South America viewed as potential market for Vietnamese apparel
Despite trade activities between the nation and South American nations seeing growth in recent times, it remains far from fulfilling its full potential, especially for the textile and garment sector, according to industry insiders.
South America is viewed as a highly lucrative fashion market that boasts a population of more than 437 million people and a relatively high per capita income. However, there are still few businesses and consumers in South America who are fully aware of Vietnamese fashion products.
Furthermore, the Vietnamese textile and garment industry is in the process of developing rapidly and is able to meet many large orders with high requirements from different markets. Currently, the nation’s textile and garment exports to Brazil stands at between US$150 million and US$200 million per year, whilst those to Chile are between US$70 million and US$90 million per year and to Peru the figure is around US$30 million to US$40 million per year.
Meanwhile, local textile and garment imports, mainly cotton from Brazil, are approximately US$300 million to US$500 million.
According to Le Hoang Tai, deputy director of the Trade Promotion Department under the Ministry of Industry and Trade, said the volume and value of Vietnamese textile and garment exports to the South American market remain limited.
“There are many reasons for the limitation such as geographical location, cultural differences, lack of information on capacity and needs between both sides’ enterprises and effective trade promotion activities. Additionally, some South American economies have low openness," said Tai.
Sharing this point of view, Truong Van Cam, vice chairman and general secretary of the Vietnam Textile and Apparel Association (VITAS), assessed that the understanding of Vietnamese firms about national culture, consumers, customs, and habits of South American countries is limited and vice versa. In addition, many South American countries are large textile and garment producing countries, meaning that they are both co-operative and competitive with Vietnamese textile and garment companies.
Following the COVID-19 pandemic, there is a need to diversify the supply of raw materials and import-export markets, whilst the need to reshape the supply chains of enterprises in both Vietnam and South American countries remains very high.
Currently, the two sides are in the process of working to form a supply chain between local textile enterprises and those South American countries. This will prioritise co-operation in areas such as raw materials, weaving, and fabric dyeing, with the application of criteria for sustainable development being to ensure consistent working conditions and labour standards.
It can be seen as necessary to quickly start the negotiation of a free trade agreement between the South American Common Market known as MERCOSUR and Vietnam to allow local textile enterprises and South American nations to co-operate to boost development for mutual benefits.
Moreover, information on market trends is needed to connect Vietnamese textile and garment enterprises directly with their South American partners. Indeed, this should be done while simultaneously launching trade promotion delegations in this region to attract more investors, Cam added.
Vietnam Trade Offices in South America said that after the COVID-19 pandemic, countries in the region have been attempting to reshape the supply chain and diversify the supply of imported goods, which is seen as an opportunity. for strong Vietnamese businesses and industries. This includes textiles and garments as part of efforts to intensify trade promotion and increase their presence in the South American region, thereby gradually increasing their market share and export value.