NATIONAL ECONOMICS UNIVERSITY

SCHOOL OF TRADE AND INTERNATIONAL

ECONOMICS
----------

INTERNATIONAL ECONOMICS
THESIS
ENHANCING VIETNAM’S TEXTILE AND APPAREL
EXPORTS TO EU IN THE CONTEXT OF EVFTA
IMPLEMENTATION

Supervisor: MSc. Tran Hoang Ha

Student’s name: Nguyen Thi Hong Nhung
Email: ranran261299.aep@gmail.com
Phone number: 0332537821
ID: 11173612
Class: International Economics 59A

Hanoi, 2020
 TABLE OF CONTENT

TABLE OF ACRONYMS
TABLE OF FIGURES
LIST OF TABLES
INTRODUCTION...................................................................................................1
CHAPTER 1: INTRODUCTION THE TEXTILE AND APPAREL
MARKETS OF VIETNAM AND EU AND EVFTA............................................2
1.1. Introduction the textile and apparel market of Vietnam.................................2
1.1.1. Main products and structure of textile and apparel enterprises in
Vietnam...............................................................................................................2
1.1.2. The main export markets of Vietnam’s textile and apparel......................2
1.2. Introduction the textile and apparel market of EU..........................................4
1.2.1. Some features of EU market.....................................................................4
1.2.2. The main import markets of EU’s textile and apparel..............................5
1.3. Introduction about EVFTA.............................................................................6
CHAPTER 2: CURRENT SITUATION OF VIETNAM’S TEXTILE
EXPORTS TO EU AND THE POSSIBLE IMPACTS OF EVFTA ON
VIETNAM’S TEXTILE AND APPAREL EXPORTS........................................7
2.1. Current situation of Vietnam’s textile and apparel exports to EU..................7
2.2. Possible impacts of EVFTA on Vietnam’s textile and apparel exports..........9
2.2.1. Positive impacts of EVFTA on Vietnam’s textile and apparel exports....9
2.2.2. Negative impacts of EVFTA on Vietnam’s textile and apparel
exports...11
CHAPTER 3: ORIENTATIONS AND SUGGESTIONS TO ENHANCE
VIETNAM’S TEXTILE AND APPAREL EXPORTS TO EU IN THE
CONTEXT OF EVFTA IMPLEMENTATION.................................................14
3.1. Government orientations to enhance Vietnam’s textile and apparel exports to
EU in the context of EVFTA implementation.....................................................14
3.2. Suggestions to enhance Vietnam’s textile and apparel exports to EU in the
context of EVFTA implementation......................................................................15
3.2.1. For government and Vietnam textile and apparel association................15
3.2.2. For Vietnamese exporting textile and apparel enterprises......................16
CONCLUSION......................................................................................................19
REFERENCES
 TABLE OF ACRONYMS

No Word Name
1 BS British Standards
2 BREXIT British Exit
3 CMT Cut, Make, Trim
4 CPTPP
Comprehensive and Progressive Agreement for
Trans-Pacific Partnership
5 DIN Deutsches Institut für Normung e.V
6 EU the European United
7 EVFTA European-Vietnam Free Trade Agreement
8 EX Export
9 FDI Foreign Direct Investment
10 FOB Free On Board
11 FTA Free Trade Agreement
12 GSO General Statistics Office of Vietnam
13 GSP Generalized System of Preferences
14 ISO International Organization for Standardization
15 OBM Original Brand Manufacturing
16 ODM Original Design Manufacturing
17 OEM Original Equipment Manufacturing
 18 SOEs State-owned enterprises
19 TRQs Tariff-rate quotas
20 USA the United States of America
21 VITAS Vietnam Textile and Apparel Association

TABLE OF FIGURES

Figur
Name Page
e
Figure Total export turnover of Vietnam’s textile and apparel sector
4
1.1 (2013-2018)
Figure Some main export markets of Vietnam’s textile and apparel to EU
8
2.1 in 2018
Figure Smiling curve of value-added stages in the textile and apparel
12
2.2 global value chain
Figure
Main modes of production of textile and apparel industry 17
3.1

