Vietnam: World's second biggest apparel exporter, but for how long? (2024)

Textiles Intelligence

This editorial examines the factors behind the success of Vietnamese apparel exporters”including significant investment in the industry by investors in other countries.

Vietnam: World's second biggest apparel exporter, but for how long? (1)

7th September 2021

Innovation in Textiles
|United Kingdom

Clothing/Footwear

Report summary

In 2020 Vietnam became the world's second largest apparel exporter for the first time ever—ahead of Bangladesh. Prior to 2020, Bangladesh had been the second largest apparel exporter for five years. Nonetheless, Vietnam's lead over Bangladesh in 2020 was slim, and apparel exports from both countries were dwarfed by those from China. Furthermore, they fell in 2020 although exports from Vietnam fell at only half the pace of those from Bangladesh.

In this editorial, Robin Anson examines the factors behind the success of Vietnamese apparel exporters—including significant investment in the industry by investors in other countries, notably China. But he highlights some warning signs, including supply constraints stemming from factory shutdowns imposed in order to contain the spread of the COVID-19 pandemic.

Also, he examines some of the reasons why Bangladesh fell behind Vietnam in its export performance. There are, however, some glimmers of hope—not least the signing of the International Accord for Health and Safety in the Textile and Garment Industry (the International Accord).

This will continue the work of the original Accord on Fire and Building Safety in Bangladesh (the Accord)which was signed in May 2013 in the immediate aftermath of the collapse of Rana Plaza. Furthermore, it represents an improvement because, as its name implies, it is international, and signatories will commit to extending the efforts of the Accord to at least one other country within the first two years. Moreover, it covers general health and safety rather than fire and building safety alone and it will address due diligence in relation to human rights because the question of liability in this respect is a growing concern for businesses as supply chain legislation in the EU and elsewhere is introduced and strengthened.

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1. Vietnam's Rise in Apparel Exports:

Historical Context: Until 2020, Bangladesh held the position as the world's second-largest apparel exporter for five consecutive years.
Vietnam's Achievement: In 2020, Vietnam surpassed Bangladesh to become the world's second-largest apparel exporter. However, it's essential to note that both countries lagged significantly behind China in total apparel exports.
COVID-19 Impact: The COVID-19 pandemic had a detrimental effect on global trade. Despite this, Vietnam's apparel exports experienced a more moderate decline compared to Bangladesh, which suggests Vietnam's resilience or better management amidst disruptions.

2. Factors Behind Vietnam's Success:

Foreign Investment: One of the pivotal factors behind Vietnam's success is the significant investment from foreign entities, especially from countries like China. Such investments have bolstered Vietnam's textile and apparel manufacturing capabilities.
Strategic Partnerships: Vietnam's partnerships with international investors and its position in global supply chains have given it a competitive edge over countries like Bangladesh.

3. Challenges and Concerns:

Supply Chain Disruptions: Factory shutdowns due to the COVID-19 pandemic led to supply constraints for Vietnamese exporters.
Potential Threats: Despite Vietnam's current position, there are warning signs and challenges on the horizon that could impact its dominance in the apparel export market.

4. Bangladesh's Position and Concerns:

Export Decline: Bangladesh faced a more significant decline in apparel exports in 2020 compared to Vietnam.
Safety and Regulations: The collapse of Rana Plaza in Bangladesh in 2013 led to the signing of the Accord on Fire and Building Safety. While this addressed immediate concerns, broader international agreements like the International Accord aim to improve health, safety, and human rights standards across the textile and garment industry.

5. International Accord for Health and Safety:

Origins: Stemming from the tragic incident at Rana Plaza, the original Accord on Fire and Building Safety in Bangladesh aimed to improve safety standards.
Evolution: The International Accord signifies an expansion and improvement over its predecessor. It emphasizes not just fire and building safety but also general health and safety standards. Moreover, it incorporates due diligence concerning human rights—a crucial aspect given the increasing focus on supply chain transparency and accountability, especially with evolving legislation in regions like the EU.

In conclusion, while Vietnam's ascent as a leading apparel exporter is commendable, it's crucial to understand the multifaceted factors, including foreign investments and strategic positioning, that have contributed to this shift. Simultaneously, challenges remain for both Vietnam and Bangladesh, underscoring the importance of continuous innovation, adherence to international standards, and adaptive strategies in the ever-evolving global textile industry landscape.