VIETNAM ACADEMY OF SOCIAL SCIENCES
ACADEMY OF SOCIAL SCIENCES

NGUYEN HONG CHINH

IMPROVING THE COMPETITIVENESS OF VIETNAM’S
TEXTILE AND GARMENT SECTOR IN THE
CONTEXT OF PARTICIPATING THE TRANS-PACIFIC
PARTNERSHIP AGREEMENT

Specialization

:Economic Management

Code

: 62.34.04.10

ECONOMIC DOCTORAL THESIS SUMMARY

HA NOI – 2017


The work was completed at:
Academy of Social Sciences

Science instructor:
Associate Professor Hoang Van Bang

Objection 1: Associate Professor Le Cong Hoa
Objection 2: Associate Professor Nguyen Trong Xuan

of these opportunities and overcome challenges, require urgent now is to improve the
competitiveness of manufacturing industries, including the textile and garment
industry ... Aware of this problem, the authors have selected select the topic
"Improving the competitiveness of Vietnam’s textile and garment sector in the
context of participating the trans-Pacific partnership Agreement", as the subject
of my doctoral thesis.
2. The purpose and mission of the thesis research
2.1. Research purposes
- General Purpose: To clarify the rationale of competitiveness textile and
garment sector; the challenges of TPP opportunities for Vietnam's textile and garment
sector; development situation and the competitiveness of the this industry of Vietnam;
recommended viewpoints, orientations and measures to develop and improve the
competitiveness of Vietnam's textile and garment sector in the context of participating
TPP.
- Specific purpose: To make the final common purpose above thesis focused
answer four research questions are:
The first, What factors are affecting the competitiveness of textile and garment
sector in the context of participating the TPP ?.


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The second, what are the criteria that be used to evaluate the competiveness of
this sector?
The third, how is the present state of Vietnam's textile and garment sector
competitiveness in the context of participating the TPP ?.
The fourth, what we should do to improve the competitiveness Vietnam's textile
and garment sector in the context of participating the TPP?
2.2. The task of the thesis research
The thesis is mainly focused on the following basic tasks:
- Interpretation is the theoretical issues about the competitiveness of sectors,

4. The methodology and research methods of the thesis
- Research approach of the thesis: The thesis implementation process, the
authors performed a systematic approach including access to the rationale of
competition, the competitiveness of the sector in order to see clearly nature, meaning
the contents need to take to improve the competitiveness of the sector.
- Methodology of research: The thesis uses the method of dialectical materialism
and historical materialism as the foundation base of the methodology,
The method is mainly applied in the implementation of the thesis include:
1. Methods of analysis - comparing: thesis research, analytical models and
elements of competition, the competitiveness of the sector, to draw scientific
conclusions about the pattern of selective and those factors.
2. Method Expert: The thesis will summarize comments, quoting the opinion of
experts, business leaders ngiep, textile associations ... about the problems that are
facing the textile industry, competence competitive textile and garment sector, the
solution to take advantage of opportunities, overcome challenges when participating in
the new generation FTAs.
3. Research Methodology situations: The thesis also uses analytical methods to
study situations: case study of the competitiveness of the textile and garment industry
cluster in the city. Ho Chi Minh and some neighboring provinces such as Binh Duong,
Dong Nai, textile and garment industry cluster key economic region of Tonkin, the
two regions accounted for 80% of the total number of textile and garment enterprises
in the sector.4. Research methods used in combination approach value chain analysis
and evaluation sector competitiveness clusters.
4. Synthetic Methods of analysis: The author analyzes use synthetic methods to
interpret data, contact the practical reasons for the content of the competitiveness of
Vietnam's textile and garment sector in the context of participating the new generation
FTAs, namely TPP.
5. Research methods use a combination approach to value chain analysis and
evaluation sector competitiveness clusters: The use of cluster coordination approach
and the industry value chain will help analyze and identify a comprehensive

thesis has evaluated the factors affecting the competitiveness of textile and garment
industry in the context participation in the new generation FTAs (namely TPP) and
clarify the effectiveness of the new generation FTA commitment to the strategy;
foreign investment; production conditions; structure and competition of textile and
garment industry as well as for supporting industries for the textile and garment
industry, and other related industries.
The thesis has drawn lessons learned can apply to improve the competitiveness of
Vietnam’s textile and garment industry in the context of participation in the new
generation of FTAs (namely TPP), on the basis of reference the experience of
countries with developed textile and garment industry.
The thesis has analyzed and assessed the real situation of development and
competitiveness of Vietnam's textile and garment sector in the past period; proposed


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valuable conclusions about the achievements, constraints and causes of these
limitations.
The thesis has proposed some solutions to promote the development and enhance
the competitiveness of Vietnam's textile and garment sector to participate in the TPP
and other new generation FTAs.
6. The meaning of theoretical and practical thesis
* Meaning theoretical: The thesis presents a systematic theoretical issues to
clarify the nature of the industry competitiveness, the perspective analysis sector
competitiveness. Also specify characteristics; evaluation criteria, the level of
competitiveness of the textile and garment sector as a basis for evaluation of industry
competitiveness textile industry in general and in particular. The thesis also used the
"diamond" of Dunning with six basic factors as a basis for reasoning to analyze,
evaluate the factors affecting the competitiveness of textile and garment sector in the
context of participation the new generation of FTAs (namely TPP).
* The meaning of the practice: The dissertation give lessons to improve the