LIST OF TABLES

Figur
Name Page
e
Table Main export markets of Vietnam’s textile industry in three years
4
1.1 2017, 2018, and the first 10 months 2019
Table
EU Textiles and Clothing imported by top 7 countries in 2018 5
1.2
Table EU commitments on some important groups of Vietnamese
7
1.3 commodity
Table Export turnover of Vietnam’s textile and apparel industry to EU
7
2.1 from 2012 to 2019
 INTRODUCTION

Vietnam’s textile and apparel industry has been developing strongly and having an
increasingly important role to play in the growth of the national economy. Besides,
because EU is known as the largest textile and apparel consumer market in the
world, Vietnam has always considered EU as an important market and also a
traditional trading partner in textile and apparel. Therefore, the issue of promoting
the export of Vietnamese textile and apparel to EU is very essential.
In this day and age, economic integration is an inevitable and growing trend. Over
many years, Vietnam has expanded the relationships with many partners through
bilateral and multilateral trade agreements. Recognizing the good prospects of the
relationship between Vietnam and EU, in June 2012, Vietnam and EU officially
announced the commencement of negotiations of EVFTA. The implementation of
EVFTA would have a profound and long-lasting impact on Vietnam's economy in
general and textile and apparel industry in particular. How EVFTA would really
affect Vietnam’s textile and apparel exports to EU market still remains a question
for researchers. Therefore, in order to assess the impact of EVFTA on Vietnam’s
textile and apparel exports to EU, I recommend the issue: "Enhancing Vietnam’s
textile and apparel exports to EU in the context of EVFTA implementation" as the
research topic.

1
 CHAPTER 1: INTRODUCTION THE TEXTILE AND APPAREL
MARKETS OF VIETNAM AND EU AND EVFTA

1.1. Introduction the textile and apparel market of Vietnam

1.1.1. Main products and structure of textile and apparel enterprises in

Vietnam

It is estimated by Statistical Yearbook of Vietnam 2018 that by 2017 there were

10,479 companies operating in the textile and apparel sector in Vietnam, mainly
small and medium enterprises. In terms of ownership, private enterprises account
for about 84%; FDI enterprises makes up for 15%, and SOEs only occupies 1%. In
terms of sector, about 70% of enterprises are in apparel sector, 17% of enterprises
are in weaving sector, 6% of enterprises are in yarn sector, 4% of enterprises are in
the dyeing sector and 3% of enterprises are in supporting industry.
In terms of product categories, Vietnam textile and apparel products mainly consist
of jackets, t-shirts, trousers, shirts, children's clothing and other products like suits,
sweaters, and cotton towels. The main products that Vietnam exports are ones that
made from cotton and synthetic fiber for the middle and low end market segments,
for instance, jackets, t-shirts, shirts, trousers and towels.

2
1.1.2. The main export markets of Vietnam’s textile and apparel

The products of Vietnam’s textile and apparel are exported to more than 180
countries in the world. In particular, the important markets are the USA, EU,
Japan, Korea, and some other markets like Canada, China, and ASEAN. In the last
few years, the textile and apparel industry has a high export turnover with an
average growth rate of 15% over the years, contributing about 15% of the total
export turnover of Vietnam. Vietnam is the fourth largest textile and apparel
exporter in the world, following China, India and Bangladesh.
According to the GSO, over the six years from 2013 to 2018, the total export
turnover of Vietnam’s textile and apparel sector witnessed a growing trend. In
2013, the export turnover was only $17.9 billion, however; only one year later, this
figure increased to $20.1 billion. During the period from 2014 to 2016, the figure
still rose, but the level of growth was slow. The growth was seen at over 18% in
2014, then dropped to approximately 12%, and finally sharply fell to only around
4% in 2016. Also, the figure in 2016 hit the lowest point during the research period
of six years. The decline in Vietnam's textile and apparel growth during these three
years was attributed to fluctuations of the world economy. Due to the weak global
economic growth and global economic instability, the world textile and apparel
industry was greatly affected. The leading countries importing textile and apparel
of Vietnam such as the USA, EU and Japan had a very low imports growth rate.
Typically, the EU's financial crisis and BREXIT event occurring in 2016 minimize
Vietnam's textile and apparel exports to this market. Also in 2016, such countries
competing with Vietnam as China, India, Bangladesh and Indonesia implemented
tariff incentives and devaluation currency policy, which made it difficulty for
Vietnamese textile and apparel enterprises. However, the export of Vietnam
gradually recovered in 2017. The export turnover then soared to over $30 billion in

