The EU market is Vietnam’s second largest consumer market for clothing and textiles, second only to the U.S. market. However, the ongoing debt crisis in Europe has triggered a slowdown in the textile and clothing industry. Currently, Japan has replaced the EU as Vietnam’s third largest consumer market for clothing and textiles. the second largest importing country.
The US, EU and Japanese markets have been the main markets for Vietnam’s clothing and textile industry for several years. The US is the largest importer, followed by the EU market, and Japan is in third place. In 2011, Vietnam’s garment and textile industry saw growth in the Korean market, with garment and textile exports to South Korea exceeding US$1 billion, making South Korea its fourth largest importer of garments and textiles.
At the end of last year, Vietnam’s clothing and textile exports to the United States reached nearly US$7.6 billion, accounting for 44.7% of Vietnam’s total exports of clothing and textile industry. Exports to the EU market were close to US$2.5 billion, accounting for 14.6%; exports to Japan exceeded US$2 billion, accounting for 12%; exports to the Korean market reached US$1.3 billion, accounting for nearly 8% of total exports.
When the global financial crisis broke out, the EU market was hit hard. In 2011, the EU’s clothing and textile imports were approximately US$260 billion, but this dropped to US$240 billion in 2012. It is predicted that imports this year may drop to US$234 billion. Clothing and textile exporters to the EU market, such as China, India and Turkey, experienced sharp declines, while Vietnam experienced a negligible impact.
In 2011, Vietnam exported US$2.8 billion of clothing and textiles to the EU market, and in 2012 it exported US$2.5 billion, a year-on-year decrease of 14%. This year, that number is expected to drop further, to $2.4 billion. In addition, exports of clothing and textiles to Japan are expected to exceed US$2 billion. Clearly, this is a no-brainer for companies that produce products primarily for the EU market.
Export data in April this year showed that Japan surpassed the EU to become the second largest importer of Vietnamese clothing and textiles, thanks to the free trade agreement between Vietnam and Japan, which came into effect at the end of 2009. In addition, benefiting from low tariffs, Japan has cut imports from China, which has also helped Vietnamese clothing and textile companies enter and expand in the Japanese market.
Currently, Japan’s annual imports of clothing and textiles total approximately US$40 billion, of which imports from China exceed US$31 billion, imports from the EU market reach US$2.1 billion, and imports from Vietnam exceed US$2 billion.
Experts say that the decline in consumption in the EU market is affected by economic difficulties. The EU remains an attractive market because it is the world’s second largest market and people there are willing to pay more for clothing.
In the past five years, with an export growth rate of 32%, Vietnam is considered the largest exporter and one of the countries with the highest export growth rate. However, the export growth rate of Vietnam’s garment and textile industry to the EU market is not as high as that to the US, Japan and South Korea markets.
Vietnamese companies and EU importers expect to increase exports of clothing and textiles to the EU market after the free trade agreement between Vietnam and the EU takes effect from 2015.
The Vietnam Textile and Apparel Association said that the EU’s current average import tariff on Vietnamese clothing and textile products is 11.7%. The reduction of import tariffs from 11.7% to zero will surely boost the morale of Vietnamese producers.
Clothing and textile companies say that despite the decline in exports to the EU market, they still like to make products for the EU market. Among the major export markets, Japan has the most stringent quality requirements, forcing manufacturers to do more in terms of technology. An investment that no company can afford. However, Japanese importers are generous in negotiations.
Although Vietnam is one of the world’s top five apparel and textile industrial countries, the country’s total exports only account for 4-5% of the global import market. Vietnam’s clothing and textile products account for only 8% of the US market and only 1% of the EU market.
Among the current four major export markets, Vietnam has a free trade agreement with Japan, is negotiating a free trade agreement with South Korea and the European Union, and is negotiating the Trans-Pacific Partnership Agreement with the United States. Vietnam’s garment and textile industry currently has many opportunities to expand their export market share.
