Vietnam's textile and garment industry's export turnover this year is certain to reach the target of US $44 billion. Photo: N.H

Benefiting from order shifts

In the third quarter of 2024, the textile and garment industry recorded impressive business results, with an export turnover of US $12.4 billion, an increase of over 13% over the same period and an increase of 22% compared to the second quarter of 2024. The strong growth compared to the second quarter is assessed to be due to the second half of the year being the peak season and higher value orders for the fall-winter collection. In the first nine months of 2024, textile and garment exports reached VND 32 billion, an increase of 7.7% over the same period last year and an increase of 9.6% compared to the first nine months of 2019 (before the Covid-19 pandemic), so the current consumption output has exceeded the pre-Covid level.

At a recent press conference, Mr. Vu Duc Giang, Chairman of the Vietnam Textile and Apparel Association (VITAS), said that in recent times, global consumption has not grown, but Vietnam has recorded growth thanks to the shift of orders. "Vietnam is one of the countries chosen as the destination for the shift of orders in the third and fourth quarters of 2024 and the whole year of 2025," Mr. Giang informed.

In the shift of orders in recent times, according to the Vietnam Textile and Apparel Association, there has been absolutely no price growth. However, Vietnamese textile and garment enterprises have maintained stability thanks to the application of technology. Enterprises have invested in machinery, equipment, automation technology, and many have even invested in robotization in production. This has helped solve the problem of labor productivity, production costs, maintaining reputation for quality as well as cooperative relationships with partners.

Another factor that has had a great impact on the recent growth of the Vietnamese textile and garment industry is the diversification of markets, customers and products. Vietnam has now exported to 104 markets worldwide. In addition to traditional markets such as the US, EU, China, Japan, CPTPP bloc and ASEAN countries, Vietnamese textile and garment products have been exported to new markets such as Africa, the Middle East, etc.

From the above factors, Mr. Vu Duc Giang affirmed that the export turnover of the Vietnamese textile and garment industry this year will reach the target of US 44 billion, an increase of 11.26% compared to 2023.

The business results of textile and garment enterprises in the third quarter of 2024 also showed positive growth. Specifically, TNG Investment and Trading Joint Stock Company recorded a sharp increase in revenue during the peak season and orders in the US and EU recovered, along with expansion into new export markets. Accordingly, TNG's net profit in the third quarter of 2024 reached VND111 billion, up 60% year-on-year. TNG's order outlook is also positive in the fourth quarter of 2024 and the company has received enough orders until the first quarter of 2025.

Similarly, Song Hong Garment Joint Stock Company's profit in the third quarter of 2024 also recorded a growth of 154% year-on-year, reaching VND130 billion; Thanh Cong Textile - Investment - Trade Joint Stock Company increased by 51%, reaching VND81 billion...

Optimistic about the target of US $48 billion in 2025

The results achieved in 2024 will be a solid foundation for the Vietnamese textile and garment industry in 2025. According to the leader of the Vietnam Textile and Apparel Association, at present, many enterprises have signed orders for the first quarter of 2025 and are negotiating for the second quarter of 2025. Therefore, orders are not a matter of concern at present.

However, enterprises will face many challenges. First of all, the purchasing methods of brands are changing very quickly. Although orders have been negotiated, if purchasing power slows down for just one to two weeks, brands may ask enterprises to stop production. In addition, Vietnamese enterprises no longer have the opportunity to choose large orders, but for the past two years have had to accept small orders, fast delivery times and many strict requirements. New generation free trade agreements also impose stricter requirements on the origin of fibers and fabrics, while Vietnam still depends heavily on imported fibers and fabrics, especially from China.

However, Mr. Vu Duc Giang assessed that growth in 2025 will still be good thanks to the experience of the Vietnamese textile and garment industry in diversifying markets, diversifying customer partners and manufactured products. In addition, the signed FTAs ​​are a special advantage, opening up a large market for Vietnamese textile and garment products. This has been demonstrated by the fact that thanks to the Vietnam - Eurasian Economic Union FTA, Vietnam's textile and garment export turnover to the Russian market has made a leap, from a very small number to nearly US $ one billion this year. In addition, enterprises have also produced many products with very high added value.

In particular, in addition to producing orders for international brands, Vietnamese enterprises are also promoting global sales through e-commerce channels. Mr. Giang said that a series of large Vietnamese branded enterprises have started selling on international e-commerce platforms under their own Vietnamese brands. This is also the task set for the Vietnamese textile and garment industry in the "Strategy for the development of the textile and garment, leather and footwear industry to 2030, vision to 2035".

In a recently released textile and garment industry analysis report, SSI Securities Company stated that Vietnam will continue to benefit from the shift of orders from China, thanks to lower labor costs than China, lower tax rates with the US than China (the level of dependence on the policies of the new US administration) and the advantage of higher skilled labor than India and Bangladesh. SSI also forecasts that retail businesses are expected to increase orders before the new US tariffs are applied, not only in China but also globally. Accordingly, the consumption output of Vietnamese textile and garment companies will increase sharply in the coming quarters.

Mr. Pham Van Viet, Chairman of the Board of Directors of Viet Thang Jean Company Limited, also said that some of the company's customers in the US are asking to speed up delivery before 2025 due to concerns that higher tariffs will be applied to Chinese goods. Because Viet Thang Jean's products have up to 30-35% of raw materials imported from China. Regarding the long-term solution, Mr. Viet said that he will find alternative sources of raw materials from India, Pakistan, Indonesia, etc.