Vietnam’s textile and garment industry is currently navigating a period of tempered optimism as it enters the second half of 2026. While the sector recorded a modest 5.6 per cent Y-o-Yncrease in export revenue during the first five months of the year, reaching approximately $18.8 billion, industry leaders remain vigilant. Boosted by a short-lived rise in orders and strategic tariff positioning, the initial momentum is now being tested by persistent global economic uncertainties. As the industry strives to meet its annual export target of $48 billion to $49 billion, the focus has shifted from aggressive volume expansion to disciplined cost management and supply chain resilience.
Margin compression and operational realities
Manufacturers are currently grappling with significant headwinds, including a 30 per cent to 40 per cent rise in container shipping costs and mounting pressure from global brands to reduce prices. The challenge for 2026 is not merely the volume of orders, but the quality of these engagements, noted an executive at Vinatex. With global consumer demand remaining soft due to inflation, buyers are increasingly shortening order lead times - often finalizing plans just one to two months in advance. This requires high levels of operational flexibility, forcing firms to transition away from traditional, low-margin ‘cut-make-trim’ (CMT) models toward more integrated ‘original design manufacturing’ (ODM) frameworks to safeguard profitability against rising labor and raw material costs.
Diversification as a strategic buffer
Despite these pressures, Vietnam’s established presence in global supply chains continues to serve as a cornerstone for stability. Exporters are proactively diversifying their market reach, leveraging trade agreements like the EU-Vietnam Free Trade Agreement (EVFTA) to mitigate the volatility of the US and Asian markets. Furthermore, the industry is accelerating its transition toward ‘green manufacturing’ to satisfy the growing regulatory requirements of international buyers, particularly regarding carbon footprint transparency and supply chain traceability. While the road to the year-end target remains arduous, the industry's shift toward higher-value production and deeper vertical integration is positioning it to remain a preferred sourcing destination in an increasingly fragmented global landscape.
Vietnam textile and apparel industry
Vietnam is the world's third-largest apparel exporter, specializing in garments like jackets, T-shirts, and technical textiles. The sector is currently transitioning from contract manufacturing toward higher-value ODM/OBM models, focusing on sustainable practices and green energy to maintain competitiveness within global supply chains under the ‘China Plus One’ strategy.
