The shifting market forces the industry to speed up to adapt

	A "moderate" increase in VND and US$ exchange rates will boost exports
	Opportunities to increase orders from the European market
	Pangasius businesses seek to export to niche markets

Businesses adapt to new trends. Photo: NT

Pressure on three strong industries

In 2022, the textile and garment and footwear industries will witness the highest export growth ever. Of which, textiles and garments reached USD 37.5 billion, an increase of 14.3%; footwear reached USD 23.9 billion, up 34.3% over the same period. Export of wood products, which accounts for a large proportion of the structure of the furniture and household appliances industry, also reached USD 10.9 billion, down 1.3% compared to 2021.

At the conference "Bringing Vietnamese fashion, furniture and household goods into the foreign distribution system" in mid-September, Mr. Ta Hoang Linh, Director of the European - American Market Department (Ministry of Industry and Trade) said , the group of Vietnamese fashion, furniture and household appliances still has many competitive advantages, especially in product quality, technical level, and the ability to meet strict requirements about labor, environment, especially tariff incentives from 15 existing bilateral and regional FTAs with many partners around the world, especially CPTPP, EVFTA, UKVFTA...

“Vietnam has become one of the world's largest exporters of this product group, in which Vietnam is currently the 2nd largest exporter of leather and footwear, 3rd largest exporter of textiles and garments and 5th largest exporter in the world of wood and wood products," said Mr. Ta Hoang Linh.

However, after a strong post-Covid-19 recovery period, Vietnam's fashion and household goods industry faces unprecedented difficulties in exporting to the world, mainly due to inflation, risk of economic recession, decline in consumption, especially with the group of non-essential items with a large amount of inventory after the import period to prevent supply chain disruption.

In the first 8 months of 2023, the fashion product group including textiles, garments and footwear, export turnover to a number of key markets witnessed a relatively sharp decline. The most important export market for Vietnamese textiles, garments and footwear is the United States, export turnover decreased by 22.7% and 32% respectively over the same period.

The EU market also witnessed a similar export deceleration when leather and footwear export turnover decreased by 19%, textile and garment showed more positive signs with growth of 12.3%. Exports of wood and furniture to the US and EU face an even bleaker situation, falling by 27% and 40% respectively in the first eight months of 2023.

​Along with that, in recent times, key export markets of Vietnam's fashion and household appliances industry such as the United States, EU, Northeast Asian countries or CPTPP countries are increasingly setting new standards, more stringent requirements from the market relating to greening production and supply chains, sustainable development criteria, circular production... pose many unprecedented challenges for domestic export enterprises.

Mr. Ta Hoang Linh also said that most recently, the EU market has introduced a policy to use recycled products for textile products and accelerated the implementation of the circular and sustainable textile strategy set out in 2022 puts Vietnamese businesses under pressure to go green and digitally transform to keep orders and market share.

In mid-May, the EU also issued a law on the Carbon Border Adjustment Mechanism (CBAM). This regulation forces importers into the EU to report carbon emissions in goods.

At the end of June, the EU issued the Anti-Forest Degradation Regulation (EUDR). Accordingly, companies trading wood and derivative products in the EU must prove that the goods they sell are not related to deforestation activities after 2021.

As a large private furniture enterprise in the world, Mr. Giafar Safaverdi, Director of Southeast Asia Supply Region, IKEA Group said that Vietnam is a strategic supply market in the global supply chain by IKEA. Vietnam possesses growing production capacity, policies that create favorable conditions for import and export activities, along with many advantages in the field of logistics, making Vietnam an important link in the IKEA's global supply chain.

Talking about the criteria for import sources, Mr. Giafar Safaverdi said that Vietnam is an important wood supply market for IKEA's suppliers. For decades, IKEA has worked with different partners in Vietnam to improve sustainable forest management. “Regardless of where IKEA's suppliers source their wood, to minimize the risk of wood without meeting supply chain requirements, including legal requirements, we ask our partners to only supply and Using wood materials certified by FSC", Mr. Giafar Safaverdi said.

Opportunities for pioneers

According to Mr. Ta Hoang Linh, in order to meet market requirements and help regain growth momentum for strong industries, green transformation and application of the circular economy model are inevitable development trends and this trend is gradually forming new rules of the game for trade and investment globally.

According to Ms. Nguyen Thi Thu Trang, Director of the Center for WTO and Integration - Vietnam Confederation of Commerce and Industry (VCCI), the EU is currently the leading region in implementing green and sustainable standards, the region is most determined and they are implementing it in practice. If we can do it with the EU market, we won't have to worry about all other markets.

Ms. Nguyen Thi Thu Trang said that the sustainable green product market is a very promising market with little competition compared to the less green market that is currently saturated. Therefore, those who can do it first, get ahead and catch up; the market will be more open.