3
2018, an increase of over 16% compared to it’s figure in 2017 ($26.1 billion). In
particular, the proportion of export coming from FDI enterprises occupied 59.9%
of the total value.
In terms of main export markets of Vietnamese textile and apparel, there were
some changes between 2017 and 2018. In both years, the USA was biggest
importer of Vietnam’s textile and apparel industry with 47.16% in 2017 and 47%
in 2018. The market share for the second biggest importer, EU, rose from 12.9%
to 15%, which was significant higher than a small increase from 11.95% to 12% of
Japan. In contrast, the figure for Korea declined slightly from 10.15% to 9%. In the
first 10 months of 2019, the position of the leading markets had no difference. Yet,
only the market share of Korea rose while the figures for others decreased.

Figure 1.1. Total export turnover of Vietnam’s textile and apparel sector (2013-
2018)

Source: GSO, VITAS

Table 1.1. Main export markets of Vietnam’s textile and apparel industry in 2017,
2018, and the first 10 months of 2019

Countries 2017 2018 10M/2019

4
 USA 47.16% 47% 45.2%
EU 12.90% 15% 12.9%
Japan 11.95% 12% 11.9%
Korea 10.15% 9% 10.7%
Other 17.84% 17% 19.3%

Source: General Department of Vietnam Customs, WTIS

1.2. Introduction the textile and apparel market of EU

1.2.1. Some features of EU market

EU is a huge market of 28 member countries (including the UK), each of which

has different customs, climate, and consumption characteristics. With an annual
import of more than $250 billion, EU has become the largest textile and apparel
import market in the world. EU accounts for 34% of the total textile and apparel
import turnover of the world and the average growth of total demand for textile
and clothing in EU is 3% per year. The kinds of product that EU targets are knitted
products which are also the type that Vietnam has strengths in the production. EU
is the convergence of the world's fashion capitals, thus they require extremely strict
and high-fashionable designs. Textile products consumed in this market need to be
stylish and diverse in order to meet the psychology of the consumers about
innovation, originality and impression. Besides, due to high standard of living, EU
is known as a high-class, fastidious market. Thus, this market requires high quality
of textile and apparel products with strict labor and environmental rules.

1.2.2. The main import markets of EU’s textile and apparel

With the population of about 500 million, the EU market needs to import over
$100 billion of textile and apparel each year . Currently, the tariff rate of exporting

5
textile and apparel to EU is 9.6% on average. The annual textile and apparel import
turnover of EU is very high, in 2018 reached $280 billion. China and Bangladesh
are currently the two largest suppliers to EU market. The three following suppliers
are Turkey, India, and Pakistan. Two last countries of top 7 belong to Cambodia
and Vietnam.

Table 1.2. EU Textiles and Clothing imported by top 7 countries in 2018

Partner
Import (US$ Thousand) Import product share (%)
name
China 44,186,792.49 9.50

Bangladesh 19,789,656.88 93.95

Turkey 17,263,866.64 19.27

India 9,135,970.53 16.93

Pakistan 6,208,363.54 76.47

Cambodia 4,687,125.41 74.14

Vietnam 4,402,717.50 9.78

Source: WITS - UNSD Comtrade

1.3. Introduction about EVFTA

Vietnam - EU Free Trade Agreement (EVFTA) is a new generation of FTA

between Vietnam and 27 EU member countries. EVFTA had been negotiating
since mid-2012. After 14 official meetings, the EVFTA negotiation process was
completed on December 2nd 2015 and was expected to take effect in 2018. This is
considered as one of the agreements with the widest range of commitments and the
highest level of commitments of Vietnam up till now. Basic areas of EVFTA
include: Trade in goods, Rules of origin, Customs and trade facilitation, Sanitary

