The Thriving Textile Sector in Vietnam: Strategic Opportunities for Foreign Investors
- Thuy Minh Giang
- Aug 11
- 4 min read
Updated: Sep 8
Amid a shifting global economic landscape, Vietnam’s garment and textile industry has emerged as a resilient and dynamic sector. Ranking second globally in textile and garment exports in 2024 with export turnover reaching USD 44 billion—the industry demonstrates strong fundamentals and a proactive adaptation strategy. For foreign investors seeking to diversify supply chains and capitalize on sustainable, high-growth markets, Vietnam offers a compelling investment destination grounded in favorable trade agreements, competitive production costs, and growing global demand.
Industry Snapshot: Scale, Growth, and Global Reach
Vietnam’s textile and garment exports have grown significantly, especially in recent years. According to the Vietnam Textile and Apparel Association (VITAS), 2024 marked an 11.26% year-on-year growth with USD 44 billion in exports. The sector posted a trade surplus of USD 19 billion, cementing its position behind only China and ahead of Bangladesh.
Top export markets in 2024 include:
United States: USD 16.71 billion (+12.33%)
Japan: USD 4.57 billion (+6.18%)
EU: Strong recovery across key economies
ASEAN: USD 2.9 billion (+4.84%)
The sector’s continued expansion reflects strategic shifts in global sourcing patterns, particularly in response to US tariffs on Chinese goods, which have redirected significant order volumes toward Vietnam.
Strategic Advantages for Investment
Vietnam’s textile and garment industry operates across a vertically integrated value chain, with each segment offering distinct investment opportunities:
Vietnam textile industry by region: North 41.5%, Central 15.2%, South 43.3% (based on current and completed projects)
1. Downstream Dominance: Garment Manufacturing
Accounting for approximately 70% of total industry output, garment manufacturing is Vietnam’s core strength. The Cut-Make-Trim (CMT) model remains dominant, but there is growing adoption of Original Equipment Manufacturing (OEM) and Original Design Manufacturing (ODM). This shift opens doors for investors to bring advanced technologies, brand partnerships, and design capabilities to a ready labor force.
2. Labor Cost Efficiency and Workforce Stability
With a young, skilled, and competitively priced workforce, Vietnam remains one of the most cost-effective textile producers globally. Despite global challenges, large enterprises like Vinatex and Hoa Tho exceeded revenue targets in 2024, aided by workforce optimization and automation integration.
3. Free Trade Agreements (FTAs) and Market Access
Vietnam is a party to 16 FTAs, including the CPTPP, EVFTA, and RCEP. These agreements offer zero or low-tariff access to markets in Europe, North America, and Asia-Pacific, providing a major cost advantage for manufacturers and exporters.
4. Geopolitical Diversification
As supply chains decouple from China, Vietnam has gained ground as a China+1 hub. This shift has been accelerated by rising Chinese production costs and trade restrictions. Foreign manufacturers are actively relocating or expanding production bases to Vietnam to hedge against geopolitical risks.
Challenges: Barriers to Long-Term Competitiveness
Despite its robust growth, Vietnam’s textile and garment sector faces structural bottlenecks:
Raw Material Dependence: In 2022, the country imported USD 3.76 billion worth of cotton. The lack of domestic, high-quality inputs limits upstream autonomy.
Environmental Constraints: Fabric production and dyeing facilities are in urgent need of sustainable upgrades. Many remain reliant on water-intensive and outdated processes.
CMT Overreliance: The low-margin nature of CMT production highlights the need for value chain advancement into higher-margin OEM/ODM models.
Technology Gaps: While leading corporations are investing in automation, the sector still lacks widespread adoption of digital tools and smart factory solutions.
Despite these challenges, strategic opportunities for foreign investors remain abundant especially in areas where Vietnam is actively seeking global expertise and capital.
Key Investment Opportunities for Foreign Stakeholders
1. Upstream Investment in Fabric and Fiber Production
Vietnam’s reliance on imported fabric and yarn presents a unique opportunity. Investors can benefit from establishing fabric dyeing, weaving, and spinning operations, especially in light of origin rules under FTAs.
2. Sustainability and Green Technologies
With increasing pressure from global brands like Nike, Adidas, and Patagonia to reduce environmental footprints, Vietnam’s manufacturers are under pressure to adopt recycled materials, energy-efficient processes and closed-loop systems. Foreign partners can bring capital and expertise in this domain.
3. Digitization and Automation
Smart manufacturing, 3D body mapping, AI-driven supply chains, and template sewing systems are in high demand. Businesses such as Vinatex and Hung Yen Garment are already integrating digital transformation and IT training as core strategies.
4. OEM/ODM Expansion
Brands seeking closer design-to-production integration will find fertile ground in Vietnam’s shift toward OEM/ODM capabilities. This requires higher technological input and branding expertise, offering highly attractive value-added investment opportunities.
Outlook for 2025 and Beyond
Vietnam’s textile and garment industry is aiming for USD 47–48 billion in export turnover in 2025. Several indicators support this outlook:
Strong order backlogs through mid-2025 across major producers like Hung Yen Garment
Investment in automation and smart factories by industry leaders such as Phong Phu Corporation
Continued diversification of export markets leveraging FTAs
Strategic shift to value-added segments in response to international pricing pressures
According to IMF forecasts, global growth will remain moderate at 3.2% through 2025. Vietnam, however, is poised to outperform regional peers due to its stable macroeconomic policies, cost advantages, and integrated trade network.
A High-Potential Market Ready for Strategic Investment
Vietnam’s garment and textile industry offers foreign investors a rare combination of scale, resilience, growth trajectory, and strategic access to global markets. While challenges remain in upstream development and sustainability, the proactive transformation seen in 2024 marked by innovation, market expansion, and digital adoption paves the way for a strong investment climate in 2025.
For investors looking to establish a foothold in Asia’s manufacturing ecosystem, Vietnam represents both a competitive advantage and a strategic necessity. From green technologies to high-value OEM/ODM production, opportunities abound for those ready to engage with Vietnam’s next wave of industrial advancement.
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