Market InsightsVietnam

Textile & Clothing Manufacturing in Vietnam: An Introduction

By 3 May, 2022June 30th, 2023No Comments

Textile factory worker in Vietnam

Vietnam is well-known for its textile manufacturing capabilities and is currently one of the biggest exporters globally. It’s considered one of the most interesting sourcing markets for textiles and garments in Asia, still with much room for growth.

In this article, we review Vietnam’s textiles and clothing manufacturing industry, and why foreign companies decide to relocate here. You will also learn more about what types of textile products can be produced, and about its trade agreements.

Vietnam’s Textile & Clothing Manufacturing Industry

The textile industry is the second biggest in Vietnam in terms of export turnover, employing more than 2.5 million people. The industry took off in the late 90s and many international clothing brands now have some sort of presence in Vietnam.

The industry has seen particularly high growth in the past 10 years, ranging from 15% to 20% yearly. As companies seek to diversify supply chains, and Vietnam introduces lucrative trade agreements, the market is predicted to attract even more investments in the coming years.

Thanks to its long history of producing textiles and garments, Vietnam has built a strong supply chain and a wide manufacturing base. This includes both textile raw materials and finished products.

Looking at the supply base, 70% of the factories can be found in or around Hanoi and Ho Chi Minh, where the industry started to develop. If you plan to manufacture or source textiles and garments in Vietnam, you will most likely end up in any of these regions.

Major export markets include the US, the EU, Japan, China, and South Korea at the top. While the US has been the main export market, it’s expected that the EU will become a significantly larger importer, thanks to the newly introduced free trade agreement (EVFTA).

What textile products are manufactured in Vietnam?

Vietnam produces a variety of clothing products, making it a suitable market for different kinds of companies. Below you can find examples of product categories that can be sourced here.

Sportswear and gym products

Sportswear is one of the fastest-growing categories in the fashion industry globally. Increasingly more brands now turn to Vietnam for sourcing and production of their products.

Examples of sportswear and gym products that can be manufactured in Vietnam include:

  • T-shirts and hoodies
  • Running leggings, joggers, and workout pants
  • Sports socks
  • Gym gloves and bags
  • Yoga apparel


Vietnam is specialized in footwear manufacturing, which can be backed by the many multinationals that produce in the country. Skechers, Nike, Adidas, and the likes all have large-scale production in Vietnam.

Any kinds of footwear can be manufactured in Vietnam, including flip flops, sandals, luxury leather shoes, sneakers, and boots.

Bags and backpacks

Small and mid-sized firms that have trouble getting bags in China benefit from manufacturing in Vietnam. For starters, China may not be a suitable choice for sourcing because factories are built for large orders.

Suppliers encourage companies to increase volumes and with high minimum order quantities (MOQs), to enjoy lower costs from economies of scale. If you’re looking to produce a limited or moderate number of bags, to begin with, Vietnam might be a more suitable option.

Orders are generally given the same level of priority. Most Vietnamese suppliers welcome lower MOQs and are willing to supply until you are ready to expand.

Many of the world’s most well-known bag and backpack brands source products from Vietnam or set up their own manufacturing facilities. Examples include the high-end brand Prada, The North Face, Fjällräven, to the “zero-waste” brand Everlane.

Benefits of Sourcing Clothes & Textiles in Vietnam

There are a handful of reasons why Vietnam has become a preferred supply market for textiles and garments. Below are the most outspoken ones.

Low labor costs

Vietnam has some of the lowest labor costs in Southeast Asia, averaging one-third of China’s. This is the primary reason why large companies like Nike and Adidas have set up much manufacturing here.

As mentioned in separate articles, we cannot stare blindly at labor costs but must take productivity into consideration.

Besides, it’s not uncommon that textiles are more expensive in Vietnam compared to China as it relies heavily on imports of raw materials and components. This is something we will cover later in the article.

Free trade agreements

Vietnam has signed several free trade- and bilateral agreements with large trading partners like the US, the EU, Japan, and Korea. It’s also a member of ASEAN, allowing free trade with other ASEAN member countries.

Increasingly more companies want to diversify and relocate at least parts of their production to Vietnam to avoid import tariffs from the US and China trade war.

Textile manufacturing capabilities

As mentioned earlier in this article, Vietnam has strong manufacturing capabilities of textiles, garments, and apparel. The industry started to grow decades back and the country has managed to develop a strong supply chain since.

Foreign investment has changed in recent years from predominantly Cut-Make-Trim (CMT) operations to more upstream industries, including fabric manufacture and dyeing.

What are the disadvantages?

Like any other country, you will find both advantages and disadvantages of manufacturing textiles products in Vietnam. For some companies, the benefits overweigh the disadvantages, making Vietnam a preferred option.

Reliance on imports

Vietnam relies heavily on imports of fabrics, primarily from Mainland China, where 55% of all imports come from. Korea, Mainland China, and Taiwan together contribute to 70% of Vietnam’s imports of fabrics.

This is primarily because Vietnam-produced fabrics are still below the standards in foreign markets.

Not only does this affect shipping lead times, but also the cost of finished goods. For small-and-medium-sized manufacturers, it can be worthwhile trying to develop existing manufacturing operations in Mainland China, if that’s your current supply market.

In addition to fabrics, Vietnam also relies on imports of components used in finished products. Velcro and buttons are examples of components that often are imported from Mainland China.

Sometimes higher costs

It’s common that manufacturers are quoted higher prices from Vietnamese suppliers compared to Chinese. The reasons are all stated above. China is still and will remain, highly competitive because they make fabric, trims, and accessories in great quantities at lower prices.

Larger brands like Nike can still benefit from setting up manufacturing in Vietnam as they have superior supply chains. If you have the US as a major export market, you can also benefit from manufacturing in Vietnam by avoiding tariffs.

Are clothes made in Vietnam of good quality?

It’s always hard to define what “Good quality” means. The quality should be defined by customers through tech-packs, material standards, specific certifications for markets, target prices, and order quantities.

With that said, Vietnam manufacturers have enough experience and capability to meet the demand in all segments, from luxury clothes to more low-cost products.


Vietnam has a long history of producing textiles and garments, dating back several decades. It’s currently one of the biggest exporters globally and continues to attract many investments from foreign companies. Its low labor costs and lucrative free trade agreements are some of the major reasons.

Worth mentioning is also that Vietnam is moving towards more upstream production, depending less on fabrics, trims, and accessories from overseas. Yet, it will still be highly reliant on markets like China in the long term.

The reliance on imports results in longer shipping lead times and increased costs of sub-components, which affect the cost of finished goods. Vietnam’s textile industry has a bright future ahead and becomes increasingly attractive to foreign companies.

Yet, it’s important that you review total costs to understand if it’s worthwhile to enter the market.

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