Vietnam aims to diversify its sources of raw materials, customers and products, while enhancing marketing capabilities and direct customer engagement. The focus will also shift from contract manufacturing to higher value-added production methods, while efforts will be made to develop new brands and products.

In terms of workforce development, the association will continue to collaborate on training programs to enhance skills in management, technical expertise, design, and digital and green transformation.

In addition, the association emphasizes the need to make advances in science and technology, advocating the application of new materials and environmentally friendly technologies, as well as comprehensive quality management. Strengthening research capabilities and integrating digital transformation are also priorities.

Finally, funds will be directed to the establishment of large industrial parks, sewage treatment plants, solar energy projects, and fashion centers. The association is also looking to implement green loan programs and financial leasing for green technology upgrades, as well as support the cultivation of domestic raw materials such as mulberry, hemp, banana and pineapple.

Foreign orders boost local industry growth

Local workers at the Garco 10 factory.

In 2024, Vietnam's textile and garment industry is estimated to reach about $44 billion in exports, an 11% growth compared to 2023, according to Vitas. This impressive performance has propelled Vietnam to the second position among the world's largest textile exporters.

Vu Duc Giang, Chairman of Vitas, noted that a key factor contributing to this success was the influx of orders moving away from Bangladesh. However, he pointed out that while these orders are substantial in quantity, they do not command high prices. As a result, companies that focus on high-end items, such as Hoa Tho and Garco 10, have not benefited from this shift.

Providing insights into Vietnam's competitors in the global textile export market, the deputy head of the Vinatex office added that Vietnam's export revenue is lagging behind India's, which has seen growth of nearly 7%. He stressed that India, which produces similar goods to Bangladesh, has benefited the most from the shift in orders.

Meanwhile, China exported $273.4 billion in textiles in the first 11 months of 2024, a modest increase of just 0.2% over the same period in 2023. However, in the apparel category, where China competes directly with Vietnam, Chinese exports totaled $144 billion, a decline of about 2.8%.

Bangladesh, on its part, faced political instability, resulting in a 3.7% decline in garment exports in the first ten months of 2024. The average monthly export value hovered between $2.8 billion and $3 billion, down from a peak of around $4 billion per month.

Despite these challenges, Bangladesh's export market to the US and EU began to regain market share in September and October. "Since textiles are the backbone of Bangladesh's economy, accounting for about 80-85% of hard currency earnings, the country has quickly accelerated the recovery of its textile production," Cam said.

He also predicted that Bangladesh's textile production would return to normal levels by the second quarter of 2025. At that point, competition for Vietnamese textile firms is expected to increase, as Bangladesh enjoys preferential tariffs for developing countries, while Vietnam's labor costs are nearly three times higher.

Other textile exporters, such as Sri Lanka and Turkey, are also benefiting from the shift in orders from Bangladesh. However, their growth remains subdued and on a smaller scale, posing little concern for the Vietnamese market, Cam said.