The target of exporting $40 billion worth of textiles and garments this year may be unattainable.

Vietnam is an attractive investment destination in the 4.0 era, but it has a weak point, limited automation capability.

Thirty-eight Vietnam’s textile and garment companies recently attended ‘Global Sources Fashion and Global Sources Lifestyle’, the biggest fashion exhibition in Hong Kong, to seek buyers.

Analysts say Vietnam’s supporting industries are seeing new opportunities as orders have increased and the capital continues to flow into Vietnam.

It is becoming more difficult for textile and garment companies to recruit workers as
labor costs keep increasing and workers quit to move to higher paying jobs. The only solution is changing the production method.

Instead of getting benefits from the US-China trade war as predicted, Vietnam’s garment companies are meeting difficulties as US importers are reconsidering business with Vietnam’s exporters.

Will Vietnam be chosen as the destination for investors who plan to move out of China?

The scenario that 85 percent of garment workers would lose jobs to robots because of the 4.0 industry revolution will not happen in Vietnam in the next 10 years, businesspeople say.

For every one percent of the yuan depreciation against the dollar, the price of Vietnam’s yarn export to China would lose 3 US cents per kilogram, analysts estimate.

The EU Vietnam free trade agreement (EVFTA) has been compared to a highway which allows businesses to go faster and boost their exports.

The benefits brought by EVFTA, CPTPP and other free trade agreements are described as ‘tonics’ and ‘supplements’ for Vietnam.

In the first half of the year, foreign invested enterprises (FIEs) saw an excess of exports over imports of $15.68 billion, while the domestic economic sector witnessed a trade deficit of $15.7 billion.

The textile and garment industry has orders to export $18 billion worth of products, but the opportunities brought by CPTPP have not been that great so far.

Vietnam’s textile and garment companies are trying to find more orders to ensure continuous production from now to the end of the year.

“We have discovered some Vietnamese businesses which joined hands with Chinese to help Chinese evade the US levy, " said Vu Duc Giang, chair of the Vietnam Textile and Apparel Association (Vinatas).

The US-China trade war and new FTAs have given a push to Vietnam’s textile and garment industry, helping it gain two-digit growth rates.

With the EU’s strong commitment on opening its market after the EU-Vietnam FTA (EVFTA) takes effect, 94 percent of 547 tax categories of vegetable and fruits will be removed.

If Vietnamese products are absent from large retail chains, domestic production will lose advantages in the home market, experts warn.

The product items of labor-intensive industries that investors hope will benefit from the production relocation movement, including textile & garments, footwear and toys, still have not seen export growth breakthroughs in the US as expected.

Nearly 100 percent of materials needed to make textile and garment products must be imported, limiting Vietnam’s to take full advantage of preferential tariffs in FTAs.