With the speeding and sustainable development, Vietnamese textile and garment industry has witnessed great heights in terms of trade! Read this post by industry expert Mausmi Ambastha to know more.

2. Introduction
• Vietnam is a Southeast Asian country, with
more than 96 million inhabitants (July 2017),
being world’s 14th most populous country.
Bordering the Gulf of Tonkin, Gulf of Thailand,
and the South China Sea, as well as China,
Laos, and Cambodia, Vietnam lies in a
lucrative geographical location from trade
perspectives.
• Country’s 61.79% of the population belongs
to the age group of 15-54 years, making the
median age of the country 30.5 years. Also,
with 34.9% urbanization, 94.5% literacy (age
15 and over can read and write), and a stable
political system, Vietnam is has become an
attractive investment destination.

3. Apparel Manufacturing
Industry in Vietnam
Vietnam is an emerging giant in the global textile and
apparel industry. Vietnam’s garment sector has seen
speedy and sustainable development over the last few
years which have played a crucial role in the country’s
socio-economic development.

4. • There are around 6000 textile and
garment manufacturing firms operating
in Vietnam, 84% of which are privately
owned, 15% FDI, and remaining 1% are
state-owned. This industry employs
around 2.5 million people in the country
on an average wage of $239 per month.
Garment manufacturing accounts for 70%
of the total businesses in this sector in
Vietnam with CMT (Cut, Make, Trim)
being the main method (85%) of export.
The apparel exports account for 11.5%
($24.61 Bn) of the country’s total exports
(2016).

5. Labor Laws in Vietnam
• Vietnam passed its new labor code in 2012 with the aim of improving the labor market and
industrial relations in the country. It includes many developments related to labor contracts,
working hours, labor outsourcing laws, internal labor rule, working conditions and foreign
employees.
• As per Vietnam’s labor laws, normal working hours should not exceed 10 hours in one day
and 48 hours in one week. Employees are not allowed to work more than 50% of the official
working hours in a day, 30 hours in a month, or 200 hours in a year, as overtime.
• Foreign investors are allowed to recruit only foreign citizens to work in Vietnam, through
prior approval in writing from the competent state authority. The trade union law in Vietnam
also assures the employee the right to freedom of association.

6. • Vietnam held the 4th position in the top garment exporters in
2016, globally. The top three apparel exporters were China, the
EU, and Bangladesh, who all together accounted for 69.1% of
world garment exports. Vietnam’s export value has increased by
5% from its 2015 status.
World Ranking Among the Top Garment
Exporting Countries

7. Challenges faced by the Vietnam
Garment Industry
• Vietnam enjoys global attention in apparel sector due to its low labor and rent costs
and favorable policies like the Vietnam's Foreign Investment Law, but the industry
faces many challenges.
• Most of the manufacturers in Vietnam do not own their brands, they produce for
foreign brands as outsourcing partners, which makes it vulnerable to global
fluctuations.
• Most of garment manufacturing factories in Vietnam are OEM/ODM enterprises
catering to foreign brands. Since big brands give priority to already established
manufacturers, this industry is tough to for new entrants, especially for the small-
scale enterprises.
• Moreover, Vietnam’s garment industry is highly dependent on imports for its
Machinery equipment, raw materials, and accessories, which not only decreases its
profit margins but also keeps it in harms reach against foreign cost fluctuations.

8. Vietnamese Apparel Industry’s
Growth Prospects
• Vietnamese apparel industry is attracting a lot of global attention lately. It is
partly due to the various free trade agreements it has signed and partly due to
the lower cost advantage it can offer to the buyers. Since the labor cost
advantages with China and India are diminishing, Vietnam is gaining the
business they are losing.
• To overcome the high cost of raw material (as 90% of it is imported), the
government has already started investing heavily in the development of
support industries in Vietnam.
• In the 2006-15 period, Vietnam was the second biggest investor in the
development of shuttleless looms and the biggest investor in ring spindles and
open-end rotors, amongst the ASEAN countries. The country has also shown a
marked expansion in its knitting sector.

9. For more insight on this topic visit
www.stitchdiary.com
You can also watch the videos regarding the concepts of garment
industry on our YouTube channel here