Vietnam Joins CPTPP China Textile Ushers New Challenges

Release time:

2019-02-13

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (ComprehensiveProgressiveTrans-PacificPartnership) entered into force in Japan, Canada, Australia, New Zealand, Mexico and Singapore on December 30, 2018, and in Vietnam on January 14, 2019. In addition, Brunei, Chile, Malaysia and Peru will begin implementing the agreement 60 days after the agreement approval process is completed. It is reported that the CPTPP agreement countries account for 13% of the global gross domestic product (GDP) and involve more than 0.5 billion of the population. After the CPTPP officially came into effect, Japanese officials told the media that Thailand and the United Kingdom may join the negotiation of this agreement in 2019 and become the new signatories of the agreement.

The impact of CPTPP on Vietnam's economy will largely depend on Vietnam's ability to seize opportunities and overcome challenges. The CPTPP will phase out 98 percent of tariffs on agricultural and industrial products, liberalize investment regulations and strengthen the protection of intellectual property rights. Joining CPTPP has brought an unprecedented market to Vietnam, and "made in Vietnam" may become the biggest winner.

The people in this land of Vietnam are not only hardworking, but also full of vitality. At present, there are about 30 million young and middle-aged people. However, the aging trend of my country's population is obvious, and the Vietnamese population is relatively young. Vietnam will maintain this advantage for a long time and thus increase the competitiveness of its labor force.

In the textile field, now "MadeinVietnam" is quietly squeezing the "MadeinChina" market. In 2009, Nike's Vietnam foundry completed a comprehensive surpassing of China's production capacity; in 2012, Adidas's last mainland China factory was closed in Suzhou; in April 2018, Uniqlo announced that China's production capacity was transferred to Southeast Asia, and Vietnam would assume 40% of the total production.

Not only foreign brands, but also attracted by cheap labor, many private enterprises of shoes, hats and clothing originally rooted in Guangdong and Fujian, China, have set off an upsurge of moving factories to Vietnam. Chinese textile and garment enterprises have also accelerated the pace of transfer to Vietnam. Chinese down jacket manufacturer and seller Bosideng will also expand its production in Southeast Asia. With the help of the capital partnership with Itochu Corporation of Japan, Bosideng began pilot production in a Vietnamese textile factory related to Itochu Corporation and plans to further expand production according to production trends.

The reason for the transfer is not complicated, because the labor cost to Vietnam can be nearly 50% cheaper. Production workers in Vietnam earn an average of $216 a month. And, according to the World Bank, Vietnam is one of the largest labor force countries in Southeast Asia, with 57.5 million workers, while Malaysia and the Philippines are 15.4 million and 44.6 million, respectively.

Under the background of Sino US trade friction, China's foreign trade orders are struggling, but Vietnam is making great strides forward, which can not but arouse the vigilance of the industry.