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Vietnam's textile industry has been highly anticipated and is known as the "backbone" of Vietnam's economy. However, recent data shows that the industry is experiencing serious difficulties. Vietnam's exports fell for the fifth straight month in July, falling to a 14-year high. Behind this data is the heavy blow to Vietnam's textile industry as a core industry of the country. This article will delve into the current state of Vietnam's textile industry and what caused its collapse.
Vietnam's textile industry has always been one of the pillar industries of the country, not only generating a lot of export earnings for the country, but also providing a lot of employment opportunities. However, this year, the industry has suffered a serious blow. According to data from Vietnam's Ho Chi Minh City Business Association, export orders from Vietnam's textile industry fell by 70%-80% in the first quarter of this year, resulting in the shutdown of 42,900 textile factories in the country. In the second quarter, export orders fell by another 80%, directly causing more than 200,000 workers in Vietnam to lose their jobs. The dramatic deterioration of the situation is extremely worrying for the Vietnamese government.
So, what is the reason for such a serious predicament in Vietnam's textile industry? First of all, Vietnam's textile industry is highly dependent on the US market. The United States has always been the largest export destination for Vietnamese textiles, accounting for more than 30% of Vietnam's textile industry exports. However, the recent slump in the U.S. economy and inflation have led to a sharp decline in demand in the U.S. market, which has had a severe impact on Vietnamese industries that depend on the U.S. market. U.S. manufacturing is also gradually shifting some low-end industries to Mexico, causing Vietnam to lose some orders.
Secondly, Vietnam's textile industry is actually more like an "assembly industry". Although Vietnam produces a large number of smartphones, most of the mobile phone components are imported, and Vietnam mainly plays the role of assembly. This means that most of the profits are captured by multinational companies, while Vietnam receives only limited benefits. In the context of the global economic downturn, this is a huge challenge for Vietnam, which is highly dependent on exports.
In addition, Vietnam's textile industry mainly produces low value-added products such as clothes and shoes. Although the labor cost of these products is relatively low, as the cost of living in Vietnam rises, the wage level of workers is gradually increasing, which makes these products less competitive. In addition, Vietnam's textile industry is also facing problems such as rising raw material prices and global supply chain disruptions, which further increase production costs.
In general, Vietnam's textile industry, while relying on the US market and low-value-added products, has not established a stable supply chain and a high value-added industrial chain. This makes Vietnam's textile industry extremely vulnerable and unable to cope with global economic instability and market volatility. Therefore, the collapse of Vietnam's textile industry is not surprising, it reveals some fundamental problems in Vietnam's economic development.
Although Vietnam was once seen as a country that could replace China as the new "factory of the world", the reality is full of challenges. Vietnam's economic model is more like a "false boom", relying on low-value-added industries and external markets without establishing an independent and sustainable economic system. Therefore, it is difficult for Vietnam to replace China as the global manufacturing leader.
Although the Vietnamese government is taking measures to deal with the plight of the textile industry, to achieve sustainable economic growth, Vietnam needs to achieve more extensive industrial upgrading and structural adjustment. Only in this way can Vietnam get rid of its excessive dependence on external markets, establish an independent and sustainable economic system, and achieve real development.
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