Vietnam Apparel Industry 2015

April 10, 2016 |


Total Page: 73 Pages

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Topic: (Household Goods & Home Construction/Personal Goods/General Retailers)

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1.   The global apparel export reaches US$489.2 bn in 2014, representing an annual growth rate of 5.7% (UN Comtrade), and is forecasted by the IMF to reach US$ 660 bn by 2019 with a compound annual growth rate at over 6% in the next five years. China remained as the largest exporter despite slowing down in recent years.


2.   Vietnam apparel market posts a good performance in 2014 with the growth rate higher than 10% to reach new record of US$ 23.6 bn in 2014. Export is the driving factor for the growth of apparel market with a proportion of 85% in total of market value in 2014.


Vietnam is the fifth largest apparel exporter worldwide with a rapid double-digit growth rate of around 17.3% over the last 5 years to reach US$ 20.1 bn in 2014. USA is Vietnam's largest market of apparel exports (48.6%), followed by EU (16.4%), Japan (12.9%) and Korea, Rep. (10.0%).


The domestic apparel market saw a solid growth rate during the last few years, with the CAGR 2010-2014 of 13.9%. The market size was estimated at US$ 3.5 bn in 2014. As Vietnam economy is projected, by IMF, to continue a resilient annual growth rate of over 6% in the next 5 years, the domestic market is expected to continue to expand at a CAGR of 10 -15% to reach over US$ 5.5 bn in 2019.


3.   Vietnam apparel industry has a lower level of profitability during the period 2011-2013, as the gross profit margin fell from 17.1% to 13.2%. The exchange rate risk arising from the mismatch between export earnings in Euro and import payment in US$ is believed to be accountable for this variation. 


4.   Vietnam Apparel is a high competitive market. The entry barriers are extremely high for the domestic newcomers, especially in price dimension, mainly due to the large numbers of competitors and the undifferentiated production activities. The buyers have a strong power since Vietnamese apparel firms are outsourcing partners only.


5.   The EU-Vietnam Free Trade Agreement and the Trans-Pacific Partnership (TPP) captures the attention of the enterprises. According to these agreements, the customs duties on the apparel exported by Vietnam to the EU and the TPP parties and vice versa will be eliminated either immediately or over longer timeframes. In other words, the exporting firms located in Vietnam will be provided with the preferential access to the largest markets worldwide, such as EU, USA and Canada. The strict rules of origin yet may deter Vietnamese apparel manufacturers from fully benefiting from this preferential access.




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