The value of Vietnam’s textiles, fibre and clothing exports reached $25.7 billion in the first eight months of the year, up 8.6 per cent year on year, according to the Vietnam Textile and Apparel Association (VITAS), which said 60.6 per cent of that figure came from foreign direct investment (FDI) enterprises. The industry’s trade surplus in that period reached $10.8 billion.

The sector spent $14.9 billion to import raw materials for production, up 2.3 per cent year on year, 62 per cent of which was done by FDI enterprises. The US-China trade war has affected exchange rates, leading to higher prices of processed goods in the country compared to regional competitors like South Korea and China. That has also affected the number of export orders for local enterprises, according to a report in a Vietnamese newspaper.

In the first eight months of this year, textile production and exports have grown over the same period last year, but due to changing orders, local businesses need to have solutions for production and business. Industry experts said export orders have fallen. Some businesses have only received 70 per cent of new orders compared to the same period last year.

Consumption of fibres and raw materials has struggled as China, Vietnam’s major export market that accounts for 60 per cent of such exports, has cut import volume. Garment enterprises also saw a drop in orders. In 2018, many large enterprises in the industry had export orders throughout the year, while this year, they could only sign monthly export contracts with small volumes. Buyers are concerned the US-China trade war will escalate, so orders are broken up instead of in bulk. As the third quarter comes to an end, it is unlikely that Vietnamese textile enterprises will increase exports due to the ongoing trade war as was predicted earlier by some.

Vietnam has not seen investment flows to the textile and garment industry due to the trade war, according to the Vietnam Textile and Garment Group (Vinatex). There have not been significant shift in production from China to Vietnam. Although the export turnover is large, the domestic textile and garment industry still lacks input materials. It has to import all cotton and 80 per cent of fabric and other material from China and India so the product costs of domestic firms are much higher than FDI companies.