Statistics by Vietnam Textile and Apparel Association (Vitas) shows that Vietnam's textile and garment export value in the first 11 months of 2020 reached 31.7 billion USD, decreasing by 11% over the same period in 2019.
In particular, garment export value decreased by 10% over the same period, reaching 26.9 billion USD. Vitas estimated that textile exports would reach 35.3 billion USD by the end of 2020, which is 10% lower than last year.
According to the Office of Textiles and Apparel (OTEXA), Vietnam continued to gain more market share in the US in 2020 (from 13% in 2019 to 14.9% as of the end of October 2020) while the opposite was true for China in the same period (from 32.8% to 28.1%).
However, the increased market share could not offset the impact of reduced demand, and the value of Vietnam's textile and garment exports to the US still decreased by 6% over the same period.
That fashion retailers went bankrupt during the pandemic also significantly affected garment manufacturing companies in Vietnam.
Particularly, Song Hong Garment Joint Stock Company was most affected when its major customer, NY & Co, declared bankruptcy in July when it owed Song Hong Garment 219 billion VND.
While the number of traditional orders plummeted due to weakening demand, the temporary urgent need for COVID-19 preventive clothing such as antibacterial fabric masks and protective clothing somehow helped garment manufacturing companies.
According to OTEXA, Vietnam exported 272 million USD worth of knitted masks in the first 10 months of 2020, accounting for 23.3% of market share of this item in the US. Furthermore, the US government health authorities have emphasized the importance wearing of masks (even after vaccination), suggesting that the demand for this item may still be growing in 2021.
According to SSI, Thanh Cong Textile Garment Investment Trading Joint Stock Company is the most successful listed garment manufacturing company in this field, with the export value of fabric masks in 10 May 2020 reaching 21 million USD, which boosted gross profit margin and after-tax profit (profit after tax in 11M2020 increased by 14.6% over the same period).
Domestic yarn prices continued to be affected by falling oil prices.
Century Synthetic Fiber Corporation recorded a decrease of 28% y / y in net revenue in the first 9 months of 2020.
However, increasing demand from sportswear brands like Nike and Adidas for recycled yarn increased sharply in the fourth quarter. This company is expected to achieve the pre-pandemic profit in the fourth quarter of 2020.
In addition, a major event in the past year is the Vietnam - EU Free Trade Agreement (EVFTA), which took effect from August 2020. This agreement is expected to open up opportunities for Vietnamese textile and garment companies to increase exports to the EU market - the largest textile and garment import market in the world.
However, because EVFTA requires strict rules of origin from fabric stitching onwards, most Vietnamese garment companies will not enjoy the immediate benefits.
The Vitas forecasts that the export value in 2021 can recover to that in 2019, reaching 39 billion USD, equivalent to an increase of 10.6% over the same period, higher than the compound annual growth rate (CAGR) for the period 2015-2019 (9.9%).
Vitas also set a target of an export value of 55 billion USD for 2025 (with average CAGR of 9.4% in the period 2020-2025).
To achieve this goal, Vitas believes that Vietnam must build a suitable domestic fabric supply to exploit the benefits of both EVFTA and UKVFTA.
It is believed that in 2021, competition from China will be fiercer and the domestic fabric supply is unlikely to increase significantly in the short term.
Besides, that the global demand recovers slowly, while supplies from China, India and Bangladesh recover faster, will competition in the world market.
"In addition, the appreciation of the VND against the US dollar may reduce the value of exports. It is also likely that the US will impose tariffs on textiles and clothing imported from Vietnam following the USTR Section 301 investigation on monetary policy." According to SSI Research.