From China to Vietnam - Drivers for Relocating Fashion Manufacturing

Thesis topic was done to identify the factors contributing the relocation of textile and clothing industry from China to Vietnam. In last 25 years, dynamics of textile and clothing industry has changed dramatically and manufacturing moved from developed countries to the low-cost manufacturing countries. Textiles and clothing manufacturing is a highly labor oriented industry and labor cost is the basic criteria for its relocation. China emerged as the largest manufacturer of textiles and clothing globally. In recent times, labor wages have increased by many folds and labor is moving to other manufacturing industries due to better compliance and wages in China. Also, relocation of Textile and clothing industry within China is taking place, which will further affect the price and supply chain of textile products. After joining the WTO by Vietnam in 2007, textiles and clothing industry in Vietnam has seen fast and sustainable growth over these years and making it one of the top five garments producer. Export value of textiles and clothing industry is expected to increase and it is expected that in future Vietnam will be the second biggest producer of textiles and clothing products after China. Many countries including China are investing to produce Textiles and Clothing products and relocating T&C industry to Vietnam. Essential part of this research is to map down the factors, which contributes the relocation including political stability, tax factors, strategic factors, foreign direct investment, labor and transportation cost, government policies, infrastructure, workforce productivity, and inbound and outbound logistics At the end, future challenges and dynamics of global textile and clothing industry was discussed with respective to China and Vietnam, and recommendations were made to Finnish textile and clothing industry to benefit from this scenario