Enhancing Vinatex’s Capacity in the Global Textile and Garment Value Chain, Moving Toward the Circular Economy Era
From now until 2030, the textile and garment industry will gradually shift its focus toward sustainable development and circular business models. From 2030 to 2045, it aims to achieve effective and sustainable growth under the circular economy model. The goal is to complete the domestic value chain and secure a high-value position in the global supply chain. After 30 years of firmly establishing its reputation and brand in domestic and international markets, the Vietnam National Textile and Garment Group (Vinatex) is preparing its core strategies to enhance its capacity in the global textile and garment value chain.
Growth Milestones
Over 30 years of development, Vinatex has successfully fulfilled its role as the nucleus of Vietnam’s textile and garment industry. The group’s investment and development strategies in each phase have demonstrated significant effectiveness, affirming their correctness and alignment with the goals of each period:
- 1995–2005: The establishment of the Vietnam National Textile and Garment Corporation marked the group’s operation under a market economy mechanism. During this phase, Vinatex focused on building a solid production and business foundation while gradually integrating deeper into the global supply chain.
- 2005–2015: Transitioning to the parent-subsidiary model, Vinatex officially operated as a diversified economic group. Strategic investments in key areas such as yarn, weaving, dyeing, garment production, and human resource training were effectively implemented, enhancing the group’s overall competitiveness.
- 2015–Present: The group was equitized by the government, with the state retaining a 53.49% stake in the parent company. Notably, on January 3, 2017, Vinatex officially listed 500 million shares on the UPCOM exchange, becoming the first state-owned corporation to list on this platform. This milestone marked a turning point in applying transparent governance standards and enhancing operational efficiency and brand value.
Thanks to these targeted strategies, Vinatex has achieved remarkable progress. By 2024, the group’s total industrial production output reached nearly VND 40 trillion, with consolidated revenue exceeding VND 43 trillion. Export turnover accounted for about 5% of the industry’s total export value, securing jobs and livelihoods for over 62,000 workers, with an average income of VND 10 million per month. Compared to 1995, total industrial production value increased more than 13 times, total revenue grew over 9 times, export turnover rose more than 5 times, and average worker income increased 12.5 times.
Challenges Ahead
Despite its strong position in the global textile production chain, Vinatex faces limitations in enhancing its role in the value chain, owing to both objective and subjective factors. The group’s core production activities lack strong connectivity, both internally and within the broader value chain:
- Yarn Sector:
Vinatex’s yarn products are limited in variety and are primarily positioned in the low to mid-range segments, failing to meet the diverse needs of high-end textile enterprises that require specialized raw materials and modern production facilities. The group’s heavy reliance on imported cotton exposes it to the volatile global cotton market, significantly impacting operational efficiency. - Weaving Sector:
Weaving plays a crucial role in the garment sector and the textile industry as a whole, but it has yet to fulfill its potential. Weak development in weaving has created a “bottleneck” that hampers the growth of the garment industry, resulting in low added value and reduced autonomy.
Factors such as small-scale production, outdated technology, and stringent environmental regulations drive up weaving and dyeing costs, making them less competitive than other countries, particularly China and Taiwan. - Garment Sector:
Accounting for the largest share of Vinatex’s production chain, the garment sector benefits from extensive experience and a highly skilled workforce. However, most garment enterprises within the group operate under FOB (Free on Board) models, which generate relatively low added value. This is partly due to the underdevelopment of the weaving sector, forcing most garment enterprises to import fabrics as per client specifications. Fabric costs account for 70-80% of the product’s total cost, leaving little room for added value. - Marketing and Distribution:
Most Vinatex enterprises rely on receiving orders through regional suppliers or the representative offices of large buyers in Vietnam. Few enterprises directly sign contracts with retailers to supply their products, indicating a lack of connection with end consumers and a reliance on fulfilling manufacturing contracts for major buyers.
Adhering to the Strategy: “One-Stop Destination for Sustainable Fashion Products”
After three developmental phases, Vinatex has accomplished its mission with distinct milestones: ensuring social security and livelihoods for a large workforce, establishing a strong position in the global textile supply chain, and improving worker welfare with competitive incomes and modern, eco-friendly working conditions. To achieve further breakthroughs, Vinatex must prioritize enhancing its position in the value chain while steadfastly pursuing the strategy of becoming a “one-stop destination for sustainable fashion products.”
For this strategy to succeed and create a sustainable textile and garment value chain in the new era, the following solutions must be implemented decisively and comprehensively:
- Strengthening the Group’s Competitiveness:
Each unit must enhance its competitiveness, actively participate in the textile and garment supply chain, ensure financial stability, and prioritize sustainable development while adhering to environmental and labor commitments. Vinatex aims to build the overall strength of its entire system to face market challenges and deepen its role in the global supply chain. - Developing Breakthrough Products:
Beyond traditional manufacturing, enterprises should focus on high-value-added products, explore niche markets, and establish a distinct presence in the industry. Regional product development centers should be established to align with production realities and ensure the successful development of new products with local capabilities. - Enhancing Weaving and Dyeing Capabilities:
Improving fabric production is essential to address the “bottleneck” in the supply chain. This will enhance the competitiveness of the garment sector, which serves as the driving force of the production system. It will also help balance the group’s production chain, achieving the “one-stop destination” goal. - Transitioning to Higher-Value Manufacturing Models:
The garment sector currently relies on labor-intensive production, which is losing its competitive edge as labor costs rise without proportional productivity gains. Investments in advanced technology and human resources are needed to transition from traditional outsourcing to FOB, ODM (Original Design Manufacturing), and other high-value models, boosting export value. - Embracing Modern Technology:
Automation and artificial intelligence should be promoted to reduce reliance on manual labor, increase productivity, and enhance worker value. - Driving Management Innovation Through Digital Transformation:
Digital transformation is crucial to improving operational efficiency. Vinatex is actively adopting the most advanced management models across its system to ensure timeliness, accuracy, and transparency. - Developing High-Quality Human Resources:
Efforts should focus on attracting, rewarding, and effectively utilizing talent, creating a competitive and appealing working environment. Training programs should emphasize marketing, product design, and supply chain management to support long-term development goals. - Elevating Corporate Culture Values:
Vinatex emphasizes solidarity, mutual support, and shared growth within its system. Corporate culture should be based on core values: fairness, transparency, humanity, innovation, and a readiness to face new challenges. These cultural values foster harmonious relationships between enterprises and workers, instilling pride, loyalty, and creativity among employees.
Over 30 years, Vietnam’s textile and garment industry has achieved remarkable progress. In the 1990s, export turnover barely exceeded $1 billion. By 2024, it is estimated to reach nearly $44 billion, up 10% from 2023. Vietnam is now the world’s third-largest textile and garment exporter, playing a pivotal role in the country’s key export sectors.
To establish sustainable value chains, Vietnam’s textile and garment industry, particularly Vinatex, must adopt clear, strategic goals with comprehensive solutions and optimized resources. Positioned within the circular economy, the value chain must embrace innovation, creativity, and global integration. Each member enterprise serves as a vital link in the broader growth trajectory, carrying forward the momentum of 30 years to excel in 2025 and achieve the vision for 2030–2045. Vinatex remains steadfast in its mission to “Weave Excellence, Craft Prosperity,” uniting a dedicated, resilient, and skilled workforce to adapt and thrive in the new era.
By: Mr. Cao Huu Hieu, Deputy Secretary of the Party Committee, General Director of Vinatex