Vietnam has overtaken Bangladesh as the world’s second largest exporter of ready-made garments (RMG). Bangladesh is now in third position, with China remaining the largest exporter, according to the latest figures from the World Trade Statistical Review 2021 released by World Trade Organization (WTO).
Vietnam’s clothing exports grew 6.4 percent in 2020 with a market value of 29 billion dollars. Over the past decade Vietnam’s share in the global apparel export market surged, just ten years ago Bangladesh still had 85 percent greater dominance, which in 2020 dropped form 6.8 percent to 6.3 percent.
Bangladesh greatly suffered during the pandemic
Bangladesh output declined during the pandemic, with factories closed as many western brands cancelled orders or delaying payments. Ongoing compliance issues have also forced closures while Vietnam managed to diversify its production making not just low-end, fast fashion garments but also mid and high-end clothing and accessories.
In 2019 Vietnam and the European Union signed a free trade agreement which significantly boosted trading to the world’s largest bloc.
China remains the world’s largest exporter of RMG with 31.6 market share, despite a 7 percent drop in 2020, valuing its exports at 142 billion dollars.
Why Vietnam is an attractive destination for apparel sourcing
Global companies have been reducing their reliance on China since the outbreak of Covid-19. Much of Vietnam’s GDP growth has been driven by garment production and manufacturing, giving it a comparatively better infrastructure towards supply chains than countries such as India and Bangladesh. Vietnam’s currency is also fixed in relation to the US dollar, so there is little price fluctuation when the market falls.
Vietnam’s proximity to China is beneficial for sourcing raw materials and machinery for production. Some brands moving out of China will want to mitigate risk and stay close by distributing their supply chains.
Politically Vietnam is more stable than countries like Bangladesh and India and its citizens have access to better education infrastructure and healthcare.