Western buyers find Vietnam the perfect alternative sourcing location to China

Vietnam is expected to be one of the fastest growing suppliers of textiles and clothing to Western markets over the next few years. Its textile industry has also outnumbered the firms of Bangladesh and Cambodia. The fastest growing supplier of the US continues to grow its demand strongly in the first four months of 2014.

With rising capacity of Vietnamese textile industry, it seems that China can only rely on Vietnam for its alternative production locations. Rising costs in China have been forcing an increasing number of Western apparel brands and retailers to cut back on sourcing in China and have more of their apparel manufactured elsewhere.

The Western buyers find that Vietnam can provide the capacity, quality, skills, variety, and complete supply chain as it has a well developed textile supply chain.

In 2013 US textile and clothing imports from Vietnam grew in value by 14.6%, which represented the fastest growth rate among imports from the USA’s ten largest suppliers. And imports continued to grow strongly in the first four months of 2014, having increased by 15.5% compared with the corresponding period of the previous year.

Furthermore, Vietnamese exporters stand to gain from a successful conclusion to negotiations aimed at establishing a Trans-Pacific Partnership (TPP) free trade agreement. This would provide imports of Vietnamese products into the US market with significant tariff benefits and flexible rules of origin.

Imports from Vietnam, on the other hand, grew by only 3.2%. However, growth picked up to 14.5% during January-March 2014 as buyers switched to sourcing locations other than Bangladesh, Cambodia and China.

Albeit no country can match China in terms of the size of its supply base, its range of skills, its quality levels, its product variety and the completeness of its supply chain and imports from Vietnam into the EU and the USA continue to be dwarfed by those from China. Vietnam seems set for a solid future as an alternative sourcing location to China.