Two key sectors that stand to benefit are textiles and garments, as well as fruits and vegetables. However, challenges remain, and success will depend on how well businesses navigate these opportunities and obstacles.
Textiles and Garments: Benefiting from Instability in Bangladesh
According to statistics from the General Department of Customs, Vietnam's textile and garment export turnover reached USD 4.29 billion in July 2024, marking a 12.4% increase compared to the same period last year. This is the first time in 2024 that monthly textile and garment export turnover has exceeded USD 4 billion, and it is also the highest monthly figure since August 2022. Over the first seven months of this year, Vietnam’s textile and garment exports totaled USD 23.9 billion, a 5.9% increase compared to 2023. Experts predict that by year-end, the garment industry will likely hit its target of USD 44 billion.
In an interview with Saigon Investment, Mr. Phạm Xuân Hồng, Chairman of the Ho Chi Minh City Textile, Embroidery, and Knitting Association, pointed out that the current order situation is relatively stable, with orders increasing by around 20% compared to last year. Some companies are even experiencing better-than-expected order volumes.
So, what’s driving this uptick in demand? According to Mr. Hồng, the recovery of key consumer markets is a major factor, but the political instability in Bangladesh—one of Vietnam's major competitors in textiles and garments—has also played a crucial role. Bangladesh’s current political turmoil has forced many of its garment factories to shut down temporarily. As a result, global buyers are redirecting their orders to other nations, including China, India, and Vietnam.
Among these countries, India stands to benefit the most from the temporary disruptions in Bangladesh. However, Vietnam has seen significant growth in Cut-Make-Trim (CMT) orders from major international fashion brands. CMT refers to a production method in which foreign brands outsource the cutting, assembling, and finishing of garments to factories in countries like Vietnam.
Additionally, Vietnam is expected to gain further from the U.S. market, as the U.S. is one of Bangladesh's largest export destinations. With Bangladesh’s instability, American companies may look more favorably toward Vietnam as an alternative supplier.
Despite these opportunities, Mr. Hồng notes that Vietnam’s garment industry is grappling with a shortage of labor. To meet rising demand, companies are working to recruit more workers, improve management practices, and raise wages for their existing workforce.
Fruits and Vegetables: Capitalizing on Shipping Rate Hikes
Vietnam’s fruit and vegetable industry has also posted impressive growth this year. Data from the Vietnam Fruit and Vegetable Association reveals that in the first seven months of 2024, the country’s fruit and vegetable export turnover hit USD 3.8 billion, a 23.4% increase over the same period in 2023. The two Northeast Asian nations—China and South Korea—are among the largest markets for Vietnamese fruit and vegetables.
China, which accounts for 64% of Vietnam's total fruit and vegetable export turnover, imported USD 2.1 billion worth of Vietnamese produce during the first seven months of the year, representing a 22% year-on-year increase. South Korea, another major market, imported USD 164 million worth of Vietnamese fruits and vegetables, a staggering 55% rise compared to last year. Japan, too, has been increasing its imports of Vietnamese produce, contributing to the Northeast Asian region's dominance in the industry. Combined, these three countries represent about 80% of Vietnam’s fruit and vegetable export market.
So, why are Vietnamese fruits and vegetables in such high demand? Mr. Đặng Phúc Nguyên, General Secretary of the Vietnam Fruit and Vegetable Association, highlights several factors. First, many of these markets, especially China, have a high demand for Vietnamese products such as durian. Second, the quality of Vietnamese produce has improved significantly in recent years, making it more attractive to demanding markets like Japan and South Korea.
Additionally, a sharp rise in global shipping costs has played to Vietnam’s advantage. The cost of transporting goods from Asia to Europe and the U.S. has surged, prompting importers in China, Japan, and South Korea to increase their purchases from nearby Southeast Asian countries like Vietnam. By doing so, they can reduce their logistics costs while still sourcing high-quality produce.
If Vietnam’s fruit and vegetable industry continues to seize these advantages, experts predict that the sector’s total export turnover could reach USD 7 billion by the end of the year. However, if the long-awaited Protocol on Frozen Durian and Fresh Coconut with China is signed soon, total turnover could even rise to USD 7.5 billion—a record figure for Vietnam’s fruit and vegetable exports.
Despite these favorable conditions, Vietnamese fruit and vegetable exporters must address ongoing challenges—chief among them being the need to maintain consistent quality. In recent months, China has issued several warnings about substandard batches of durian, even going so far as to ban imports from some Vietnamese factories and growing areas that violated its regulations.
At a recent conference, Mr. Lương Ngọc Quang, a representative from the Department of International Cooperation and Communications at the Plant Protection Department, emphasized the complexity of the market-opening process. Negotiations for market access can take anywhere from three to five years, or even longer, for certain products. Once the market is opened, producers and exporters must comply strictly with the importing country's standards. A failure to do so could result in a “one bad apple spoiling the barrel” scenario, where even minor infractions tarnish the reputation of the entire industry.
With careful management and strategic planning, Vietnam has the potential to achieve record-breaking export turnover in 2024. By leveraging these "heaven-sent" opportunities, the country can strengthen its position in global supply chains and continue to drive economic growth in the coming years.
