Tue, 16 Jul 2019

Apparel Sector a Reminder That Vietnam and China Must Get Along

Voice of America
24 Apr 2019, 17:35 GMT+10

HO CHI MINH CITY - Vietnam this week just celebrated the fact it has survived nearly a millennium of independence from China, which previously ruled the smaller neighbor for nearly as long. Much is made of the ancient rivalry between the two sides -- but there is far less attention, especially on the international stage, on areas where they both get along fairly well.

The textile and garment sector is as good an example as any of this amicable cooperation, given that China is the worlds biggest exporter in the industry, and Vietnam is the second biggest. Analysts often describe Hanoi as taking a path similar to Beijings, both having communist leaders who turned toward export-led market capitalism in recent decades, and in terms of selling ever more footwear, clothes and bags to the world, Vietnam is indeed following Chinas actions.

China and Vietnam hold a pivotal position in the global textile market, Chen Dapeng, president of the China National Garment Association, said at a trade conference in Ho Chi Minh City this month. The industries of the two countries are highly complementary.

The industries compete for customers, but they are also complementary in that Chinese factories supply much of the fabric and other inputs needed in the business, while Vietnamese factory hands are increasingly supplying the labor as costs rise in China.

We believe many in Asia can cooperate, said Le Tien Truong, CEO of the Vietnam National Textile and Garment Group. We are not just taking Chinese investment, but also reforming Vietnamese suppliers.

He and others in Vietnam speak of domestic reform because the country does not have as large and complex a network of textile suppliers and processors as in China. That is one reason the smaller country relies on the larger one as its biggest source of imported goods overall. No matter the geopolitical problems at the top, the reality is that textile firms on both sides of the border work together to turn a profit.

On one hand, amid the trade war between the United States and China, the latter competitor has lost some of its business to Vietnam. On the other hand, it is not just foreign third parties moving factories from China to Vietnam, but also Chinese investors themselves, who deem it beneficial to relocate some of their supply chain to the south.

This month a large contingent of Chinese textile companies went scouting for Vietnamese partners in the industrial parks just outside Ho Chi Minh City.

This global shift in interest toward Vietnam has helped it to catch up to China, which is still the export leader in shoes and garments.

We congratulate Vietnam for that big effort, said Sun Rui Zhe, president of the China National Textile and Apparel Council.

He noted his country looks to support that effort as part of its Belt and Road Initiative, which gives loans and grants to dozens of countries, mostly for infrastructure, but also private industry, including textiles. Beijing has already financed dozens of projects in Vietnam, from coal power to ship yards to fertilizer plants.

China has done our best to improve our relations all over the world, Sun said.

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