Vietnam Surpasses China to Become the Top Textile-Garment Exporter to the U.S.
Vietnam Surpasses China to Lead U.S. Textile-Garment Exports in Early 2024
Vietnam has emerged as the largest textile-garment exporter to the U.S. in the first five months of 2024, surpassing China for the top spot. Notably, Vietnam also recorded the highest export growth rate among the world’s top three textile-garment exporters, according to a recent report by the Vietnam National Textile and Garment Group (Vinatex).
Between January and May 2024, Vietnam’s textile-garment exports reached nearly $16 billion, marking a 5% increase compared to the same period last year. Of this, the U.S. market accounted for $6 billion, reflecting a 4% year-on-year rise.
This growth has propelled Vietnam ahead of China in terms of market share in U.S. textile-garment imports. Alongside Vietnam, the two other dominant players in the industry, China and Bangladesh, reported contrasting trends:
China maintained its position as the world’s largest textile-garment exporter, with total export turnover reaching $66 billion. However, this represented a 2% decline compared to last year, indicating a shift in sourcing patterns.
Bangladesh, the third-largest exporter, saw a 3.9% increase in textile-garment exports, bringing in $21.7 billion.
The decrease in China’s exports and Vietnam’s upward trajectory suggest that global brands and retailers are increasingly diversifying their sourcing strategies, with Vietnam emerging as a key alternative.
Key Drivers Behind Vietnam’s Export Boom
According to Vinatex, Vietnam’s export growth is not primarily driven by increased global demand but rather by a combination of external market factors and currency fluctuations.
Many fashion brands and retailers are reducing their dependence on China, redistributing orders to Vietnam due to concerns about geopolitical tensions, rising labor costs in China, and supply chain resilience.
The 5% depreciation of the Vietnamese dong (VND) against the U.S. dollar has made Vietnamese goods more competitive in pricing, attracting buyers seeking cost-effective alternatives.
Vietnam continues to benefit from multiple free trade agreements (FTAs), including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA), which enhance its trade attractiveness.
Despite the strong export figures, Vietnamese textile-garment enterprises are facing significant pricing pressures.
Unit prices for exports remain 20-50% lower than in 2019, indicating that while demand is steady, pricing power has weakened.
The cost of textile orders from major markets such as China, Turkey, and South Korea is hovering near the break-even point, forcing manufacturers to optimize production efficiency to maintain profitability.
Most Vietnamese garment companies have already secured orders through Q3 2024 and are actively negotiating contracts for Q4, which includes the critical Christmas and New Year shopping season. However, price competition remains fierce, requiring businesses to adopt cost-cutting measures while ensuring quality and delivery reliability.
To meet export demand, Vietnamese textile enterprises have maintained a stable workforce, ensuring timely order fulfillment. Employee incomes have remained on par with 2023 levels despite market challenges.
However, shifting industry dynamics have pushed companies to diversify their product offerings and expand into new markets:
Many firms are moving beyond traditional cotton fiber products to explore blended and recycled fiber textiles, despite these not being their core strengths.
Businesses are investing in product innovation and technology upgrades to enhance competitiveness.
To reduce dependence on traditional markets such as the U.S. and Europe, companies are exploring opportunities in the Middle East, Africa, and emerging Asian economies.
Outlook for the Second Half of 2024
Looking ahead, global textile-garment demand is expected to remain stagnant, presenting new challenges for Vietnamese exporters. Vinatex warns that while Vietnam has gained market share, competition will intensify in the coming months due to several factors:
Currency Devaluation by Competing Countries
Some rival textile-exporting nations may devalue their currencies by 15-20% to make their products cheaper on the global market, posing a pricing threat to Vietnam.
Rising Production Costs
Vietnamese manufacturers are grappling with higher costs, including:
Shipping freight fees
Electricity prices
Bank interest rates
Labor expenses
These factors could erode profit margins if companies fail to adapt.
Evolving Consumer Trends
Sustainability and eco-friendly production continue to shape consumer preferences, prompting brands to prioritize suppliers with strong environmental, social, and governance (ESG) commitments.
Vietnamese exporters must accelerate sustainability initiatives to align with international buyer expectations.
Navigating Challenges and Sustaining Growth
Vietnam’s ascent to the top spot in U.S. textile-garment exports marks a significant milestone for the industry, reflecting both the country’s manufacturing strength and the shifting global supply chain dynamics. However, maintaining this momentum will require strategic adaptation, innovation, and resilience in the face of emerging challenges.
While Vietnam has successfully diversified its export markets, its reliance on major economies like the U.S. and the E.U. makes it vulnerable to economic downturns, trade policy changes, and shifting consumer trends. In the coming months, stagnant global demand, rising production costs, and currency devaluations by competing nations will intensify price competition, forcing businesses to optimize efficiency without compromising quality.
To stay ahead, Vietnamese manufacturers must adopt a multi-pronged strategy:
✔ Expanding Market Reach: Reducing dependency on traditional markets by exploring emerging economies in the Middle East, Africa, and Latin America to create new revenue streams.
✔ Enhancing Product Innovation: Investing in high-value textiles, such as sustainable, recycled, and blended fibers, to align with global trends and attract premium buyers.
✔ Strengthening Sustainability Commitments: As ESG (Environmental, Social, and Governance) standards become increasingly important, Vietnamese exporters must enhance green production practices, improve labor conditions, and adopt circular economy models to remain competitive in global markets.
✔ Optimizing Costs & Technology Adoption: Rising costs in logistics, energy, and raw materials necessitate greater automation, AI-driven production management, and lean manufacturing techniques to improve margins while maintaining competitive pricing.
Despite these hurdles, Vietnam’s agility and resilience make it well-positioned to sustain its upward trajectory in the textile-garment industry. By embracing innovation, diversifying exports, and adapting to evolving global demands, Vietnam can not only maintain its leadership in the U.S. market but also cement its status as a global textile powerhouse in the years ahead.
Looking for producing garment in Vietnam?
