Textile and garment exports are on the rebound

2020 is a particularly difficult year for Vietnam's textile and garment industry when the market has many complicated and unpredictable fluctuations. Under the impact of the Covid-19 pandemic, the textile and garment industry are one of the industries that suffer the largest direct losses along with the tourism, aviation, and footwear industries. Difficulties due to lack of raw materials in the first months of the year and slowing demand from the EU and the United States... from April 2020, when consumers around the world focused only on essential supplies and disease prevention Vietnamese textile and garment enterprises have faced a shortage of orders. Small orders, quantity and low value only maintain production for a short period of time every month, even week, many businesses have to extend shifts, lay off workers on a rotational basis, greatly affecting export action.

Exports decrease

In 2020, the total export turnover of products of the textile and garment industry will reach about 35 billion USD, down 9.8% compared to 2019. In which, exports of textiles and garments reached 29.8 billion USD, down 9.2% compared to 2019. Yarn exports reached 3.74 billion USD, down 10.5%; exports of textile and garment materials reached 1.0 billion USD, down 16% and drapery and other technical fabrics reached 456 million USD, down 22.6%.

Exports of FDI enterprises reached 20.6 billion USD, accounting for 58.8% of the total export turnover of textiles and garments of the country.

Table 1: Export situation of textile and garment products

Source: Compiled from the data of the General Department of Vietnam Customs

Regarding textiles: In 2020, Vietnam's textile and garment exports reached 29.81 billion USD, down 9.2% compared to 2019.

The US is the market with the largest export turnover, reaching 13.99 billion USD, down 5.8% compared to 2019 and accounting for 46.9% of the country's total textile and garment export turnover. The EU market ranked second, reaching 3.08 billion USD, down 11.7% over the previous year, accounting for 10.3% of the total export turnover of textiles and garments. Followed by the Japanese market reached 3.53 billion USD, down 11.4% over the previous year and accounting for 11.9% of the total export turnover of textiles and garments. Exports to South Korea reached 2.86 billion USD, down 14.8% and accounting for 9.6% of the total export turnover of textiles and garments.

For the first time in decades, Vietnam accounts for over 20% of the US apparel market share. One of the reasons is that garment brands have been shifting orders from China to Vietnam to avoid the impact of the US-China trade conflict.

In general, in 2020, textile and garment exports to most markets decreased compared to 2019.          Significant reductions include a number of markets such as Tanzania down 77%; Angola down 75%; Argentina down 44%; Senegal, Philippines, Slovakia all decreased by more than 39%; some other European markets decreased significantly such as the UK, Greece, Finland, Spain, Norway, Austria, down from 28-37%.

Table 2: Vietnam's textile and garment export market

Source: Compiled from the data of the General Department of Vietnam Customs

Structure of exported textiles and garments: In 2020, the export structure of textiles and garments will have a big change. Traditional items such as jackets, pants, shirts of all kinds and fashion and high-end clothes are all reduced. Due to the global spread of the Covid-19 pandemic, from the beginning of the second quarter of 2020, the world's fashion shopping demand has plummeted, making way for essential items and disease prevention items. Vietnamese enterprises have turned around step by step to meet the world's consumption demand and maintain production, export and retain workers by switching to production and increasing exports of group of necessary goods for epidemic prevention and products used a lot in home to make up for the shortage of traditional export orders, including: Masks reached about 817 million USD; protective gear reached 757 million USD (up 283%, equivalent to 559 million USD); curtains, blinds, carpets reached 415 million  USD (up 3.7%, equivalent to 15 million USD); nightwear reached 222 million USD (up 12.5%, equivalent to 25 million USD); medical clothing reached 161 million USD (up 17.5%, equivalent to 23 million USD).

Table 3: Some types of textile and garment exports in 2020

Source: Compiled from the data of the General Department of Vietnam Customs

Regarding fibers and textile fibers: Export of yarn reached 3.74 billion USD, down 10.5% in value but up 1.2% in quantity compared to 2019. The average export price of the year is about 2,150 USD/ton, down 11.6% compared to 2019.

Exports of FDI enterprises reached nearly 1.2 million tons, equivalent to 2.7 billion USD, up 5.1% in quantity but down 7.2% in value.

2020 is a difficult year for the fiber industry, in addition to being negatively impacted by the global pandemic, the fiber industry is also affected by investigations and application of trade remedies from importing countries. In 2020, the fiber industry was subject to an anti-dumping investigation by the United States and India and a global safeguard investigation by Turkey.

From the end of 2020, most fiber enterprises have not received new orders from the Chinese market or customers paid low prices. Other markets such as Korea, Japan, Egypt, Turkey, Philippines, and Taiwan still have orders, but the quantity is very small, and the selling price is still on a downward trend and has not shown any signs of recovery. The reason is due to price competition from competitors, there are signs of dumping to avoid inventories, and China sells to the market a large amount of cotton stock, causing cotton prices to drop sharply.

