Vietnam'S Textile And Garment Exports Face Challenges Due To Declining Market Demand

According to Vietnam Customs statistics, Vietnam's textile and clothing exports will reach 43.4 billion US dollars in 2022, an increase of 11% year on year. Although the data shows growth, the orders and amount of Vietnam's textile and clothing exports have declined significantly since the fourth quarter of 2022, due to weak demand in major export markets, including the United States and the European Union.

In addition, Vietnamese textile and clothing producers continue to face other challenges in production and export, including the continued rise in raw material and logistics costs (Russia Ukraine conflict and epidemic), the sharp fluctuations in international cotton prices, Vietnam's tightening monetary policy to control inflation, and the increase in labor costs.

According to the report of Vietnam Textile and Clothing Association, Vietnam's textile export orders in the first quarter of 2023 fell by 25-27% year on year. In response to the decline in orders, many Vietnamese textile and clothing enterprises reduced the operating rate, resulting in a large number of workers unemployed. The industry expects this downward trend to last at least until the third quarter of 2023. Nevertheless, Vietnam Textile and Garment Association still set the export target of $46 billion in 2023, provided that the economy and consumption of major export markets recover.

In 2022, Vietnam's textile industry will add about 100000 spindles, and the total number of textile mills will be about 110, half of which will be located in the south, 40% in the north, and 10% in the middle. According to the statistics of Vietnam Customs, Vietnam's yarn export volume in 2022 will be 1.6 million tons, down nearly 19% year on year, and the export volume will be 4.7 billion dollars, down 16% year on year. The small increase in exports to Bangladesh failed to offset the sharp decline in exports from China and South Korea.

In 2022, among all Vietnam's yarn exports, cotton yarn exports accounted for 56%, but the cotton yarn export volume was only 866000 tons, a year-on-year decrease of 24%, and the export volume was $2.9 billion, a year-on-year decrease of 16%. The increase in cotton yarn exports in the first five months of 2022 failed to offset the decrease in the remaining period. The decline in global demand for textiles and clothing has reduced Vietnam's demand for cotton, cotton yarn and other raw materials. According to Vietnamese industry news, due to the joint impact of the reduction of orders and the decline of cotton yarn prices, the operating rate of most spinning mills in Vietnam has dropped to 50-70%. This trend is expected to continue until the first quarter of 2023. The rebound depends on the recovery of the global economy.

Data shows that Vietnam exported 788000 tons of cotton yarn to China in 2021/22, a year-on-year decrease of 20%, and 280000 tons of cotton yarn to China in the first half of 2022/23, a year-on-year decrease of 35%. As China's import demand for cotton yarn decreases, Vietnam's cotton consumption is expected to decline in 2022/23. In 2023/24, under the premise of economic and consumption recovery, Vietnam's cotton consumption is expected to increase slightly by 3%, reaching 6.5 million bales.