Vietnam’s textile industry faces many difficulties with both export and production on the decrease due to effects of an intensified China-US trade war, said industry experts.

Textile workers at the Hue Textile Garment JSC 

“Buyers are concerned with the on-going China-US trade war and it has resulted in fewer and smaller orders,” said a report by the Ministry of Investment and Planning.

Vietnamese textile companies were being hit hard as the trade war dragged on, as indicated in a performance review of the Vietnam National Textile and Garment Group (VINATEX), one of the largest in Vietnam.

Export of raw materials to China, traditionally a major market for Vietnamese products that accounts up to 60 percent of the country’s total export volume, plummeted as China cut back on imports. Among the most affected was yarn export with the price continuing to fall as fears of further tariffs being slapped on an additional 250 billion USD worth of Chinese goods linger.

“As the global yarn industry faces worsening prospects due to the on-going trade war, competition among rival countries such as India, Indonesia, Pakistan, Thailand and Vietnam has intensified,” said the review.

In stark contrast to last year when there were more than enough orders to work on until the end of the year by September, companies are scrambling to secure orders to maintain production.

A vast majority of orders, if they were signed at all, were of small volume and short-term as customers were constantly on the look-out for new developments of the trade war. In addition, more and more Chinese orders have been shipped to countries with better tax incentives such as Cambodia and Bangladesh.

The possibility of Vietnam’s textile industry hitting its target of 40 billion USD in exports this year is getting slimmer, said VINATEX Vice President Truong Van Cam.

Along with the trade war’s adverse effects, expectations for trade deals such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA) were set unrealistically high, Cam said, adding such deals will take a while to make a real impact.

According to figures released by the General Department of Customs, textile exports during the first three quarters of 2019 reached 29.2 billion USD, a 9.1 percent year-on-year increase.