Vietnam's textile and garment export scale is still expanding, but growth momentum is showing signs of fatigue. In the first five months of 2026, total exports reached $17.8 billion, a mere 0.6% year-on-year increase, far below the double-digit growth rates of previous years, reflecting structural bottlenecks facing the industry.
Growth Slowdown Amid Rising Costs and Competition
Vietnam's textile and garment industry has set an annual export target of $50 billion, which means monthly exports in the second half must average $6.44 billion, nearly 81% higher than the monthly average of $3.56 billion in the first five months. From a supply chain perspective, achieving this target is challenging. Vu Duc Giang, chairman of the Vietnam Textile and Apparel Association, publicly stated that relying solely on low-cost competition is no longer sustainable. Domestic labor costs continue to rise, while overseas buyers are tightening requirements on delivery time and quality. Meanwhile, low-cost competitors like Bangladesh and Cambodia are diverting global orders, intensifying homogeneous competition. For buyers, Vietnam's cost advantage is being eroded by other Southeast Asian countries, increasing the risk of order shifts.
Green Compliance Becomes a Hard Barrier for European and US Markets
The US and EU are Vietnam's two core textile export markets, but both are tightening trade access rules. Requirements for carbon emission control, renewable energy use, corporate social responsibility, and environmentally friendly production are escalating, making green production capacity a direct determinant of whether companies can retain European and American orders. For local factories in Vietnam, this means significant investment in equipment upgrades and process reforms; otherwise, they will be locked out of mainstream markets. This trend sends a signal to the global textile supply chain: green compliance is no longer a bonus but a ticket to entry.
Supply Chain Weaknesses Undermine Free Trade Agreement Benefits
Vietnam's textile supply chain localization rate remains at around 50%, with core raw materials like fabrics and accessories heavily dependent on imports. This structural issue directly prevents Vietnam from fully leveraging tariff reductions and customs facilitation under various free trade agreements. Imported raw materials mean higher costs and thinner profit margins, limiting further market expansion. From an industry analysis perspective, filling upstream gaps and building a self-controlled domestic raw material supply chain are key to enhancing Vietnam's textile competitiveness.
Transformation Paths: Technology, Green, and Diversified Markets
Facing internal and external challenges, Vietnam's textile industry is trying to break through via three paths: first, promoting digital production transformation and core technology upgrades to phase out outdated, high-energy-consumption capacity; second, scaling up green textile industrial parks for centralized, low-carbon, standardized production; third, leveraging diversified free trade agreements to explore emerging overseas markets and reduce single-market risk. Whether these measures succeed depends on the coordinated efforts of the government, industry associations, and enterprises.