Summary:
- Vietnam’s garment industry is projected to reach $44 billion in exports for 2024, marking an 11% year-on-year growth and positioning itself to overtake Bangladesh as the world’s second-largest garment exporter.
- Bangladesh’s export target of $40.48 billion falls $4 billion short of Vietnam’s projection, with the country facing multiple challenges including labor unrest, gas crisis, and tax issues affecting production.
- Political instability in Bangladesh has inadvertently benefited Vietnam’s garment sector, leading to increased order diversions and market share gains in the second half of 2024.
- Despite lower labor costs in Bangladesh, Vietnam’s competitive advantage stems from better infrastructure, political stability, and absence of production bottlenecks, positioning it for sustained growth in the global textile market.
Vietnam has officially overtaken Bangladesh to become the world’s second-largest apparel and textile exporter, trailing only China, marking a significant shift in the global textile industry landscape.
Record-Breaking Performance
The Vietnamese textile and garment industry is set to achieve a milestone revenue of $44 billion in 2024, representing an 11% growth compared to the previous year. Hoang Manh Cam, spokesperson for the Vietnam National Textile and Garment Group (Vinatex), made this announcement during a press briefing on December 25.
Market Dynamics
Vietnam’s success stems from capturing a substantial portion of orders that shifted away from Bangladesh throughout 2024. The United States remains Vietnam’s largest market, accounting for 42.28% of total exports, followed by Japan and South Korea. The country’s export growth has been particularly strong in the European Union, with notable increases in shipments to the Netherlands (19.97%), Czech Republic (48.98%), and Slovakia (55.32%).
Bangladesh’s Challenges
Bangladesh’s textile sector has faced significant setbacks due to multiple factors. Political unrest and infrastructure crises, including severe gas shortages, forced many factories to operate below 30% capacity. The industry suffered estimated losses between $150-500 million per day during peak disruptions in July 2024, with total losses reaching approximately $543 million due to delayed shipments and increased operational costs.
Competitive Advantages
Vietnam’s rise in the global textile market is attributed to several key factors:
- Advanced supply chain efficiency and large-scale production capabilities
- Substantial investments in automation and digitalization
- Strategic trade agreements, including CPTPP and EVFTA
- Strong infrastructure and political stability
- Diversified export markets across Asia, Africa, and the Middle East
Future Outlook
“These results may only last for a certain period,” warns Vinatex spokesperson Cam, noting Bangladesh’s recent recovery in market share. However, Vietnam’s textile industry remains optimistic, with plans to generate over $48 billion in export revenue by 2025, as the country continues to strengthen its position in the global textile market.
Source: The Daily Star
