Japanese textile companies are flocking to Vietnam. Many of these manufacturers are hoping to get a boost from the proposed Trans-Pacific Partnership free trade agreement, to which Vietnam is a party and are ramping up production and exports in the Southeast Asian country with an eye toward boosting US-bound shipments.

The excellent technical capability of Vietnamese workers is a big draw, even if labor costs are higher than those in Bangladesh or Myanmar. Deregulation efforts are adding to the country's appeal. Last year, for example, Vietnam began allowing foreigners to own property for 100 years, as well as hold 100 per cent stake in local publicly traded companies, up from the previous 49 per cent.

Further enhancing the country’s drawing power is the fact that in addition to being a member of the TPP and the Asean economic community, Vietnam also has free trade agreements with South Korea and the European Union. Major Japanese trader Itochu has established a weaving mill in Vietnam with a monthly capacity of 5,00,000 meters of fabric. Itochu also produces shirts at the facility under other brands and ships them to the US and elsewhere. Japanese cotton spinner Shikibo will lower output at its Chinese sewing factory and increase production at a partner plant in Vietnam.