How Vietnam In 2021 Became 2nd Biggest Apparel Supplier & Its Road Ahead
23 May 2022, Mumbai:
Vietnam surpassed Bangladesh as the world's second-largest garment exporter for the first time in 2020. Bangladesh has been the second-largest clothing exporter for five years before 2020.
Nonetheless, Vietnam's edge over Bangladesh in 2020 was tiny, and both nations' garment exports were overshadowed by China's.
Furthermore, they decreased in 2020, but at half the rate of Bangladeshi exports. In this editorial, Robin Anson looks at the elements that have contributed to the success of Vietnamese textile exporters, including considerable foreign investment, particularly from China.
However, he points out several red flags, such as supply limits caused by manufacturing shutdowns ordered to stop the spread of the COVID-19 epidemic.
Due to its strategic location and advantages in shipping, competitive labor, and production costs, Vietnam has become a top destination for manufacturing investment.
In the garment enterprises, 40% of investment has been made through FDI.
Vietnam's growth is how realistic!
Global businesses seek to diversify, increase the resiliency and connectivity of their supply chains, and reduce reliance on a single country. Compared to other Southeast Asian countries, Vietnam has international airports, seaports, and rail ties that help with manufacturing and transportation.
Manufacturing and processing continued to lead in foreign direct investment (FDI) in 2020, accounting for 58.2 percent of total FDI.
With its help, Vietnam's economy is expected to regain speed in 2022, with a GD 6.5 percent GDP growth.
LOW DOWN ON BANGLADESH MARKET
Bangladesh’s exports to traditional markets including the US and the EU grew in 2021. Exports to its single largest market, the US surged from 17.5 percent in 2018 to 20.30 percent in 2021, says Faruque Hassan, President, BGMEA.
It totaled $7.28 billion in 2021. The share of woven garment exports was worth $4.65 billion while knitwear exports totaled $ 2.62 billion. For the first time, Bangladesh’s RMG export to the US exceeded $7 billion in a year, a growth of 43.62 per cent compared to 2020, says Hassan.
COVID-19 caused substantial supply chain disruptions in the industrial industry in 2020-2021.
What works in the Vietnam industry favour
Manufacturing production in Vietnam has been reduced due to temporary firm closures, transportation issues, and employee shortages. Several fundamental elements drive the manufacturing business.
To begin with, Vietnam is marketed as a low-cost producer with cheap labor expenses.
Vietnam's labor expenses are half that of China's, at US$2.99 (VND 68.000) per hour against US$6.50 (VND 148.000) per hour. This helps cement Vietnam's position as a more cost-effective alternative to its regional competitors.
Second, Vietnam has a vast and well-educated worker force, making it a desirable industrial hub. Furthermore, the government has sponsored further vocational education and training programs to equip the workforce better.
The government has implemented various policies and programs in response to the present labor crisis and the lack of trained personnel in critical areas such as IT.
Reflecting on the Better Work ethos Vietnam continues to strive to accomplish ongoing competitiveness both by improving the working conditions in the country’s garment industry also by unmatchable productivity/indomitable work spirit.
