Vietnam’s textile and garment exports to South Korea are expected to increase by 20 percent this year and continue rising in upcoming years.
The advantages for Vietnam’s textile and garment exports increased after multilateral and bilateral agreements took effect. According to the General Department of Customs (GDC), in the first seven months of the year, Vietnam’s total export turnover to South Korea reached $10.2 billion, increasing by 32 percent compared with the same period last year.
Of these, textile and garment exports to South Korea reached $1.5 billion, an increase of 24.9 percent. In July alone, the figure was $270.7 million, up by 24.18 percent over June and 24.06 percent over July 2017.
Vietnam and China are the two biggest suppliers of textiles and garments in South Korea which hold 32.7 percent and 34.5 percent of market share, respectively, compared to 29.5 percent and 40.2 percent as seen three years ago.
Vietnam has made a big leap in the South Korean market, narrowing the market share gap with China. Also according to GDC, South Korea has become the fourth largest export market of Vietnam, after Japan, with import turnover of $2.7 billion in 2017.
The EU-Vietnam FTA (EVFTA) applies cumulative rules of origin, allowing Vietnamese exporters to use fabric made by third countries which have FTAs with Vietnam or the EU. South Korea is one of the third countries.
Analysts commented that the principle will bring new opportunities to Vietnam to boost exports, because in the future, when more ASEAN countries sign FTAs with the EU, Vietnam will be able to expand material supply sources, while still enjoying preferential tariffs.
As such, Vietnam can import fabric from South Korea to make products domestically and then export finished products back to South Korea, and use South Korean materials to make products for exports to the EU.
This is a great advantage for Vietnam, which has been mostly importing materials from China.
Analysts predict that Vietnam’s textile and garment exports to South Korea will increase by 20 percent this year.
They said becoming the biggest garment supplier to South Korea is within reach of Vietnamese enterprises as South Koreans favor Vietnam-made garment products.
As Vietnam’s textile and garment exports have bounced back, the price of textile and garment companies’ shares has increased by 20 percent.
Thanh Cong Textile & Garment, Investment and Trade (TCM) reported that its profit in July alone was equal to 77 percent of the profit of the entire third quarter of 2017.