Sourcing Textile & Garment Products from Vietnam: A Complete Guide

Vietnam’s Textile and Garment Industry Overview

Vietnam has become a major player in the global textile and garment market, ranking as the second-largest exporter worldwide, after China. With exports reaching over 44 billion USD by 2024, Vietnamese textile and garment products are now present in over 100 countries. This success is the result of over two decades of continuous effort by local businesses.

Main Export Markets of Vietnam’s Textile and Garment Industry

• The U.S. Market: The United States is Vietnam’s largest market, consistently accounting for 45-50% of total exports. Despite global economic challenges, Vietnam became the leading supplier of garment exports to the U.S. in 2024, reaching a turnover of 12 billion USD by the end of September.
• Japan: Vietnam’s second-largest market, with a stable export turnover, reaching 2.74 billion USD in the first eight months of 2024, up 6.6% year-over-year.
• Korea: A key market, with a 33% market share in Korea’s textile and garment imports, driven by strong FDI from Korean enterprises.
• EU: Benefiting from the EVFTA, Vietnam’s textile exports to the EU grew to 3.1 billion USD in the first nine months of 2024, positioning Vietnam as the 6th largest supplier to the EU.
• Russia: An emerging market with significant growth, seeing a 117% increase in exports to reach 0.61 billion USD in the first nine months of 2024.

Key Benefits of Sourcing from Vietnam

Vietnam’s garment industry is poised for significant growth in the coming years, driven by several key factors:

Vietnam’s garment industry has earned high regard from international experts. A survey by the U.S. Fashion Industry Association (USFIA) found that Vietnam is the only Asian country to achieve strong scores across all 8 key criteria that global fashion companies consider when selecting suppliers. This includes factors such as product quality, delivery speed, and social compliance. Notably, Vietnam was the only country to receive high ratings across the board, while other garment-producing nations like Sri Lanka, Indonesia, and Bangladesh had several criteria that did not meet international standards. This positions Vietnam as a highly attractive sourcing destination for global fashion brands.

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Abundant labour force

The Vietnamese textile and garment industry is a significant source of employment, with approximately 2 million workers currently employed in the sector. Out of this total, 1.3 million are direct workers, and a majority (about 80%) of the workforce is female. The industry’s workforce is highly reliant on manual labour, as garment production requires a significant amount of hands-on work, especially in the manufacturing and finishing stages.

Salary and Income Structure

The basic salary for workers in the Vietnamese textile and garment industry is relatively competitive, averaging around 170 USD per month. However, due to the high demand for production and tight deadlines, regular overtime is a common feature. The typical overtime range for workers is between 47 to 60 hours per month, which contributes an additional 52 USD per person per month, accounting for 22.4% of the total income.

Overall, the average total income of garment workers in Vietnam typically ranges from 200 to 250 USD per month. Skilled and experienced workers can earn significantly more, with salaries for highly specialized roles reaching between 300 to 350 USD per month. These workers typically handle advanced tasks that require more expertise, resulting in higher pay per hour and a more specialized role within the factory.

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Comparative Labor Costs in the Region

In terms of labour costs, Vietnam has a clear advantage compared to other garment-producing countries in Asia. For instance, the average salary for garment workers in Bangladesh is only 95 USD per month, Cambodia at 190 USD per month, and India at 145 USD per month. Despite Vietnam’s higher labour costs compared to these countries, global suppliers tend to prefer Vietnam due to its flexibility, ability to adapt to market trends, political stability, and focus on sustainable development.

Additionally, while Bangladeshi enterprises typically prioritize large orders, Vietnamese enterprises are noted for their flexibility in handling both large and small orders, making them more adaptable to diverse customer needs and contributing to their growing competitive edge in the global textile and garment market.

Sustainability Certification in Vietnam’s Garment Industry

The textile and garment industry is a major global contributor to CO₂ emissions, accounting for 8-10% of the total. To meet the growing demand for environmentally responsible practices, especially from major export markets like the US and Europe, companies must adhere to sustainability standards.

Vietnamese garment companies are working to reduce energy and water consumption, with targets to cut energy use by 15% and water use by 20% annually from 2014 to 2030. The fiber industry is also shifting towards using recycled polyester and organic cotton to reduce environmental impact.

Additionally, Vietnam leads in producing bio-fibers from plants like banana fiber, bamboo, and coconut, offering an opportunity for the textile industry to meet international sustainability standards and improve global competitiveness.

Production Capabilities

Structure of Vietnamese Textile and Garment Enterprises

The textile and garment sector in Vietnam has experienced significant growth, though it has faced challenges over the years. From 2011 to 2021, the number of textile and garment enterprises in Vietnam has fluctuated but generally trended upwards. In 2011, there were about 3,922 enterprises in this industry. By 2014, this number had increased to 5,013. However, in 2015, the sector faced a crisis, with approximately 1,500 enterprises going bankrupt, resulting in a decline to 3,557 enterprises. Despite this setback, the industry recovered and by 2022, the number of enterprises had reached around 5,500.

