VIETNAM TEXTILE & GARMENT INDUSTRY: 2025 REVIEW & 2026 OUTLOOK

Conditional Recovery – Growth Accompanied by Screening

The year 2025 marks a pivotal period for Vietnam's textile and garment industry. While the sector has emerged from a cycle of deep decline, it is simultaneously entering an environment defined by stricter competition regarding structure, costs, and compliance standards

 

1. 2025 Export Turnover: A Return to Growth, Yet No Breakthrough

According to industry reports, Vietnam's textile and garment export turnover in 2025 is estimated to reach approximately $46 billion, an increase of 5–5.6% compared to 2024. This figure allows Vietnam to maintain its position in the global Top 3 exporters, trailing only China and Bangladesh.

However, this increase reflects a technical recovery driven primarily by:

• A slight recovery in import demand from the US and EU.
• Active restructuring of orders by enterprises, moving away from reliance on massive production volumes.

It is premature to categorize this phase as a significant growth.

 

2. Localization Rate Surpasses 50%: A Foundational Shift

One of the most significant developments in 2025 is the industry-wide raw material localization rate exceeding the 50% threshold. Compared to the pre-2020 period (which hovered around 35–40%), this is a substantial advancement.

Direct Impacts:

• Mitigation of supply chain disruption risks.
• Reduced vulnerability to logistics and exchange rate volatility.
• Increased domestic value-added and improved long-term profit margins.

This is considered the foundation that will help the industry withstand the 2026–2027 cycle.

 

3. Broad Market Coverage with High Dependency

As of the end of 2025, Vietnamese textile products are exported to approximately 138 markets. Notably:

• The United States remains the largest market, accounting for nearly 40% of total turnover.
• ** The EU and Japan** maintain stable roles.
• Emerging markets show slow growth rates.

This data indicates broad market reach but simultaneously highlights the risk of over-concentration on key markets.

 

4. Tax Policies & Trade Barriers: Long-term Pressure

2025 witnessed numerous adjustments related to:

• Countervailing duties in the US.
• Rules of origin and traceability regulations in the EU.
• ESG (Environmental, Social, and Governance) standards tied to trade.

While these factors did not create an immediate shock, they have increased compliance costs, particularly burdening SMEs and mid-sized processing facilities.

 

5. Global Context: Fashion Market Slowdown

According to international reports, the global fashion market scale in 2025 reached approximately $1.8–1.9 trillion, yet growth remains in the low single digits.

Dominant Factors:

• Slow recovery in consumer purchasing power.
• Inventory levels remain high in certain markets.
• Consumers are prioritizing essential spending.

 

6. 2026 Forecast: No Room for Easy Growth

Forecasts for 2026 unanimously agree on one point: Global textile demand growth will remain low with no expected surges.

This implies:

• Orders will not increase sharply.
• Competitive pressure regarding price and delivery times will intensify.
• Enterprises are forced to optimize operations rather than chasing output volume.

 

7. Green Transition & Digitalization: From Trend to Mandatory Condition

The 2025–2026 period records a clear shift in requirements from international clients:

• Usage of recycled materials.
• Emission reduction in production.
• Supply chain transparency.

These are no longer competitive advantages but prerequisites for survival in the global supply chain.

 

8. Regional Competition: An Increasingly Crowded Field

Vietnam faces direct competition from:

• Bangladesh (Low labor costs).
• China (Complete, closed-loop supply chain).
• Indonesia (Rapidly improving productivity and policies).

The competition is no longer just about price, but about the ability to meet standards and the speed of adaptation.

 

9. Environmental & Sustainability Factors: External Pressures

Major markets are increasing demands regarding:

• Textile waste recycling.
• Reducing environmental impact.
• Social responsibility in production.

Enterprises that fail to meet these standards face elimination from the supply chain, regardless of market fluctuations.

 

CONCLUSION

2026 will not be a year of hot growth for the Vietnamese textile and garment industry.

It is a year of capability polarization, where:

• Well-optimized enterprises will survive.
• Slow-to-adapt enterprises will be eliminated.

The textile industry is transitioning into a phase of conditional growth, rather than expansion