Apparel manufacturers from China, Japan, Taiwan and Hong Kong have flocked to Vietnam to set up production facilities in order to grab the advantage of duty-free access to the U.S. and other Trans-Pacific Partnership (TPP
Major Japanese trader Itochu has been building up its presence in Vietnam since well before the conclusion of TPP negotiations.
In 2014, Itochu established a weaving mill in Vietnam with a monthly capacity of 500,000 meters of fabric. The company also produces shirts at the facility under other brands and ships them to the U.S. and other markets. It plans to invest in more facilities to enhance its ability to quickly respond to jumps in demand from customers.
Other Japanese companies in the textile and apparel industry cotton spinner Shikibo, which will lower output at its Chinese sewing factory and increase production at a partner plant in Vietnam, and Kuraray Trading, which plans to install of a $2.51 million production line for sportswear in the city of Danang.
Other big names from Northern Asia such as China’s Texhong Textile Group, Shenzhou International, Yulun Taiwan’s Forever Glorious, and Hong Kong’s TAL have been scaling up investments in Vietnam to capitalize on opportunities here.
The excellent technical capability of Vietnamese workers is a big drawing point for textile companies, even if the labor costs are higher than those in Bangladesh and Myanmar, but still half those in China, according to www.yarnsandfibers.com.
Vietnam’s rising allure also comes from its active participation in regional economic blocs. Besides TPP and the ASEAN
Economic Community, the country has free trade agreements with South Korea and the European Union under which almost Vietnamese export staples such as apparel and seafood will enjoy zero tariffs.
While major emerging economies such as China, Brazil and Russia are struggling, Vietnam’s economy expanded 6.68% in 2015 and the growth rate is set to stay steady above 6.5% in the years to come, making it among the fastest-growing markets in the world.
Vietnam’s exports increased 7.9% year-on-year to $162.11 billion in 2015. Textile and apparel products were the second largest export staple, with the value rising 9.1% year-on-year to $22.81 billion, according to data of the General Department of Vietnam Customs.