6
and phytosanitary (SPS), Technical barriers to trade (TBT), Trade remedies (TR),
Trade in services, Investment, Competition, State-owned enterprise, Government
purchases, Intellectual property, Sustainable development, Legal issues, and
Cooperation and capacity building.
EU committed to abolishing tariffs right after EVFTA took effect on Vietnamese
goods belonging to 85.6% of tariff lines in the tariff schedule, equivalent to 70.3%
of Vietnam's exports to EU. Within 7 years after EVFTA came into effect, EU
committed to eliminate 99.2% of tariff lines in the tariff schedule, equivalent to
99.7% of Vietnam's exports to EU. For the remaining 0.3% of export turnover
(including: rice products, sweet corn, garlic, mushrooms, sugar, etc.), EU
committed to Vietnam under tariff quotas (TRQs) with an import duty of 0%.

Table 1.3. EU commitments on some important groups of Vietnamese commodity

Product Commitments of EU
Textile and apparel Abolishing tariffs within 7 years
Note: Rules of origin: must use fabric
made in Vietnam;
Special: allowed to additionally use
fabrics made in Korea
Shoes Abolishing tariffs within 7 years
Fisheries (except canned tuna and Abolishing tariffs within 7 years
fish balls)
Milled rice, unmilled rice and TRQs
fragrant rice
Products made from rice Abolishing tariffs within 7 years
Sugar and products containing high TRQs
sugar content
Plastic products Most products abolish tariffs immediately
Glass and ceramic products Most products abolish tariffs immediately
(European Commission, Ministry of Industry and Trade of Vietnam)

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CHAPTER 2: CURRENT SITUATION OF VIETNAM’S TEXTILE
EXPORTS TO EU AND THE POSSIBLE IMPACTS OF EVFTA
ON VIETNAM’S TEXTILE AND APPAREL EXPORTS

2.1. Current situation of Vietnam’s textile and apparel exports to EU

Table 2.1. Export turnover of Vietnam’s textile and apparel industry to EU from
2012 to 2019

Year 2012 2013 2014 2015 2016 2017 2018 2019

EX turnover (US$
2.456 2.723 3.333 3.408 3.596 3.885 4.304 4.400
mil)
EX turnover 16.3 15.9 14.5
15.2% 15.2% 14.9% 15.0% 11.28%
(%) % % %

Source: Compiled from General Department of Vietnam Customs

As can be seen from the table 2.1, during the period 8 years from 2012 to 2019, the
export turnover of Vietnam’s textile and apparel grows steadily. Within 7 years,
this figure increased from $2.456 billion (2012) up to $4.3 billion (2018). In 2019,
exports to EU reached $4.4 billion, increased by 2.23% compared to the year of
2018 and accounted for 11.28% of export market of Vietnam’s textile and apparel.
Especially, in May 2019, exports to the EU market increased sharply by 31.9%
compared to April 2019, reaching $397.36 million, raising export turnover to this
market in the first 5 months of 2019 to $ 1.53 billion, making up for 12.6% of the
total turnover.
Over the period from 2015 to 2019, Vietnam's textile and apparel market share in

8
EU increased slightly from 2.79% to 2.98% in volume and from 3.46% to 4.15% in
value. This figure made up for about 10% of EU's total commodities imported
from Vietnam. However, the export market share of Vietnam to the EU is still
modest in comparison with the export capacity of the whole industry.
Figure 2.1. Some main export markets of Vietnam’s textile and apparel to EU in
2018

