Why Is Vietnam'S Textile Export Booming

Since this year, Vietnam's export trade has been booming, especially in the textile and apparel industry. The president of Vietnam textile and clothing association recently said that in the first two months, Vietnam exported nearly $8.2 billion worth of textile and clothing products, up 59% year-on-year. In a short period of one year, Vietnam's textile and clothing exports have increased by 50%, which is impressive. The booming export of Vietnam's textile and apparel industry is closely related to the cooperation between China's textile fabrics, raw materials industry and Vietnam's textile industry. Since the implementation of the regional comprehensive economic partnership agreement (RCEP) at the beginning of this year, it has continuously released policies and trade dividends, bringing real benefits to enterprises and consumers in the region, China Vietnam textile trade is a case in point.

According to the chairman of the textile association, Vietnam's export revenue is expected to reach 12.7 billion US dollars in the quarter. According to the statistics of Vietnam's General Administration of customs, Vietnam's exports to the United States reached 9.76 billion US dollars in March, and the total export volume in the first quarter reached 25.96 billion US dollars. It is worth mentioning that textile exports to the United States reached US $4.36 billion, up 24.2% year on year, accounting for 50.3% of the total exports of such commodities. It is understood that many local textile enterprises in Vietnam have even arranged orders to the third quarter of this year.

The strong recovery of Vietnam's textile and apparel export is due to the clothing demand of European and American markets and the increase of China's investment in Vietnam's textile industry; Second, Vietnam benefited from the rapid vaccination of domestic vaccine and the relaxation of prevention and control measures for new crown pneumonia; Third, the entry into force of RCEP at the beginning of this year, as well as the tariff preferences brought by EU Vietnam free trade agreement and Britain Vietnam free trade agreement, make Vietnamese textile and garment enterprises increase their efforts to enter the European market this year. These factors have played a key role in the recovery of Vietnam's textile and clothing industry.

According to the data, Vietnam's textile industry is highly dependent on Chinese fabrics, and 60% of the fabrics are imported from China. Among them, in 2021, China's textile yarn exports to Vietnam will increase by 37% and chemical fiber by 36%. The deep cooperation between China and Vietnam in textile industry is particularly obvious in China Qingdao Guihua Knitting Co., Ltd. According to Li Yuqin, head of the company's sales department, "We understand from the preferential scheme designed by the customs that, according to the RCEP rules of origin, the fabrics of Chinese origin used by Vietnamese processing plants can be regarded as the components of the contracting party. Our knitted garments processed with Chinese domestic fabrics meet the requirements of the RCEP agreement on the rules of origin, and can continue to enjoy zero tariff treatment in Japan by virtue of the RCEP certificate of origin issued by Vietnam." 。 In order to reduce the production cost and enjoy the tariff preference given by Japan to ASEAN member countries, China Qingdao Guihua Knitting Co., Ltd. has invested in the construction of knitting garment processing plants in Vietnam and other Southeast Asian countries, and the products are mainly sold to the RCEP member markets such as Japan. It is estimated that due to the tariff reduction policy brought about by RCEP, Qingdao Guihua Knitting Co., Ltd. alone can increase the fabric export capacity to ASEAN by 21.66 million yuan per year due to the adjustment of industrial chain supply chain, and promote the development of other upstream and downstream industries.

Moreover, the implementation of RCEP also makes Chinese textile enterprises see the prospect of stable development of related industries in RCEP region. China Lutai Textile Co., Ltd. recently disclosed that Vientiane textile, a wholly-owned subsidiary, has planned a total investment of US $210 million in Xining Province, Vietnam, for the construction of a production base for woven and knitted fabrics. After the investment is completed, the annual production capacity of high-grade woven fabrics is about 60 million meters. It can be seen from the announcement of Lutai that the investment is based on the strategic development of the company and the needs of foreign investment, and the efficient integration of China's domestic and foreign advantageous resources, and the decision to further invest in RCEP and the areas along the belt and road. This decision effectively avoids the impact of potential trade barriers and maximizes the interests of the group.

Wu Zhicheng, former vice president of Vietnam's Central Institute of economic management, said that the effective implementation of RCEP has enabled Vietnam to have a long-term, stable and predictable export market. Vietnam's exports will have more opportunities to enjoy preferential tariff. The export categories benefited mainly include communications, textiles, footwear, agriculture and automobiles. Nguyen Shiu Chiu Chuang, director of the WTO and integration center of the Vietnam chamber of Commerce and industry (VCCI), believes that RCEP has opened up a free trade and investment zone accounting for 30% of global GDP for Vietnam and 30% of the global market. With the establishment of unified regional standards and mechanisms, it will provide more opportunities for trade and investment cooperation between Vietnam and its member economies, More favorable conditions for Vietnamese enterprises to participate in the value chain.

(source: International Business Daily)