"Vietnam to Overtake Bangladesh as No. 2 Garment Exporter"

Bangladesh’s reign as the world’s second-largest exporter of garments after China could soon be overthrown by Vietnam, providing one of the clearest signs that its economic and political woes have taken a material toll over the past year.

Vietnam is set to generate $44 billion in apparel export revenue in 2024, an 11 percent year-over-year increase from the year before and nearly $4 billion more than Bangladesh’s target of $40.5 billion, Cao Huu Hieu, CEO of the Vietnam National Textile and Garment Group, the textile giant better known as Vinatex, said at a press conference in Hanoi on Wednesday.

While Vietnam’s year began on a softer note due to sluggish global growth, momentum picked up in the second half of 2024 after Bangladesh’s uncertain future in the face of explosive student-led protests, Prime Minister Sheikh Hasina’s unceremonious ouster and still-percolating worker unrest drove brands and retailers to reposition orders, Cao said, calling it a “fortune” for suppliers who benefited from the shift.

[...]

Cao said as much this week when he pointed out that Bangladesh’s minimum wage is lower than Vietnam’s, meaning that the calculus could change—as it did following a similar recalibration post-Covid-19—in the former’s favor once more. Adding weight to that argument is the fact that orders from Bangladesh tend toward simpler, lower-priced products that benefit from cheaper labor rather than “value-added” skills. Not all Vietnamese suppliers were able to take advantage of them as a result, he said.

“These orders will definitely decrease in 2025 and Bangladesh will get them back,” Cao added. “In fact, there was a month when their exports dropped to $1.6-1.7 billion, but now they have increased to $3 billion per month, proving that they are attracting orders again.”

At the same time, he expected general market conditions to improve as key geographies such as the United States and Europe recover economically. Still, for Vietnam to continue to succeed, it needs to make investments in raw materials that it predominantly imports from China, a target of high tariffs from the incoming Donald Trump administration that could prove a potential albatross depending on how threats shake out.

[...]

But another reckoning could be coming for Bangladesh as it’s poised to graduate from least developed country status in a few years. This could see the country losing the preferential duty benefits it enjoyed under the European Union’s Everything But Arms scheme.

[...]