Vietnam’s supply chain diversification has been happening for a few years already, mainly driven by rising labor costs in China. Even before the trade war, Vietnam was getting attention because of the proximity to China and because of the existing infrastructure in the country. The full supply chain has been set up in the country for the past decade already.

In 2018, Vietnam’s exports of textiles and apparel to the US increased 6.19 per cent over 2017. Vietnam is currently the third largest supplier of textiles and apparel to the US after China and India. The country has invested significant effort into building up the apparel sector, in particular. By the end of this year, Vietnam expects to become the second largest exporter in the world.

With the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) now in place, even more eyes are on Vietnam for sourcing. As part of the deal, Vietnamese garments bound for Canada, Mexico, Japan, Australia, New Zealand, Peru, Singapore, Malaysia and Brunei either are already enjoying duty-free access or will within ten years as some tariffs get phased out in waves. Because of CPTPP, a lot more investment into fully vertical supply chains is happening in Vietnam.