Source: Ministry of Industry and Trade of Vietnam

Figure 2.1 illustrated top six export markets of Vietnam’s textile and apparel to EU
in 2018. As can be seen, Germany dominated the market share of Vietnam’s textile
and apparel exports to EU, occupying nearly 20%. The UK occupied the second
position in the market share with 18.7%. Following by the UK were Holland,
France and Spain, constituting 15.9%, 13.9%, and 11.9% of the market share
respectively. Finally, the figure for Italy was only 6.3%.
The main textile and apparel products that EU imported from Vietnam are jackets,
t-shirts, shirts, sweaters, short skirts, and trousers. Besides, each market of EU has
different customs with tastes and designs always change depending on seasons.
Thus, Vietnamese orders exported to the EU are mainly small in number. In the
high-end segment, most of the supply is provided by EU companies, Vietnam's
textile and apparel industry has not participated in this value chain. In addition,

9
many Vietnamese exporters still have no direct access to customers , and rely
heavily on intermediaries like Korea, China, Hong Kong, etc. The reason is that
Vietnam’s textile and apparel export activities consist mainly of small and medium
enterprises, which are unable to design and build brands by themselves. What’s
more, financial and material autonomy of Vietnam’s textile and apparel is still
limited, therefore, the main activity is still export processing.

2.2. Possible impacts of EVFTA on Vietnam’s textile and apparel exports

2.2.1. Positive impacts of EVFTA on Vietnam’s textile and apparel exports

When EVFTA officially comes into effect, textile and apparel industry might gain
the most benefits. This can help much in the orientation of Vietnam’s textile and
apparel industry.

 Opportunities from abolishing tariff: EVFTA is expected to have a positive

impact on Vietnam's textile and garment industry in the long term. According
to WTO and International Trade Center - VCCI, up to 42.5% of tariff lines
applied to this sector will be eliminated as soon as the agreement comes into
effect, the remain would be eliminated according to the schedule from 3 to 7
years. This might help Vietnam's textile and apparel industry increase its
opportunity to compete with products that currently benefit from GSP (0%
tariff rate) from Bangladesh, Pakistan, and Cambodia. The tariff reduction
makes a contribution to reduce production and export costs. This may create
favorable conditions for Vietnamese businesses to boldly invest in production
and boost textile and apparel exports to the EU market.

 Accessibility to modern machinery and technology: With the commitment to

reduce import tariff down to 0%, Vietnam’s textile and apparel enterprises

10
 would have the opportunity to import machinery and technology from the EU
market more easily in order to serve production and business activities.
Previously, Vietnamese textile enterprises had to import machinery from such
countries as China, Taiwan, and Korea. But when EVFTA is implemented,
Vietnam might have a chance to change the direction to import machinery and
technology from EU member countries. EVFTA enables Vietnamese
businesses to buy machinery with competitive prices, good quality, and
advanced technology, thereby having the opportunity to increase the
competitiveness of Vietnam’s textile and apparel products in the EU market as
well as the global market. This also helps Vietnam to avoid relying too much
on a supply that is low-quality and volatile like China.

 Attracting FDI from EU to Vietnam: FDI has a vital role to play in Vietnam's
textile and apparel exports. In 2018, according to GSO nearly 60% of the total
export value in Vietnam’s textile and apparel sector came from FDI
enterprises. Nevertheless, the proportion of FDI flows into this sector remains
low, FDI enterprises only constitute 15% of the whole industry. When EVFTA
comes into force, commitments on tariff reduction and trade facilitation at a
high level may promote FDI to flow into Vietnam’s textile and apparel sector.
This would create an opportunity for Vietnam to cooperate with investors from
EU and encourage them to invest in raw materials, weaving and dyeing which
Vietnam’s textile and apparel sector is still weak at. This makes a contribution
to helping Vietnam participate in the textile and apparel global value chain,
creating greater competitiveness and reaping more added value when exporting
to EU as well as other markets.

 Rules of origin: According to CPTPP, the condition for Vietnamese textile and
apparel products to enjoy a tariff rate of 0% is to meet the rules of origin from
11
 yarn in the exporting country or to be cumulatively calculated within the
trading block. However, with EVFTA, rules of origin of raw materials are
allowed from fabric. This is also considered as an advantage for Vietnamese
textile and apparel enterprises, because this would be more favorable than
beginning from yarn. In addition, EU allows the application of cumulative rules
of origin, which means that fabric originating from Korea, the country having
FTA with both Vietnam and EU, also benefits from the favor.

