In the past few years, China has developed automated controlled manufacturing and factories have relocated to countries including Vietnam to reduce labor cost. China still leads as the world’s largest exporter in apparel manufacturing. However, as labor cost rises in China, Vietnam’s manufacturing sectors continue to soar along with its ongoing economic development.

Bangladesh Dhaka-based industry magazine, TextileToday reported in 2016, Vietnam’s apparel exports accounted for 16% of Vietnam’s total outbound trade and is the third-largest apparel exporter in the globe. At the same time, apparel manufacturing accounts for 70% of exports in the textile sector. Vietnam’s domestic market shows a healthy perspective with a large population of 900 million and a large younger generation present in the nation, recent increase in income within a rising middle class has resulted in a 20% boom in the country’s domestic retail sector. Vietnam has over 6,000 garment and textile manufacturing companies, with over 25 million workers. From recent analyses, the sector will grow by 14% per year and reach a market value of USD 50 billion  by 2020.

“We have realized that many international brands have migrated into the Vietnamese market, relocating their headquarters to the country. From a historic point of view, Vietnam is similar to China 10 years ago, although much of Vietnam’s economic activity comes from private-sector businesses. The Vietnamese government does not actively support the textile industry, though on the other hand, they have not emplaced policies that would hinder sector growth, which remains crucial to manufacturers.”

A large number of FDI has accumulated in the Vietnamese market. In the first 11 months of 2017, FDI in the country’s manufacturing sector grew by 11.9%, with the majority  in apparel and textile manufacturing.

Vietnam’s FDI sources are mainly coming in within the Asia region, with Japan and South Korea leading in investments. Japan’s Union Industry is one of the largest investors providing manufacturing machines and equipment to the country. Giovanni Lamberti, Union Industry’s international sales director, remains confident in the Vietnamese garment sector: “Vietnam is emerging as a leader in manufacturing and production and we predict that its market value will reach USD 50 billion and be able to develop micro-niches besides wholesale production.”