The COVID-19 pandemic had a limited negative impact on the industry, primarily because the US, which is a key partner, continued to import textiles from Vietnam. One of the strongest periods of growth for the sector occurred between 2018 and 2019 when over 800 new enterprises entered the market.

Enterprise Types and Distribution

In the period from 2011 to 2019, private enterprises made up about 90% of the textile and garment enterprises in Vietnam. However, since 2019, the proportion of private enterprises has decreased to 80%, primarily due to small and medium-sized enterprises (SMEs) facing difficulties after the pandemic. Among the roughly 5,000 enterprises operating in the sector, 88% are micro and small enterprises.

As of 2023, Vietnam is home to about 7,000 textile and garment enterprises. Of these, 80% are small and medium-sized, while more than 10% are foreign-invested enterprises (FDI). The industry employs approximately 3 million workers, with 70% of the workforce focused on production.

Production Types

In terms of production, more than 70% of the textile factories in Vietnam focus on garment production. Only 6% of the factories are involved in yarn production, 17% in fabric production, and 4% in dyeing. This production distribution reflects Vietnam’s strong position as a global garment exporter, especially in the apparel segment, while the other areas, such as yarn and fabric production, remain comparatively smaller in scale.

Overall, the Vietnamese textile and garment industry is resilient and continues to adapt to challenges, with a strong emphasis on garment manufacturing, a growing number of enterprises, and a diversified structure including both local and foreign-invested businesses.

Sourcing Strategies for International Company

Direct Sourcing

Direct sourcing is often the most cost-effective strategy when working with Vietnam’s textile and garment industry. By eliminating intermediaries, businesses can engage directly with manufacturers, gaining better control over pricing, product quality, and lead times. To effectively implement a direct sourcing strategy in Vietnam

Working with Sourcing Companies

For businesses that lack the resources to manage direct relationships with manufacturers or those unfamiliar with Vietnam’s textile industry, working with intermediaries such as sourcing agents or companies is a viable option.

These intermediaries bridge the gap between international buyers and local manufacturers, helping to identify suitable suppliers, negotiate pricing, and oversee production processes. They often have established networks within the industry, which can save businesses time and reduce risk.

Advantages of Working with Intermediaries:

1. Expertise and Local Knowledge: Agents typically have in-depth knowledge of Vietnam’s textile sector, local business practices, and regulatory requirements. They can help navigate cultural and communication barriers.
2. Quality Control: Sourcing companies often provide on-the-ground oversight, ensuring that manufacturers adhere to the quality standards and deadlines agreed upon in contracts.
3. Reduced Risk: By leveraging the intermediary’s existing relationships with manufacturers, buyers reduce the risk of encountering unreliable suppliers or production delays.

Factory Visits

Visiting factories is a crucial part of the sourcing process, especially when vetting new suppliers or ensuring ongoing production quality. Factory visits allow buyers to directly assess the manufacturer’s capacity, working conditions, and compliance with international standards.

Arranging Factory Visits

 Before planning a visit, coordinate with the manufacturer to schedule a tour of the facility. Many factories welcome visits from international clients, as it demonstrates a serious interest in building long-term relationships. Here are some tips for a successful visit:

• Preparation: Bring detailed questions about production capabilities, lead times, quality control processes, and certifications (such as ISO or Oeko-Tex). Ensure you’re clear on your product specifications to evaluate the manufacturer’s ability to meet your requirements.
• Check Facilities: During the visit, examine the machinery, equipment, and workforce. Take note of the factory’s scale and capacity to determine whether they can handle your order volume.

Auditing Production Sites

Auditing a factory’s production processes and quality control procedures is critical for ensuring product consistency and compliance with international standards. Key aspects of an audit include:

• Workforce Conditions: Ensure the factory complies with labour laws, such as fair wages, working hours, and safety standards.
• Production Capacity and Scalability: Assess whether the manufacturer can handle large-scale orders or flexible production volumes if your needs increase.
• Environmental and Ethical Standards: Evaluate the factory’s sustainability practices, such as water and waste management, use of eco-friendly materials, and adherence to environmental regulations.

By incorporating these sourcing strategies, businesses can streamline their operations, maintain product quality, and build long-term, successful partnerships with Vietnam’s textile and garment manufacturers.

Vietnam’s textile and apparel industry has grown strongly, not only because of its modern manufacturing infrastructure and abundant labour force but also because of its ability to adapt quickly to the demands of the international market. The combination of direct sourcing strategies, working with intermediaries, and factory inspections has helped international companies build sustainable cooperative relationships in Vietnam. With its potential for sustainable development and strategic location, Vietnam will continue to be the first choice for global fashion brands.

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