The textile and garment supply chain layout is reshuffled and reshaped by factors such a s swift growth of garment business led by domestic demand, demand growth in garment personalization and fashion, changes in global labor force and increasingly short delivery time.
Moreover, turbulent and tougher eco-environment of the textile and garment industry doesn’t make player of the textile industry feel at ease, so numerous processing factories and brand service providers are seeking for new opportunities.
Currently, booming development in Vietnam seems to be a “last straw” of the textile and garment manufacturing industry.
Lately, immediately after the end of the event for the 【Vietnamese Textile and Garment Investment Investigation Group】, sponsored by FunTex Holdings and co-organized by TSCI, the famous media TopPrint subordinate to FunTex Holdings organized over 20 bosses of Chinese textile enterprises to deeply investigate Vietnamese textile and garment industry and visit several famous textile and garment manufacturers.
It can be concluded that, in the scramble for manufacturers to settle in Vietnam, the demand for employment is soaring so that Vietnam has no cheaper labor force. However, Vietnamese governmental policies and trade advantage are still very beneficial to the textile manufacturing industry, resulting in a relatively optimistic survival status of large processing factories settled in Vietnam.
In fact, the optional destination country for migration of textile and garment manufacturing industry is not merely Vietnam. With the support by China's “the Belt and Road” policy, Bangladesh, India, Cambodia and other countries have witnessed settlement by the garment manufacturing manufacturers from China and other regions, and maintained close and good trade relations with China in the textile field, with different focuses in the development of the textile and garment industry.
New Roadmap of Silk Road
1. Northern Line A： North America (USA, Canada) - North Pacific - Japan, South Korea - Sea of Japan - Vladivostok (Zarubino Port, Slavyanka, etc.) - Hunchun - Yanji - Jilin - Changchun - Mongolia - Russia - Europe (North Europe, Central Europe, Eastern Europe, Western Europe, Southern Europe)
2. Northern Line B：Beijing - Russia - Germany - Northern Europe
3. Central line： Beijing - Zhengzhou - Xi'an - Urumqi - Afghanistan - Kazakhstan - Hungary – Paris
4. Southern line: Quanzhou - Fuzhou - Guangzhou - Haikou - Beihai - Hanoi - Kuala Lumpur - Jakarta - Colombo - Kolkata - Nairobi - Athens – Venice
5. Central line：Lianyungang - Zhengzhou - Xi'an - Lanzhou - Xinjiang - Central Asia - Europe
Overview of the textile and garment industry along the Belt and Road Initiative countries
1. International garment industry pattern
The international pattern of the modern garment industry is mainly formed by the international division of labor under the backdrop of economic globalization. It involves the process from the production of fabric and accessory to the garment processing and manufacturing, and to the sales at logistics terminals: The garment manufacturing is centralized in developing countries and regions with relatively advantageous comprehensive cost, while the garment terminal brands and retail channels are in developed countries and regions where the consumer markets are more concentrated.
2. International garment export
"In 2018, the world's garment exports exceeded 500 billion US dollars, and the garment exports in China, Bangladesh, Vietnam, India and Turkey accounted for 31.3%, 6.8%, 6.4%, 6.2% and 3.3% of the world's garment exports respectively." – The data source is from the WTO
It can be seen from the above data that the leading position of Chinese garment exports is unshakable due to its great advantage in national territorial area, while the development in Bangladesh, Vietnam and India can’t be underestimated. With the improvement and popularization of the Chinese education system as well as the transformation and upgrading of the manufacturing industry, cheap labor force is no longer the biggest advantage enjoyed by China, so labor cost is a problem to be contemplated and solved by operators in the world manufacturing industry, and intelligent garment manufacturing is an irresistible trend.
Regarding import, EU, USA and Japan, the top 3 importers, account for 20%, 17.4% and 5.7% respectively of global total imports. China, Vietnam, Bangladesh, Indonesia and India represent major markets for the EU to import textile and garment, achieving imports of 38.839 billion euros, 3.899 billion euros, 16.781 billion euros, 1.601 billion euros and 7.978 billion euros. Among such markets, Vietnam and Bangladesh witnessed a year-on-year growth rate of 7.5% and China about 1.5% (with the proportion of the total down 0.65% and the descending degree ranked first).
In 2019, with adverse impacts on the escalation of Sino-US trade disputes and the global economic slowdown, the textile and garment orders and production capacity is quickly shifted to the “Belt and Road” countries. Among them, the exports of the “Belt and Road” countries in the sewing machinery industry maintained a low growth rate of 5.99%, with the proportion of total industrial export up about 4.8%, and with the market concentration continually tilted towards the Belt and Road countries.
