Vietnam became the number two supplier of apparel to the US in the first four months of 2008, according to a new report. Just a year earlier, Vietnam had ranked as low as fifth. This growth comes despite a US import monitoring programme which has failed to scare buyers away.

Vietnam's new found strength was helped by a leap of almost 28% as US imports from the country hit US$1.5 bn.

Moreover, according to Global Apparel Markets, published by Textiles Intelligence, this increase occurred during a period when US imports as a whole declined by 3.7%.

The 28% rise put Vietnam just behind China, which has dominated supplies to the US for five years.

Growth in US imports from Vietnam was remarkable even by comparison with other major suppliers.

For example, US imports from Bangladesh, in sixth place and the second fastest growing supplier, rose by just 6.1% in the first four months of 2008. Imports from China, the leading supplier, actually fell by 6.8%.

A similar trend was apparent in volume terms as US imports from Vietnam rose by 29% while those from Honduras, the second fastest growing supplier, rose at less than half this rate - by 12.6%.

Imports from all sources declined by 2.9%, while imports from China fell by 5.0%.

As a result of these trends, Vietnam took 7.0% of the US import market in value terms and 6.7% in terms of volume - and yet in 2000 Vietnam's share was less than 0.1% in value terms.

Market share from China
Vietnam appears to have taken market share from China. In the first four months of 2008, supplies from China declined by 6.8% and the country's value share fell from 27.4% to 26.5%.

The fall in China's share has coincided with a deterioration in the competitiveness of Chinese manufacturers as Chinese exports have become more expensive.

One reason has been a rise in the value of the renminbi against the US dollar. Another is that Chinese labour costs have increased - particularly in China's coastal regions. Raw material costs have gone up significantly as well.

Imports from Vietnam, on the other hand, have grown strongly since the country joined the World Trade Organization (WTO) in January 2007.

Indeed, many apparel buyers who placed orders with Chinese manufacturers in 2007 appear to have shifted their sourcing to Vietnam during January-April 2008.

Furthermore, several Chinese producers have set up new operations in Vietnam since the beginning of 2008, in search of lower labour costs.

Monitoring programme
Growth in US imports from Vietnam has continued apace despite the establishment of a monitoring programme by the Bush Administration when Vietnam joined the WTO in 2007.

The programme was established at the behest of the US textile industry to review US textile and clothing imports from Vietnam and was designed to self-initiate anti-dumping cases if there were any evidence of injurious dumping.

At the time, many industry observers believed that the programme for monitoring imports from Vietnam would scare buyers away from placing orders with Vietnamese factories in favour of those in China and other Asian countries.

However, on the contrary, Vietnam was one of the fastest growing US textile and clothing suppliers in 2007 and has continued to perform well in 2008.

The US government has conducted two separate reviews of textile and clothing imports from Vietnam - one in autumn 2007 and the other in spring 2008.

On each occasion, it determined that there was no evidence of injurious dumping.

US authorities will conduct a final review of imports in autumn 2008 and the monitoring programme will expire shortly afterwards.

"Trade and trade policy: leading clothing suppliers to the USA" was published by Textiles Intelligence in Issue No 2 of Global Apparel Markets.