The US and China's imposition of steep new tariffs affecting tens of billions of dollars worth imports isexpected to become major factors affecting global trade prospects this year.
According to Huynh The Du, Fulbright University lecturer, there will be more opportunities for Vietnam to scale up export to the US in some fields where Vietnam has for years been directly competing with Chinese peers, such as textile clothing and footwear.
Echoing the mindset, a representative from the Vietnam Textile and Apparel Association (Vitas) said that if Chinese textile and garment items incurred high tariffs in the US, it would be beneficial to China’s direct competitors, such as Vietnam, Cambodia, and Bangladesh.
Besides, when China’s textile and garment export faces a threat, the Chinese government might step up efforts to shift export production to neighbouring countries, including Vietnam, to make avail of these countries’ comparative advantages on labour costs and business expenses.
According to Le Quang Hung, chairman of Saigon Garment JSC (Garmex Saigon), as labour costs in China rose sharply in recent years, the country has not invested in export production, which reduced its competitiveness against Vietnamese export products.
In fact, some US importers, fuelled by the fear from the implications of the on-going US-China trade war, have shifted their import orders from China to Vietnam.
“There is concern that part of Chinese textiles and garments will flow into the markets of neighbouring countries, including Vietnam, after they fail to reach the US market, thus fueling domestic market competition,” said Hung.
According to Vitas’ figures, in the first six months of this year, Vietnam earned nearly US$6.4 billion in textile and garment export turnover from the US, up 12.5 per cent on-year and representing 47.7 per cent of the sector’s total export value.
General export performance is forecast to maintain this growth momentum in the remaining half of the year. Recent survey results by the General Statistics Office about quarterly production-business trends in the last six months of 2018 show that 93.7 per cent of surveyed firms believe that exports will increase in the second half of the year, with fiber and garment firms forecast a sharp growth in order intake.
The survey involved 6,500 businesses in the processing and manufacturing industries.