Weaker demand in major markets and intensifying competition, particularly from lower-priced Chinese products in Europe, have pushed exporters to adjust production, inventory and cash-flow planning. (Photo: VnEconomy)

Despite stable production at the start of the year, order visibility is currently limited to the short term, according to Pham Van Viet, Chairman of Viet Thang Jean Co Ltd. He said orders in early 2026 are mainly confirmed for the first quarter, while clients remain cautious about placing longer-term commitments amid ongoing global economic uncertainty.

Weaker demand in major markets and intensifying competition, particularly from lower-priced Chinese products in Europe, have pushed exporters to adjust production, inventory and cash-flow planning.

Viet Thang Jean, whose main export markets are the United States and Europe, recorded little growth in 2025 as demand fell sharply and price competition intensified.

Alongside pricing pressure, manufacturers continue to face high borrowing costs, stricter technical standards and tighter traceability requirements in export markets. Many firms have scaled back output and accepted lower margins to retain customers.

In response, companies are shifting strategies to identify new growth space.

Viet Thang Jean plans to maintain stable production in the first quarter while expanding domestic sales and online channels to support employment. Although the domestic market cannot fully offset exports, it helps firms stabilise operations and their workforce, Viet said.

At the macro level, Vietnam’s industrial sector showed stronger momentum in 2025, laying a foundation for growth in 2026.

Manufacturing and processing expanded 10.5%, continuing to serve as the main driver of economic growth and accounting for about 24.7% of GDP.

Several leading manufacturers continued to play a prominent role. VinFast reported an electric vehicle localisation rate of around 60% and targets 84% by 2026.

Hoa Phat Group, Southeast Asia’s largest steel producer, boosted crude steel output beyond 10 million tonnes after commissioning its Dung Quat 2 project, up about 25% from 2024. These firms are seen as leading examples under the Politburo’s Resolution 79 on developing the state-owned economic sector.

According to S&P Global, Vietnam’s manufacturing purchasing managers’ index (PMI) reached 53.0 points in December 2025, remaining in expansion territory. Business confidence rose to its highest level since March 2024, with nearly half of surveyed firms expecting output growth in 2026.

Despite improving prospects, manufacturers continue to face major challenges, including rising input costs and risks of supply-chain disruption following natural disasters in late 2025. Experts say policy support will be critical for firms to achieve double-digit growth.

The Ministry of Industry and Trade’s Industry Agency said there is still ample room for localisation, with imported inputs accounting for about 65% of total import value. Policy priorities include institutional reform, higher localisation and deeper participation in global supply chains, alongside digital and green transformation.

Programmes such as the Ministry’s “Go Global” initiative are expected to provide a platform for Vietnamese firms to participate more deeply in global value chains.

According to experts, 2026 presents both opportunities and challenges for the manufacturing sector. Building on a solid recovery in 2025, and with policy support in place, many firms are accelerating efforts not only to overcome difficulties but also to target double-digit growth, while establishing a more sustainable and self-reliant growth model for the economy.