Historically, textiles and clothing (T&C) consistently ranks among Vietnam's leading export industries. Due to their diverse skills and advantages, Bangladesh T&C and Vietnam apparel will profit from most garment sourcing businesses' China plus one approach.
According to WTO data, Vietnam will overtake Bangladesh as the world's second-largest garment exporter in 2020.
According to the BGMEA, the Bangladesh apparel sector recovered its position in the first half of 2021. Compared to Bangladesh, Vietnam garment exports have increased quickly in recent years. Vietnam has had an FTA with the EU since 2019, which has aided its export growth.
Twist in the tail
"China is significantly investing in Vietnam to diversify and increase the value of its exports. Bangladesh, on the other hand, Bangladesh is still competing with its low labor costs," Raihan Mahmud, marketing director of Bangladesh's Tex Garment Zone, mentioned in the news. "If exporters here can diversify their products and our government inks some new free trade agreements, Bangladesh has a greater chance of catching up."
The Bangladesh and Vietnam apparel sectors will benefit from most garment sourcing companies' "China plus one" strategy because of their diversified capabilities and advantages. Vietnam was expected to replace Bangladesh as the world's second-largest garment exporter in 2020, according to WTO data.
Vietnam's lowdown on its foreign trade performance
According to Tran Thanh Hai, deputy general director of the Agency of Foreign Trade, Vietnam's exports and imports grew by double digits in the first quarter of 2022, reaching $176 billion, up 14.4% yearly. During this time, exports increased by 12.9%.
According to several analysts, overall export-import income might surpass $700 billion this year. Bangladesh, according to the BGMEA, regained its position in the first half of 2021. Vietnam's garment exports have expanded rapidly in recent years compared to Bangladesh.
Vietnam has had an FTA with the EU since 2019, which has boosted its export growth. The increase, according to Hai, is due to the benefits of new-generation free trade agreements (FTAs) and regional trade agreements.
Below is the list of FTAs that Vietnam has concluded at present.
- Vietnam–Japan Economic Partnership Agreement
- Vietnam–Chile Free Trade Agreement
- Vietnam–Korea Free Trade Agreement
- Vietnam–Eurasian Economic Union Free Trade Agreement
ASEAN Agreements:
- ASEAN–India FTA
- ASEAN–Australia–New Zealand FTA
WTO Study
Following the publishing of a World Trade Organization (WTO) study, the competition between Vietnam and Bangladesh took on a new dimension.
As close competitors in the realm of garment manufacturing and exports, Vietnam surpassed Bangladesh in 2020 to become the second-largest readymade garment/apparel exporter after China's textiles & apparel industry, shipping apparel worth the US $ 29 billion all over the world, even if Bangladesh rallied from behind to surpass Vietnam within a year of the WTO findings.
Garment exports, the lifeblood of Bangladesh's economy, and foreign earnings increased by 30.36 percent to US$35.81 billion in the calendar year 2021, the highest level ever (earnings from apparel exports in 2020 were US$27.47 billion).
In 2021, Vietnam's textile sector had a 9.89 percent increase, but only US $32.75 billion in garment exports, compared to the US$35.81 billion in Bangladesh T&C. Vietnam gained $29.80 billion from garment exports in 2020.
"It was a temporary change in ranking in the global apparel export market because COVID-19 hit our production hard, negatively impacting exports," said Abdus Salam Murshedy, Managing Director of Envoy Textile, who added that with the outbreak of the pandemic in March 2020, the government-imposed lockdown resulted in factories' production taking a significant hit.
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Originally published on www.dfupublications.com, republished with permission.
Top image of Hatirjheel Lake Bridge in Dhaka by Salman Preeom on Unsplash
