Vietnam's Textile and Garment Exports Slow Down, $50 Billion Target Faces Structural Challenges

Vietnam's textile and garment industry recorded a seemingly stable but worrying performance in the first five months of 2026. According to public data from the Vietnam Textile and Apparel Association (VITAS), total exports reached $17.8 billion, a mere 0.6% year-on-year increase. This growth rate is far below the average of recent years, indicating that while global procurement demand exists, the room for expansion is narrowing.

Export Growth Stalls, $50 Billion Target Under Pressure

A 0.6% increase is almost stagnation in the textile and garment export sector. Compared to the same period in 2024, Vietnam has not enjoyed a clear order rebound. VITAS still sets the full-year target at $50 billion, which means the average monthly export for the remaining seven months must reach about $4.6 billion, nearly 30% higher than the $3.56 billion monthly average of the first five months. Given the current global trade environment, achieving this target is highly challenging.

VITAS Chairman Vu Duc Giang publicly admitted that relying solely on low prices to win orders is no longer viable. Vietnam's labor costs have risen year after year, while competitors such as Bangladesh and Cambodia are diverting orders with even lower prices. Overseas buyers are also demanding faster delivery and higher quality, putting Vietnamese factories in a dilemma between price and efficiency.

Green Compliance Becomes a Hard Constraint

The European and American markets are core export destinations for Vietnam's textile and garment industry, but entry barriers are rising rapidly. The U.S. and EU have successively updated carbon emission controls, renewable energy use ratios, and corporate social responsibility standards. Green production capacity directly determines order allocation. For many small and medium-sized Vietnamese factories, environmental equipment investments can run into millions of dollars, which is difficult to digest in the short term, and some orders may shift to compliant suppliers in China or Turkey.

Vietnam's textile and garment industry chain localization rate is only about 50%, with upstream fabrics and accessories heavily dependent on imports, especially from China. This shortfall prevents Vietnam from fully utilizing the rules of origin in signed free trade agreements (e.g., CPTPP, EVFTA), and export profits are eroded by import costs. If the U.S. or EU imposes tariffs on non-originating fabrics, Vietnam's competitive advantage will further weaken.

Transformation Direction: Technology Upgrade and Supply Chain Autonomy

Expert recommendations focus on two main lines: first, promoting digital and automated production to reduce reliance on cheap labor; second, building a self-controlled upstream supply chain to reduce import dependence. Specific paths include:
- Government guidance to invest in high-tech production lines and environmentally friendly projects, phasing out outdated capacity;
- Concentrated construction of green textile industrial parks for low-carbon, standardized production;
- Encouraging local fabric companies to develop and increase self-sufficiency;
- Using diversified FTAs to explore emerging markets like the Middle East and Africa to spread risk.

For Buyers - Pay attention to environmental certifications (e.g., LEED, GOTS) of Vietnamese factories, and prioritize suppliers that have passed audits to avoid future compliance risks. - Clearly specify origin requirements in order negotiations to ensure eligibility for FTA tariff benefits and reduce overall procurement costs.

For Foreign Trade Companies - Assess the stability of Vietnam's supply chain; for categories relying on imported fabrics, allow longer lead times or consider completing fabric production in China before processing in Vietnam. - Proactively engage with green industrial parks planned by the Vietnamese government to secure preferential policies, while providing traceable low-carbon production data for European and American clients.