2.2.2. Negative impacts of EVFTA on Vietnam’s textile and apparel exports

Besides many positive impacts, Vietnam’s textile and apparel exports might have
to encounter with some challenges and barriers when engaging in EVFTA.
Firstly, in spite of being considered as one of the most beneficial products from the
EVFTA, in order to gain tariff incentives, textile and apparel products must strictly
follow the rules of origin. The tailoring of products and fabrics that are used to
create finished products obligatorily originate from Vietnam or EU (by not less
than 40%). This can be considered as the biggest challenge for Vietnamese
enterprises and the whole textile and apparel industry in Vietnam. Because up till
now, Vietnam has have to import up to 80% of fabrics for exports (about 50%
from China, 18% from Korea, and 15% from Taiwan).
Secondly, supporting industry of textile and apparel has not been developed
adequately and has not had enough capacity to support this spearhead industry. To
make it more clearly, Vietnam has had no chain of links from raw material areas to
output products, proactively supply raw materials. Instead, Vietnam mainly
follows the method of CMT. According to the smiling curve of value-added stages
in the textile and apparel global value , Vietnam is in the lowest point of the curve.
This means that the majority of producing activities of Vietnamese enterprises only
focuses on processing, which is unable to reap high profits.

12
 Figure 2.2. Smiling curve of value-added stages in the textile and apparel global
value chain

Source: Ph.D. Gary Gereffi

Thirdly, labor quality is also a big challenge for Vietnam's textile and apparel
exports to EU. Despite the advantage of abundant labor resources and cheap labor
cost, the Vietnamese textile and apparel industry lacks skilled human resources,
especially in the field of weaving and dyeing. The average worker's wage of
textile and apparel sector in Vietnam is only $248 per month, however; labor
productivity in this sector is still low compared to other countries in the region.
Therefore, the average cost per unit of product is still high. If Vietnam still cannot
figure out how to tackle this problem, Vietnamese textile and apparel products
exported to EU may find it hard to compete with rivals from China, Bangladesh,
and India.
Fourthly, Vietnam might have difficulty in complying with EVFTA's intellectual
property regulations. Intellectual property is one of the top requirements of EU
while Vietnam is still relatively indifferent to this issue. According to the
representative of Vinatex, of the 49 member companies of Vinatex, up to 2016,

13
only 30 companies have registered trademarks and 19 companies have not
registered their trademark yet. However, the registration mainly focus on the
domestic market, only a few ones, for instance, Phong Phu, Viet Tien, and May 10
register trademarks in the foreign markets. The total number of register trademarks
of Vinatex is 266 while registration of industrial designs and patents in the whole
Vietnam's textile and garment industry is still 0. The intellectual property content
in Vietnam’s textile and apparel products remains low, which is not commensurate
with the potential of this industry. If Vietnam’s enterprises still apathetic about this
problem, Vietnamese textile and apparel products would be less competitive when
entering the EU’s market.
Finally, Vietnam’s textile and apparel exports might be directly affected by
BREXIT. BREXIT event has made the euro and pound continually depreciate.
This would cause difficulties for Vietnam’s textile and apparel exports because
the relative prices of goods entering EU become more expensive. Also, the gloomy
prospect of European economy after BREXIT has dragged down the demand for
goods and thereby the demand for imported goods into the EU has also minimized.
In addition, the UK is one of the leading export markets of Vietnam’s textile and
apparel in EU. In 2018, the UK ranked the second highest market share in
Vietnam's textile and apparel export market to EU, accounting for 18.7%
(according to Ministry of Industry and Trade of Vietnam). Therefore, in the
context of EVFTA implementation, Vietnam’s textile and apparel may find it
difficult gaining benefits from the agreement when exporting to the UK.

