2016

Top Markets Report Technical Textiles

Country Case Study
Vietnam







Vietnamstextileandapparelindustryisgrowingfaster
thanthatofmanyofitsregionalcompetitors,andforeign
companiesarestartingtopourmoneyintoVietnamto
takeadvantageofpotentialeconomicopportunitiesfrom
futurefreetradeagreements.ITAexpectsthatonce
theseagreementsarecompleted,signedandentered
intoforce,U.S.companieswillhavethechanceto
increasetheirexportsoftechnicaltextilestomore
consumersandbusinessesinVietnam.

TheVietnamesetextileindustry,withmorethan3,800
companies,isthecountrysleadingexportsector.The
countryranksfifthworldwideintextileandapparel
exportsandhasalaborforceinthatsectorofmore
than2millionpeople,ofwhom1.3millionareworking
directlyintheindustry.

TheUnitedStatesVietnamBilateralTradeAgreement
(BTA),whichenteredintoforceonDecember10,
2001,formsthebasisforthecurrentU.S.Vietnam
bilateraltraderelationship.Itservedasanimportant
precursortoVietnamsaccessiontotheWTOon
January11,2007.AstheU.S.VietnamBilateralTrade
AgreementandtheTransPacificPartnership
Agreement(onceitentersintoforce)openupnew
marketsforU.S.goodsandservices,andasVietnam
meetsitsWTOcommitments,theVietnammarket
representsthenextgreatopportunityforalltypesof
U.S.companies,includingthoseproducingtextiles.

Vietnamstextileandapparelindustryhasbenefitted
fromincreasedforeigninvestmentoverthepast
severalyears.Textileandappareltradegrew
consistentlythroughtheeconomicdownturnof2008
through2009.Theindustrysgreatestadvantageisits

Nonwovens

Spec. & Ind.

10
Medical

Overall
Rank

14
Protective

57

61

18

lowcostlaborandrelativelyyoungandstableworker
base.

About70percentofVietnamstextileandapparel
productionisviaprocessingtradeusingimported
textilesandotherinputs,predominantlyfromChina.
Pendingtradeagreements,however,havethe
potentialtodivertsometradefromChinatothe
UnitedStates.Investmentinfiber,yarnandtextile
manufacturingisrising,particularlyforspinningand
weaving,sothequantityandqualityoftextile
productionislikelytoincrease.Manytextileand
garmentcompaniesintheregionhavealreadybegun
tomoveproductiontoVietnam.

Vietnamisbecomingknownforbeingaprimelocation
forinvestorsoperatinginthetextileindustry.
ManufacturersareheadingtoVietnamwiththe
completionoftheTransPacificPartnership
Agreementandanticipationofitsentryintoforce.
Underthisfreetradeagreement,Vietnameseexports
toTPPcountrieswillseetariffsontextilesand
garmentsdrasticallyreduced.Inordertotake
advantageofthistariffreduction,foreigncompanies
mustphysicallylocatethemselvesinVietnamand
beginproducingtextilesandgarmentsforexport.1
2016 ITA Technical Textiles Top Markets Report

This case study is part of a larger Top Markets Report. For additional content, please visit www.trade.gov/topmarkets.

U.S.DepartmentofCommerce|InternationalTradeAdministration|Industry&Analysis

Vietnamstextileindustrywilldependondemand
fromtheUnitedStatesandtheEuropeanUnion,which
accountfor18percentand14percentofVietnams
exports,respectively.Thisdemandwillpurportedly
contributetoexportgrowthof20percentthisyear.
Exportbusinesses,especiallyforeigninvested
manufacturingfirms,willprovideamuchneeded
boosttoVietnamsgrowth.2

OverviewoftheTechnicalTextileMarket

Vietnamhasarapidlygrowingandvibranttextile
industry,largelybasedonimportedinputs.U.S.
exportsoftechnicaltextilestoVietnamgrewbyan
impressive539percentto$46.9millionbetween2008
and2015.

In2008,U.S.exportsoftechnicaltextilestoVietnam
accountedforabout21percentoftotalU.S.textile
andapparelexportstoVietnam,andthatnumber
increasedto46percentby2015.Exportgrowthhas
beenespeciallyfastforfabricsandtextilemill
products,particularlyspecialtyandindustrialfabrics.
Totakeadvantageofthisgrowingtrendand
dependenceofU.S.inputs,Vietnamcontinuesto
importmachinerytosupportitsgrowingtechnical
textilesector.

Currently,Vietnamcomprisesaverysmall
percentageofU.S.technicaltextileexports,butthis
growthisencouragingforproducers.U.S.exportsof
nicheproducts,suchasspecialtyandindustrial
fabrics,increasedmarkedlyoverthesevenyear
periodof2008to2015from$3.6millionto$22.3
million.

U.S.industryassociations,suchastheIndustrial
FabricsAssociationInternational(IFAI),arevery
interestedinthemarketpotentialinVietnam.IFAI
planstoincreasetextilenicheproductexportsto
Vietnam.AsVietnammovesuptheproduction
chain,upandcomingmanufacturingsectors,such
asautos,marineandhospitalitysectorswillalso
offermarketpotentialforU.S.technicaltextiles.To
supportthesenewmanufacturingsectors,Vietnam
willneedtoexpandmarkets,diversifyproduct
categoriesanddesignsandenhanceproduct
quality.3

ChallengesandBarrierstoTechnicalTextileExports

DoingbusinessinVietnamcanbechallenging.In2008,
Vietnamintroducedanimportlicensingregimeona
numberofproducts,mostlyconsumergoods.OnMay
28,2010,VietnamsMinistryofIndustryandTrade
publishedCircular24,whichextendedthelistof
productsforwhichlicensesthatwererequired,
includingtextileandapparelproducts.Thisrequires
localimporterstoobtainanautomaticimportlicense
(AIL)beforeshipmentscanbeunloadedata
Vietnameseport.

