Vietnam’s textile and apparel sector delivered a solid start to 2026, but exporters are signalling that the second half could be more difficult as demand softens, freight costs rise and competition intensifies. State media figures cited by industry sources show Vietnam textile exports increased 5.6% year on year in the first five months of the year to about $18.8 billion, even as manufacturers operated in a weak global consumption environment.
The early-year performance keeps the industry broadly aligned with its 2026 ambition of roughly $48 billion to $49 billion in shipments, according to targets referenced by the Vietnam Textile and Apparel Association (VITAS). But executives say the path to that goal will depend on whether orders hold up through the remainder of the year, when retailers in major markets are expected to remain cautious on inventories and discretionary spending.
Cao Huu Hieu, general director of Vietnam National Textile and Garment Group (Vinatex), said part of the first-half lift was linked to a temporary opening created by US tariff developments. Manufacturers, he said, pushed production schedules forward and accelerated shipments to take advantage of a more favourable tariff window—effectively pulling demand into earlier months.
While that strategy supported near-term volumes, industry voices are increasingly wary about what comes next. Businesses report limited visibility for fourth-quarter orders, suggesting that brands and retailers are delaying commitments and keeping purchase cycles shorter. At the same time, exporters are facing a fresh cost headwind: container freight rates have increased by an estimated 30% to 40%, putting pressure on margins and raising the landed cost of goods for buyers.
Demand risks are also building in consumer markets. Industry observers point to inflation across the United States, the European Union, China, Japan and South Korea as a key factor squeezing household purchasing power. With everyday costs rising, consumers are spending more cautiously on apparel, pushing retailers to manage inventory more tightly and source more selectively.
Market performance has been uneven across destinations. Shipments to the United States have held up comparatively well, helping stabilise overall results. Elsewhere, some Asian markets have shown signs of weakening demand. Exports to the European Union have been supported by tariff advantages under the EU–Vietnam Free Trade Agreement, which has helped offset softness in other regions and remains an important competitive lever for Vietnam’s exporters.
In response to the shifting environment, manufacturers are focusing on financial discipline. Companies are prioritising stable cash flow, tightening inventory control and cutting non-essential operating expenses to protect profitability during a less predictable order cycle.
VITAS has also urged the industry to strengthen competitiveness beyond price. Rather than relying primarily on low-cost production, the association is encouraging firms to expand into higher-value operating models, including FOB (Free on Board) and ODM (Original Design Manufacturing). The aim is to improve positioning with buyers by adding services, speed and design capability—areas that can differentiate suppliers when demand is fragile and competition is rising.
For Vietnam’s exporters, the first-half results show resilience, but the outlook is becoming more complex. With Vietnam textile exports still tracking upward yet order visibility tightening and logistics costs climbing, companies are entering the second half of 2026 focused on efficiency, value-added services and market diversification to maintain momentum.
