April 17, 2024

2023 Most Difficult Year For Vietnam Textile & Garment Exports

2023 has been the most difficult year for textile and garment exports in the past 29 years. This was said by Cao Huu Hieu, Director of Vietnam Textile and Garment Group (Vinatex).

Hieu said this while addressing a press conference while summarising the developments in the Vietnamese textile and apparel industry in 2023.

Hieu added that 2023 has gone through with unprecedented difficulties due to geopolitical instability and rising inflation which led to a decline in global textile and garment demand.

Demand from Vietnam’s main export markets such as the US and EU dropped sharply in 2023, due to consumers tightening spending on non-essential goods, including textiles and garments.

Although there were predictions from the second half of 2022 about difficulties that would last into 2023, all these predictions came true.

According to the Vinatex Director, the export turnover of the textile and clothing industry worldwide, decreased by nearly 10 percent in 2023.

With the decline in total textile and garment demand, order prices tended to also decrease sharply, on average by over 30 percent, and in particular, large quantity items were down by up to 50 percent.

He stated that countries focus on price competition to get orders. Macro factors such as exchange rates, interest rates, and minimum wages also carry weightage among competing countries.

Currently, the monthly wages of workers of Vietnam’s textile and garment industry is second highest at US $330 per month compared to $420 per month in China.

But it is three times higher than that in Bangladesh, over two times higher than India, 1.8 times higher than Cambodia and this is in an industry where labour costs account for over 55 percent over total costs.

Along with that, the VND exchange rate was stable during the first eight months of the year while the Chinese Yuan depreciated by 5 percent, Bangladeshi Taka fell 5.9 percent and Turkish Lira dropped 31 percent.

“The labour cost and the depreciating currency of other countries made exports of Vietnamese textile and clothing uncompetitive,” he summarised by saying.

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