Vietnam textile and garment industry Nov 2021 – Continuing the recovery momentum


Textile and garment industry Nov. 2021 recovered strongly in both production and export, especially exports to the US market.


In Nov, the production of the textile & footwear industry continued to record a strong recovery. Compared to the same period in 2020, the production indexes of all commodity groups increased. Specifically, Textile increased by 11.2% YoY, Garment increased by 13.5% YoY, Leather and related products increased by 7.3% YoY.


Export turnover of commodity groups of the industry in Nov 2021 simultaneously increased over the same period.


A major contributor to the export growth of the whole industry is the ready-to-wear group; fibers, textiles and draperies, technical fabrics with a growth rate of >35%.


Besides, the group of footwear and handbags showed signs of recovery after 3 consecutive months of negative growth in export turnover. However, the export situation of this group of products is still not completely stable and export turnover is still decreasing in some markets. Specifically, the US market recovered strongly (the market accounted for ~42% of the export proportion of this group of products); but the situation of exports to other major markets such as the EU, China is slower and still has negative growth compared to Nov 2021.



With the current situation of production & actual export orders being relatively positive, the Textile and Garment Association has made a forecast of the total export turnover of the textile and garment industry (excluding leather, shoes, and bags) for the whole year. 2021 is more positive than before, is expected to reach 39 billion USD (up 9% compared to 2020). While, exporting leather, footwear & handbags is more difficult than textiles, but it is still considered likely to reach approximately the target of 20 billion USD at the beginning of the year.


TEXTILE AND GARMENT INDUSTRY GROWTH SCENARIO IN 2022


Although the recovery of production and export of both the Textile & Footwear industry is quite positive. However, enterprises in the industry still face many difficulties and challenges that can directly affect business performance such as:


  • Raw material prices continue to escalate. Especially, the transportation cost for the China to Vietnam route in particular increased dramatically by >130% MoM within 1 month (in Nov 2021), pushing up the cost of raw materials. Because >50% of the supply of raw materials for the industry is imported from China.

  • The epidemic situation in the country is still complicated and uncertain. Therefore, the cost of epidemic prevention (quick testing for workers, periodic cleaning/disinfection of factories, etc.) is still a burden for businesses.


In the face of difficulties of COVID-19 that negatively affect production, export and textile supply chain, the Vietnam Textile and Apparel Association offers three scenarios for the textile and garment industry in 2022 (excluding leather goods group). Shoes & Bags):


(i) Positive scenario: If the epidemic situation is basically controlled in the first quarter of 2022, the export value can reach 41.5-42.5 billion USD;

(ii) Medium scenario: If the epidemic situation remains complicated by mid-2022, the export value will reach 40-41 billion USD;

(iii) Less positive scenario: If the epidemic situation remains complicated until the end of 2022, the industry's export turnover is expected to reach only 38-39 billion USD (equivalent to 2021).



Source: Excerpt from Textile Industry Report Dec 2021