According to the statistics of Vietnam textile and clothing association, the export volume of Vietnamese textile and clothing products in 2020 is US $25billion, a year-on-year decrease of 10%, which is the first negative growth in 25 years.

COVID-19 has brought great damage to the textile and garment industry of the country. In the first quarter of 2020, China’s customs clearance led to the shortage of Vietnamese raw materials supply. Vietnam’s exports to many regions, including Europe and America, began to suffer severe damage in the second quarter. 60% of Vietnam’s imported raw materials come from China, while exports to Europe and America account for 60% of its exports. Therefore, the epidemic has brought a huge blow to Vietnam’s textile and clothing industry. Recently, the crisis of shipping container supply has brought new impact on Vietnam textile and clothing export. The soaring sea freight and transportation delay lead to the increase of production cost and a large amount of warehouse products, which affects the capital flow of enterprises.

Judging from the current situation, due to the increasing proliferation of COVID-19, there is still uncertainty in global apparel demand. Vietnam is closely following the trend of China’s relations with Europe and the United States. Previously, the goal of Vietnam textile and clothing association was to reach 39billion US dollars in textile and clothing exports in 2021, but there are three conditions for achieving this goal: one is that Europe and the United States can control the epidemic situation, the other is that China continues to purchase Vietnamese cotton yarn, and the third is that domestic enterprises can seize the opportunities brought by the FTA.

Due to the unclear market outlook, many Vietnamese yarn factories delayed investment opportunities and no new ones in 2020, and the yarn capacity in the country is expected to maintain at 8.25 million ingots in 2019.

According to the Vietnamese customs data, the total export of Vietnamese yarn in 2020 is 1.74 million tons, an increase of 1.2% year-on-year. Cotton yarn is still the main export variety, accounting for 60% of all exports. In 2020, Vietnam’s cotton yarn export volume is 1.05 million tons, down 4% year-on-year. Due to the falling cotton yarn price, the export volume of cotton yarn is 2.5 billion US dollars, down 11% year on year. In 2020, Vietnam exported 944000 tons of cotton yarn to China and South Korea, accounting for 90% of the total cotton yarn export. The export of cotton yarn to China began to resume in June 2020.

The sharp fluctuation of cotton price in 2020 makes Vietnamese enterprises cautious about signing long-term U.S. cotton import contract and China cotton yarn export contract. To minimize risk, Vietnam’s yarn mills tend to sign short-term contracts (1-3 months). As Vietnam cotton yarn is mainly exported to China, any changes in the demand and policy of Chinese cotton and cotton yarn will have an impact on Vietnam cotton consumption. In 2019 / 20, Vietnam exported 867000 tons of cotton yarn to China, an increase of 7% year-on-year, accounting for 83% of Vietnam’s total cotton yarn export. In the first half of 2020 / 21, China’s cotton yarn import to Vietnam continued to increase. The agricultural counsellor of the United States predicted that Vietnam’s cotton yarn export to China will increase by 10% in the whole year and will continue to increase in 2021 / 22.