14
 CHAPTER 3: ORIENTATIONS AND SUGGESTIONS TO
ENHANCE VIETNAM’S TEXTILE AND APPAREL EXPORTS
TO EU IN THE CONTEXT OF EVFTA IMPLEMENTATION

3.1. Government orientations to enhance Vietnam’s textile and apparel

exports to EU in the context of EVFTA implementation

In the context of EVFTA implementation, Vietnamese government has built textile

orientations in 2020 - 2030.
The Prime Minister stated that it is necessary to create world business brands and
product brands that bring long-term benefits to the country and to future
generations. The Prime Minister suggested that Vietnam needs to strive to create at
least 30 brands of textile and apparel contributing to the world market as well as
EU market by 2030. In addition, Vietnam defines EU is one the the most
important export market and focusing on exporting to Germany, Holland, France
and the UK. Besides, Vietnam’s textile and apparel exports must be ranked among
the top of EU, manage to increase the import market share in EU. Therefore, it is
necessary to have a spirit of self-improvement and must aim for sustainable and
prosperous development.
To accelerate Vietnam’s textile and apparel exports to EU when EVFTA comes
into effect, Vietnam government also support enterprises in the industry to deeply
participate in the supply chain in general and actively participate in the production
of domestic fabrics in order to gradually remove the "bottleneck" of the industry,
gradually reducing the dependence on foreign fabric sources and increase the
export value as well as the industry's value by satisfying the requirements on rules
of origin of EVFTA.

15
3.2. Suggestions to enhance Vietnam’s textile and apparel exports to EU in the
context of EVFTA implementation

3.2.1. For government and Vietnam textile and apparel association

First, to ensure the rules of origin in EVFTA, Vietnam needs to take the initiative
in input materials, in which the key issue is to develop supporting industry,
gradually proceed to self-control in raw materials from cotton, yarn, fiber to cloth.
Vietnam should find suppliers from South Korea, India, Bangladesh, Brazil, etc. to
gradually replace materials imported from Chinese. Besides, it is necessary that
government have appropriate policies to develop supporting industry or attract FDI
to invest in. In addition, government with VITAS need to help Vietnamese
businesses by creating alignment and cooperation among regions for raw material
production. Thus, Vietnam's textile and apparel industry can develop its value
chain, build a sustainable foothold in EU market and bring great benefits to the
country's economy.

Second, to exploit all potential of Vietnamese textile and apparel industry, it is

required that government should have orientation to build a chain of links from raw
material areas to output products, proactively supply raw materials, towards export
targets in the direction of FOB (input materials only), ODM (single package
products follow a closed process from supplying fabric - designing - sewing -
laundry - finishing). This enables to improve the quality and price of textile and
apparel products when exporting to EU market.

Thirdly, the government has a duty to raise the quality of labor resources.
Vietnamese government ought to formulate a strategic orientation to develop the
workforce in terms of quantity and quality in accordance with the the development

16
plan of Vietnam’s textile and apparel industry. Besides, it is necessary to create a
link between vocational training institutions and enterprises to help workers to be
properly trained and able to access to technology 4.0. Furthermore, government
need to frequently inspect and supervise the implementation of labor law,
insurance regimes, and regulations on occupational safety of Vietnam’s textile and
apparel enterprises. Also, government and VITAS give awards to those who come
up with new inventions and innovations in textile and apparel industry to
encourage the self-study spirit of employees.
Last but not least, Vietnamese government needs to continue to enhance the
protection of intellectual property right. Vietnam needs to improve the legal
framework that ensures accuracy and clarity to protect intellectual property right.
Besides, government must severely penalize individuals and organizations
intending to infringe upon intellectual property law. Also, government together
with VITAS should promote propaganda activities and frequently hold seminars on
protecting intellectual property right to raise awareness for textile and apparel
enterprises.

3.2.2. For Vietnamese exporting textile and apparel enterprises

First, in the short-term, in order to deal with the strict requirements of the EU on
rules of origin, Vietnamese textile and apparel enterprises should manage to look
for high quality of raw materials whose origin can be traceable, especially
imported raw materials from countries that engage in FTA with EU to take
advantage of tariff preferences, help reduce costs as well as increasing profits.
Vietnamese enterprises ought to find some countries that can be potential
suppliers as the alternative of China, for instance, Taiwan, Japan, Korea, and
India. Besides, Vietnamese enterprises need to proactively build supply chains of
raw materials and auxiliary materials.

