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Technology Will Create New Competitive Advantages for Vietnamese Textiles and Garments

Technology Will Create New Competitive Advantages for Vietnamese Textiles and Garments

Digitalization in textile production helps businesses cut production costs and creates new competitive advantages for Vietnam’s textile and garment industry.

According to the Vietnam Textile and Apparel Association (Vitas), the country has about 7,000 textile and garment enterprises, of which 80% are small and medium enterprises (SMEs) and 40% are foreign direct investment (FDI) enterprises. The industry employs 3 million workers and has a capacity utilization rate of 70%.

Much room to expand exports

The textile and garment industry still has much room to strengthen international economic integration and expand export markets. Many free trade agreements (FTAs) will take effect within the next two years, gradually reducing tariffs to zero. This is a good opportunity for Vietnam’s textile and garment industry, as it has a very open export market.

In addition to participating in the implementation of 15 FTAs with a wide coverage of more than 60 countries and territories, including the world’s largest markets, Vietnam is also stepping up negotiations for an FTA with the European Free Trade Association (EFTA).

In addition, Vietnam is also one of 14 countries participating in negotiations on the Indo-Pacific Economic Framework for Prosperity (IPEF). In particular, Vietnam has become one of the leading countries in the region in forming multilateral economic cooperation frameworks.

Currently, Vietnam is in the top three largest textile-exporting countries in the world. Of these, the United States is the market with the largest share, followed by the EU, Korea, China, and Japan, all of which account for around 10% of the total export turnover of the entire industry.

As for the EU market, Vietnam’s textile and garment industry has not fully exploited its potential. The value of orders to the EU is only about 10% of the total export turnover of the entire industry, which is lower than expectations.

In the first few months of this year, Vietnamese textiles and garments have approached a number of new markets, such as Canada and Australia. This shows that new-generation FTAs have begun to have a positive impact on this industry.

In addition, the chairman of the Vietnam Textile and Apparel Association is also calling on designers to prioritize the use of domestic yarns, fabrics, and accessories so that textile products from Vietnam can take advantage of the tariff incentives of the best FTAs.

Competitive advantage from mastering technology

To prepare for the market recovery period, textile and garment enterprises are trying to cut production costs and retain their workforce by all means. This not only prepares resources for the order recovery period but also affirms the stability of domestic production as a competitive factor with other countries.

The development orientation of Vietnam’s textile and garment industry will gradually move towards production methods that bring higher added value, from processing to FOB and ODM. Further, by 2035, the main contribution to textile export value will come from exporting Vietnamese branded products.

This transformation process is starting with the strong determination of domestic businesses to implement sustainable production and digital transformation, bringing technology into production and business processes.

Many businesses during the period of social distancing have begun to apply Style 3D design technology, from building a digital fabric warehouse that allows customers anywhere to access information and features the techniques and textures of each fabric sample. By working with customers on the Style 3D application, introducing them to fabric samples, and immediately implementing online design requests according to customers’ ideas, businesses can make changes to the colors, fabric patterns, and accessories on the sample product that are no different from if the two sides were working directly face to face. In particular, it now takes only a few days to create a finished product from a fabric sample according to customer requirements, compared to several months before.

This 3D design technology allows businesses to cut down on almost the entire sample sewing process. Even completely online fashion shows, from design to finished products and virtual models performing, are all on the Style 3D technology application.

Many businesses have had up to 15% of their orders completely from the Style 3D design application. Thus, this technology not only opens a marketing channel to reach customers but also greatly reduces time and production costs for businesses.

These applications will reduce production costs, improve productivity, and increase profits for businesses. Further, 3D design technology is expected to support the development of on-site design teams, which is a necessary condition for businesses to move from making processed goods to higher methods.

At the same time, if businesses proactively design samples for brands, it will be very convenient to switch to the ODM method or develop their own fashion brand.

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