Exports to Turkey decreased due to the negative impact of the cases of imposition of anti-evasion tax on POY yarn and anti-dumping on polyester elastic yarn and man-made fiber. This is also the market that applies trade remedies the most to Vietnam.

In 2013, Turkey was the second fiber market after China with an export value of 138,000 tons, worth 321 million USD, accounting for 19.2% in volume and 14.9% of Vietnam’s fiber export. But so far, after this country applied trade remedies against Vietnam, Turkey is only the sixth largest export market of Vietnam, after China, Korea, ASEAN, Taiwan and the United States. Exports to Turkey reached 79.2 million USD, accounting for 2.1% of total exports.

The Indian market also experienced a decline due to the negative impact of India's anti-dumping duty imposed from the end of 2018 on nylon Filament yarn imported from Vietnam. Exports to this market in 2020 decreased from 5th place to 11th in fiber and yarn export markets of Vietnam, reaching only 41.1 million USD, down 66.6% compared to 2019, reached 1.1% of total fiber and yarn exports. In 2020, India continues to initiate an anti-dumping investigation on polyester fibers originating from Vietnam.

While most export markets decreased, there were three strong growth markets, namely Taiwan, the United States and Pakistan with growth rates of 76.5%, 55.7%, 153% in volume and 50.4%, 38.5%, 73.1% in value, respectively. However, with strong export growth to the US, the industry is currently under anti-dumping investigation by the US for polyester textured yarn (PTY) imported from Vietnam.

The export price of fiber and yarn in 2020 decreased by about 11.6% compared to 2019, of which the export price to China dropped sharply by nearly 10%, affecting the export price of the whole industry.

Regarding textile materials and accessories: Export of textile materials and accessories reached 1.0 billion USD, down 16% and curtain fabrics and other technical fabrics reached 456 million USD, down 22.6%.

General assessment

2020 is the first year that the export turnover of the textile and garment industry has a negative growth (down 9.8%) reaching only 35 billion USD compared to 39 billion USD in 2019 after 25 years of continuous growth and export turnover of textiles and garments has dropped to the third place after the group of Phones and Computers, electronic products - components. However, with the export turnover achieved in 2020, Vietnam's textile and garment industry is still a bright spot in export activities, especially in the context that the world's total demand for textiles and garments has decreased by nearly 20% (from 740 billion USD to 600 billion USD), the countries that compete in the textile and garment sector all saw a decrease of 15-20% or even nearly 30% due to long isolation.

The textile and garment industry achieved the above results thanks to the effective disease control, which has helped Vietnam to be the only country in the top 5 largest textile and garment exporting countries in the world not to be isolated and not to stop production, thereby contributing to maintaining the market share of Vietnam's garment and textile industry in major markets. Along with that, the Free Trade Agreements, although unable to offset the decrease in turnover, have had a significant effect in minimizing the shortage of orders.

In 2020, under the drastic direction of the Government, the Ministry of Industry and Trade has closely grasped the import, production and export situation of enterprises on a weekly and monthly basis to propose solutions to support business help, in which, it is necessary to mention a flexible mechanism in the policy of directing and managing the import and export of masks, and at the same time, proactively inform textile and garment enterprises to convert production lines to sewing protective clothing and masks for export, helping to make up for the lack of orders in export, maintaining the growth of the industry and creating jobs workers.

Export prospects in 2021

Currently, in the world, the pandemic situation is still complicated, even the negative impact of the pandemic may last for the next 1-2 years. It is forecasted that 2021 will still be the year that Vietnam's textile and garment market continues to face difficulties, depending on the epidemic situation.

According to data reported by the Ministry of Industry and Trade, in the first quarter of 2021, exports of textiles and garments increased by 1.1% over the same period, reaching 7.18 billion USD; exports of textile fibers and yarns of all kinds increased by 31%; export of drapery and other technical fabrics increased by 8.8% over the same period. This shows that the textile industry in the first quarter of 2021 has had many signs of improvement compared to the same period in 2020.

The initial recovery of Vietnam's textile and garment exports has opened up positive signals for 2021. Export turnover in 2021 is forecasted to recover to 2019 levels, reaching 39 billion USD. However, according to the assessment of the Ministry of Industry and Trade, the increasing development of the COVID-19 epidemic may cause further difficulties in freight transport. To support the business community, the Ministry of Industry and Trade will organize to exploit and take advantage of opportunities from free trade agreements to find solutions to develop markets and remove barriers to penetrate new markets. Continue to closely monitor the development of the COVID-19 pandemic in the world to take timely response measures. Prioritize the implementation of export promotion activities and export markets to recover soon after the pandemic; focus on closely monitoring the situation of each market in order to review and identify the types of goods that countries are wishing to import to exploit and promote the export of textiles and garments in the coming time./.

Source: Vietnam import and export Report in 2020

Do Thi Bich Thuy

Department of Information, Library and Trade Promotion - VIOIT