17
Second, Vietnamese enterprises should make a process innovation, accelerate the
application of achievements of the industrial revolution 4.0. Simultaneously,
enterprises need to improve the capacity of enterprises in the shift of production
and business methods from CMT to other forms such as OEM, FOB, ODM, OBM.
This might help Vietnamese enterprises to make use of the input source as well as
benefit from EVFTA to accelerate textile and apparel exports.
Figure 3.1. Main modes of production of textile and apparel industry

Source: Compiled by FPTS

Third, it is vital that enterprises make efforts to improve the labor quality.
Businesses should launch human resource training programs appropriate to the
development and progress of technology. In addition, it is important to establish a
labor management regime together with a reasonable reward and punishment
regime to encourage employees to be proactive and self-conscious to improve their
productivity at work. Besides, income is the main motivation for promoting and
improving the quality of labor. Therefore, enterprises need to implement the
remuneration regime in accordance with labor capacity based on the agreement
with employees. What’s more, Vietnamese textile and apparel business ought to

18
implement positive policies concerning taking care of the lives of workers to meet
the basic requirements for employees.
Last, businesses ought to proactively protect intellectual property right. Each
business needs to raise awareness about the importance of intellectual property
right. Due to intellectual property regulations of EVFTA are extremely stringent,
Vietnamese enterprises should actively seek for useful information in order to
fully understand the bilateral commitments as well as strictly complying with
EVFTA's regulations on intellectual property right. Besides, each business in
Vietnam should follow the orientation of government and seriously obey to the
law about intellectual property right. This contributes to helping textile and apparel
enterprises in Vietnam meet the commodity standards of EU and break down
export barriers.

19
 CONCLUSION

The signing of EVFTA is one of the important milestones in Vietnam's

international economic integration process. When EVFTA is officially
implemented, the exports of Vietnam’s textile and apparel would be significantly
affected by the agreement. Thus, promoting Vietnam’s textile and apparel exports
to EU in the context of EVFTA implementation has a significant role to play. This
issue poses a need to improve the solutions to accelerate Vietnam’s textile and
apparel exports to EU when EVFTA comes into effect.
The project research and analyse the following issues:
1, Analyzing the basic features of Vietnam and Eu’ textile and apparel markets;

2, EVFTA on Vietnam’s textile and apparel exports;

3, Government’s orientation and suggestion to accelerate Vietnam’s textile and

apparel exports in the context of EVFTA implementation.

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 REFERENCES

[1] Duong, B. T. (2018). Update on textile and apparel's business results . PHS.
[2] EU - Vietnam Free Trade Agreement (EVFTA). (n.d.). Retrieved from
http://evfta.moit.gov.vn/
[3] General Department of Vietnam Customs. (n.d.). Retrieved from
https://www.customs.gov.vn
[4] General Statistics Office of Vietnam. (n.d.). Retrieved from
https://www.gso.gov.vn
[5] General Statistics Office of Vietnam. (n.d.). Retrieved from
https://www.gso.gov.vn
[6] John J. Wild, Kenneth L. Wild. (2014). International Business: The Challenges
of Globalization (7th ed.). Pearson.

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[7] Paul R. Krugman, Maurice Obstfeld, Marc Melitz. (2011). International
Economics (9th ed.). Prentice Hal.
[8] Salvatore, D. (2013). International Economics (11th ed.). John Wiley & Sons.
[9] Thuan, L. H. (2017). Report on textile and garment industry. FPT Securities.
[10] Tran Thi Bich Nhung, Tran Thi Phuong Thuy. (2018). Vietnam’s Textile and
Garment . Business & IT, 8(2), 45-53.
[11] World Integrated Trade Solution. (n.d.). Retrieved from
https://wits.worldbank.org/

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