Thelicenseisapparentlynot,however,automatic,as
reportedlyproductscannotmoveuntiltheimporter
hasthelicenseinhand,aprocessthatissupposedto
takesevendaysbut,accordingtoindustryinpractice,
oftentakeslonger.ManyU.S.companieshave
reportedthatdelaysinreceivingAILshaveresultedin
decreasedshipmentsintoVietnamandsignificant
losses.Importersmustwaituntiltheyhaveanoriginal
BillofLading(BL)beforeapplyingfortheAIL,which
limitstheirabilitytoapplyforAILsearlytoavoid
delays(aBLcannotbeobtaineduntilcargohasbeen
loaded).

Additionally,whileVietnamhasreducedtariffson
manyproductsinlinewithitsWTOcommitments,
hightariffsonselectedproductsremain.U.S.industry
hasidentifiedarangeofproducts,includingtextile
productswhereitseessignificantpotentialofexport
growthifVietnamstariffscouldbereducedfurther.

InvestorsinVietnamalsoreportthattheyoftenfind
poorlydevelopedinfrastructure,highstartupcosts,
arcanelandacquisitionandtransferregulationsand
procedures,andashortageofskilledpersonnel.

OpportunitiesforU.S.Companies

Vietnamhasmadesignificantprogressineliminating
nontariffbarriers(NTBs)underthe2001United
StatesVietnamBTAandsinceVietnamsaccessionto
theWTO.Additionally,Vietnamsengagementand
commitmenttotheTPPagreementwillaffordU.S.
textileproducerspreferentialaccesstothe
Vietnamesemarket.Thiswouldmostlikelyresultin
newbusinessopportunitiesforU.S.fiber,yarnand
fabricproducers.Vietnameseproducersdepend
largelyonfabricimportedfromChina;however,with
theentryintoforceoftheTPPagreement,thistrade
couldtoshifttoU.S.producers.
2016 ITA Technical Textiles Top Markets Report

This case study is part of a larger Top Markets Report. For additional content, please visit www.trade.gov/topmarkets.

FiguresfromtheVietnamTextileandApparel
Association(Vitas)showedthat70percentofmore
than3,700textilefactoriesinthecountrymake
apparel;only6percentproduceyarn,17percent
makefabric,and4percentaredyehouses.Thereisa
hugevoidintextileproduction,andasVietnams
technicaltextileindustrycontinuestoevolve,thiswill
onlyincreaseopportunitiesforexportsfromthe
UnitedStates.Vietnamisatrueemergingmarket,
offeringgroundfloorandgrowingopportunitiesfor
U.S.exportersandinvestors.

Moreover,withplentifulcompetitivelypricedlabor,
Vietnamhasadistinctcostadvantageoverother
countriessuchasChina.Vietnamalsohasdeveloped
supportivegovernmentpolicies,beguntoimplement
majorinfrastructureprojectsandintroduced
incentivesforforeignproducers.Allofthishasthe
goaltoattractforeigndirectinvestment.

Nonwovens

Vietnamhasemergedasahotbedofactivityinnon
wovenproducts,asU.S.manufacturerscontinueto
investambitiouslyintheregion.Vietnamisseizingthis
opportunitywithanindustryrestructuringplanforthe
nonwovensmarketoverthenexttwoyears.This
shouldresultinattractingadditionalinvestment.

In2015,U.S.exporterssawsignificantgrowthinthe
nonwovenssector,whichaccountedforroughly48

percentofU.S.technicaltextileexportstoVietnam.
Overthepastsevenyears,nonwovenexportsto
VietnamfromtheUnitedStateshavegrownatannual
rateof38percent.

SpecialtyandIndustrialFabrics

Vietnamhasbeenexpandingitsreachintoindustrial
fabricsandhigherendtextilesinrecentyears,
includingtirecordandcoatedfabrics.Overall,U.S.
exportsofspecialtyandindustrialfabricshavegrown
30percentannuallysince2008,butindollars,theU.S.
exporttotalsarelowcomparedtoothercompeting
countries.

ProtectiveApparel

Ofthefourtechnicaltextilesubsectors,protective
apparelhasseenthesmallestgrowthandistheleast
significant.Vietnamesegarmentandtextilecompanies
havetomeetU.S.healthandsafetyrequirementsfor
consumers,likeflameretardantstandards.Health
safetyisalwaysofatopconcernofconsumer
protectionassociationsandtheU.S.government.High
standardsandregulationsongarmentandtextileraw
materialsprotectconsumersandmayindirectly
encouragemanufacturersandexporterstoinvestin
modern,advancedproductiontechnologiestobe
certified.

Platzer, Michaela D. U.S. Textile Manufacturing and the Trans-Pacific Partnership Negotiations Congressional Research Service.
August 28, 2014.

Platzer, Michaela D. U.S. Textile Manufacturing and the Trans-Pacific Partnership Negotiations Congressional Research
Service. August 28, 2014.
3
Thinh, Hien US Non-tariff Barriers to Vietnam Exports Vietnam Business Forum. July 16, 2014.
2016 ITA Technical Textiles Top Markets Report
This case study is part of a larger Top Markets Report. For additional content, please visit www.trade.gov/topmarkets.