Vietnam’s textile-garment export turnover in the first six months of 2022 (H1) is estimated to rise by 23 per cent year on year (YoY) to about $22 billion, reaching the highest level ever, according to the Vietnam Textile and Apparel Association (VITAS). Such exports to the US market in the first five months of 2022 increased by 26 per cent YoY to $7.58 billion, accounting for 57 per cent of the total value of such exports.
A report by Viet Dragon Securities JSC (VDSC) said data from Vietnam’s general department of customs imply the prospects of the country’s textile-garment industry will depend heavily on economic developments in the US market.
However, in the second half of 2022, VDSC forecasts that the demand for textiles and garments will tend to decrease due to high consumption in 2021, while inflation is cutting people’s spending on unnecessary products.
The US market also began to show many warning signs of a cooling down in apparel demand. In the first quarter of 2022, clothing accounted for just 3.9 per cent of total US consumer spending, down from 4.3 per cent in 2019 before the pandemic.
According to Vinatex, the US market’s textile and garment import demand is likely to decline by 7-10 per cent in the second half of 2022.
On the other hand, the US ban on cotton originating from the Xinjiang region that officially took effect on June 21 also caused disruptions in the supply chain and contributed to higher cotton prices.
VDSC data shows that only 10.5 per cent of US cotton apparel imports came from China in April, down from about 15 per cent at the beginning of the year. The ban may affect the source of raw materials of Vietnamese enterprises and create barriers when exporting to the US market, a news agency reported.
But this can also be an advantage for large textile and garment enterprises in Vietnam, who have the ability to diversify sources of raw materials, replacing orders to the US of Chinese companies.
Besides, the shutdown of China’s economy also contributed to the shift of orders from China to Vietnam recently. In April, China’s market share in textile imports to the United States fell to a new record low of 26.3 per cent in volume and 16.8 per cent in value.
In a recent report, SSI Research estimated that revenue growth of textile and garment manufacturing companies in Vietnam will decelerate in the last six months of 2022 and in 2023.
Yarn, fabric, logistics and labour costs are expected to remain at high levels due to rising oil prices and competition in the labour market, mainly in FDI factories.