Viewing from the structure of industrial export products, categories except embroidery machine affected by Indian and Pakistani markets keep year-on-year growth in value. Among such categories, industrial sewing machine is still the main category for export with the proportion of 54%, and the proportion of embroidery machine and pre-and-post treatment and finish equipment accounts for 15%.
Summary of key countries along the Belt and Road Initiative in garment industry
Among the key countries along the Belt and Road Initiative in garment industry, Bangladesh, Vietnam and Cambodia are the hottest countries that have a relatively high concentration in the textile and garment manufacturing industry.
Then, let’s summarize the survival status and current situation of the textile and garment manufacturing industry in these three countries:
1. Bangladesh
Overview: Bangladesh enjoys a national territorial area of about 148,000 square kilometers and a population of about 160 million, and is one of the densely populated and the poorest countries.
Labor force: Bangladesh enjoys abundant labor resources. In 2017, the total working population aged from 15 to 50 in Bangladesh was about 62.1 million, but the labor efficiency is not high. The labor cost is low, and the minimum wage is equivalent to RMB 416 yuan/month.
Garment manufacturing industry: terminal garment manufacturing industry is the main body of the industry chain and pillar industry of Bangladesh, accounting for 13% of national GDP. Bangladesh enjoys an annual output of jeans wear (about 200 million pieces), accounting for 27% of the total imports in Europe, which is higher than that of China.
Textile and garment industry: It is a pillar industry in the Bangladeshi economic development. According to BGMEA statistics, there are about over 2000 textile mills and over 6000 ready-to-wear processing factories, as well as over 5 million employment figures in the textile industry, 80% of them being females.
2. Vietnam
Overview: Vietnam is located in the southeastern tip of the Indo-China Peninsula, and borders China, Laos and Cambodia. It is surrounded by the sea on three sides, with a land area of 329,000 square kilometers and a population of 95.54 million in 2018.
Labor force: Vietnam enjoys a working population (aged above 15) of over 54.4 million with a prime population structure. The per capita monthly wage of workers in the textile industry is about 200-300 US dollars, which is only 40% of the wage level of textile workers in coastal areas of China.
Garment manufacturing industry: Terminal garment manufacturing industry is the main body of the industry chain and pillar industry of Bangladesh, accounting for 13% of national GDP. Bangladesh enjoys an annual output of jeans wear (about 200 million pieces), accounting for 27% of the total imports in Europe, which is higher than that of China.
Textile and garment industry: It is an important pillar industry in Vietnam. In 2018, there were nearly 7,000 textile and garment enterprises in the country, with a working population of more than 2.7 million, and operating income of 42 billion US dollars accounting for more than 80% of the national industry’s operating income; exports total 37 billion US dollars, accounting for 15.1% of the national exports. There are 8 textile industrial parks nationwide.
3. Cambodia
Overview: Cambodia is located in the southern part of the Asian Indo-China Peninsula, with a national territorial area of approximately 181,000 square kilometers and a population of approximately 16 million.
Labor force: Cambodia has a labor force aged from 15 to 55 accounts for nearly 60% of the total population, and enjoys abundant labor resources. However, in the past two years, it has been difficult to recruit workers. Due to the small population size and shorter demographic bonus period, workers' wages are far lower than that in China. But in Southeast Asia, developing countries are in the middle and upper level, and the minimum wage for workers in garment processing industry is 182 US dollars per month, which is higher than that in Vietnam.
Garment manufacturing industry: The development of Cambodian textile and garment industry is dominated by ready-to-wear processing factories. Most of the garment products are knitted ones, and the added value of products is relatively low. At present, 70% of Cambodian garment enterprises are Chinese enterprises.
Textile and garment industry: Cambodia has a low level of economic development and relatively late industrial initiation. The garment processing industry is Cambodian largest one with total exports accounting for more than 70% of the total national exports of goods. There are more than 500 textile and garment enterprises in the country, most of them are garment manufacturing enterprises. The direct employment population of Cambodian domestic textile and garment industry has reached 1 million, and the relevant employment population is about 2 million.
Basic necessities of life are eternal theme of mankind for living and textile and garment manufacturing industry is an indispensable link thereof. Whether in China, Vietnam, Bangladesh or Cambodia, there is no eternal cheap labor force but the industry supply chain upgraded and optimized towards less labor force and intelligent direction!
Seize the strategic opportunity - speed up the market deployment, enhance risk awareness - expand the market in an ideal and orderly way, adjust the structure to converge advantages - actively expand the differentiated market, promote cooperation and mutual benefit for win-win status - build a good competitive order to accelerate the transformation and upgrading of the textile and garment industry together!！
To only understand the garment industry pattern of the Belt And One Road Initiative countries is far from enough!
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