US and European businesses display products to seek textile and garment supplies from Vietnam

Many businesses in the textile, footwear, and wooden furniture industries expressed their worry about a serious drop in export turnover at yesterday’s international conference with the theme ‘Bringing Vietnamese fashion, furniture, and household goods into the foreign distribution system’, the program in the event series "Connecting the international goods supply chain" organized by the Ministry of Industry and Trade in collaboration with the People's Committee of Ho Chi Minh City.

Head of the European-American Market Department Ta Hoang Linh said that since the beginning of the year until now, the export turnover of fashion products including textiles, garments and footwear in some key markets has witnessed a relatively sharp decline. Specifically, export turnover of textiles, garments and footwear in the US market decreased by 22.7 percent and 32 percent respectively over the same period.

The European market also witnessed a similar export deceleration, when leather and footwear export turnover decreased by 19 percent while textile and garment showed more positive signs with growth of 12.3 percent. Exports of wood and furniture to the US and EU are even worse with a fall of 27 percent and 40 percent respectively in the first eight months of 2023.

Explaining this issue, Deventrade B.V’s Purchasing Director Freek Jansen said that in recent times, the key export markets of Vietnam's fashion and household appliances industry such as the United States, the EU, and other Northeast Asian countries increasingly set new standards with stricter demands related to greening production and supply chains, sustainable development criteria, circular production which set out unprecedented challenges for domestic export enterprises.

For instance, the EU market has recently introduced a policy to use recycled products for textile products and accelerated the implementation of the circular and sustainable textile strategy set out in 2022.

Furthermore, the EU also last May issued a law on the Carbon Border Adjustment Mechanism (CBAM) which is applicable from October 1. This regulation forces importers into the EU to report carbon emissions in goods. Plus, the EU issued the Anti-Forest Degradation Regulation (EUDR) at the end of June. Accordingly, companies trading wood and derivative products in the EU must prove that the goods they sell are not related to deforestation activities after 2021.

These regulations have caused Vietnamese businesses to narrow their market share, and have difficulty in receiving more export orders whereas they have a large amount of inventory after importing goods for fear of supply chain disruptions. On the other hand, businesses are facing pressure to go green and digitally transform to keep orders and market share. However, the Ministry of Industry and Trade said that Vietnamese fashion, furniture and household appliances currently still have many competitive advantages, especially in product quality, technical level, and ability to meet strict labor and environmental requirements.

In particular, tariff incentives from 16 FTAs have helped Vietnam rise to become one of the world's largest exporting countries in this industry group. In particular, Vietnam is currently the world’s second exporter of leather and footwear and the top third exporter of textiles and garments. The Southeast Asian nation is also the fifth largest exporter of wood and wood products in the world by 2022.

At the conference, domestic and international experts simultaneously pointed out that businesses must quickly transform production and supply chains towards greening, applying a circular economy model, and sustainable development so that Vietnamese-made fashion, furniture and household items can be displayed in foreign distribution systems.

Besides, Vietnamese firms should constantly change in designs to suit market trends and consumers’ tastes, businesses in this field need to have clear strategies and regularly update fashion trends in export markets.