K.Ketels discussed competitiveness, issues around competitiveness, views on
competitiveness
1.1.2. Sector Competitiveness
Typical research According to the United Nations; Porter (2008); Van Duren
(1991) ...
1.1.3. The evaluation criteria and factors affecting industry competitiveness
About the indicators reflecting the sector competitiveness studies, such as
research & John C.S Sirikrai Sajee B. Tang (2006), market share (Anderson & Soha,
1999; Lau, 2002); sales; growth in sales (Anderson & Sohal, 1999; Li, 2000); and
labor productivity (Noble, 1997; Ross,) ......
Factors affecting industry competitiveness, there are researchers of Michael
E.Porter, in his "national competitive advantage" book. Or John Dunning's research
(1993), the author expanded model Porter's diamond in the conditions of globalization
and integration of world economy
1.1.4. The study of the textile and garment sector, improve the capacity of
textile and garment sector
There are some researchs that estimating of the textile industry in some
countries such as the author's article Mohammed Ziaul Haider (2007) on the
competitiveness of the Bangladesh garment industry in major markets; Michaela D.
Platzer: Production of the US textile and TPP (2013), the article made the comments
on the development of the US textile industry to join the TPP; M.Zakir Hossain
(2010): Report on the textile and garment industry of Vietnam; Vanzetti, David and
Pham Lan Huong (2014), "The rules of origin, labor standards, and TPP"; Fukunishi
and Yamagata (2014): "garment industry in countries with revenues low: A path to
industrialization "; Ingvild Bakken (2014):" Renovation of the entire apparel value
chain: An analysis of the competitiveness of developing countries in Asia with China
in manufacturing garments "...
1.2. Research situation in Vietnam.
1.2.1. Research on industry competitiveness.


Report, "TPP - Opportunities and challenges for Vietnam's textile and garment sector
"; Tran Thi Thu Hien (2013), "Forecasting the impact of the agreement Trans-Pacific
Partnership (TPP) to the textile export market of Vietnam in the United States and
Japan"; Pham Minh Duc (2014), the World Bank, "Vietnam Textile and Garment
Industry in the context Implementation Agreement Trans-Pacific Partnership (TPP)";
...... ..
1.2.3. Overview Agreement Trans-Pacific partners.


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Agreement on the Trans-Pacific Partnership (TPP) was signed by 12 countries,
including Australia, Canada, Brunei, Chile, Japan, Malaysia, Mexico, New Zealand,
Peru, Singapore, United States and Vietnam, have provided economic model
accounted for 40% of GDP and 30% of global trade. This is a free trade agreement the
new generation, the nuclear development framework forming regional trade and the
world meet higher requirements in the context of development of productive forces
rapidly and global integration deeper economic. TPP Agreement is a comprehensive
market access, ensure the free movement of factors of production through the
commitment rapidly eliminate export taxes, import and non-tariff barriers; create a fair
business environment, non-discrimination; trade facilitation, investment, bringing new
benefits for business, for employees as well as consumers (including 30 chapters).
1.3. Research gaps
1.3.1. Overall evaluation study situation
First, studies have contributed to systematize theoretically and make
observations and different evaluations of industry competition, industry
competitiveness, perspectives, criteria for evaluating competitiveness branch....
Second, some studies have assessed about Vietnam's textile and garment sector
worldwide including human resources, financial, garment industry supporting
industry, the value chain of the textile and garment industry, the status cluster textile
and garment industry

According to M. Porter, then, competitiveness means only when considered at
the national level is productivity. According to Krugman, then, more or less
competitive fit only enterprise level because the lower boundary is very clear here, if
companies do not compensate well. World Economic Forum consider that
"competitiveness is the ability of a country to achieve the growth rate of per capita
income and high sustainability."
2.1.2. The level of competitiveness.
There are many different views on competition, competitiveness, but many
studies have identical views with 4 levels of competition as follows:
1. National Competitiveness: National Competitiveness can be understood as the
construction of a common economic environment, ensuring effective distribution of
resources, achieve and sustain high growth, sustainable .


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2. Sector Competitiveness: Theo Van Duren (1991) compete at the sector level is
"the capacity to maintain profitability and market share on the domestic and foreign
markets"; longer follow Ash, Brink, L. (1992) suggests that "a sector is considered
competitive as this industry is capable of producing up profits and maintain market
share in the domestic market and internationally" .
3. Competitiveness of Enterprises: So far there is no unified concept of the
competitiveness of enterprises. According to the Organisation for Economic Cooperation and Development (OECD, 2006), the competitiveness of the productive
forces now are relatively high income on the basis of use.
4. Competitiveness of products and services: The competitiveness of products
and services is our superiority compared to products or services of the same type as the
other competitors offer on the same market, is the ability to hold and increase their
share of the product or service in the market.
2.1.3. The views of the industry and assess industry competitiveness
2.1.3.1. The views of industry
Currently, the concept of "industry" is used in a variety of conditions and have

competitiveness, the textile sector has the following basic characteristics: Due to the
nature of the textile industry is the role of the support industry is huge textile industry
tends to translate move from high-cost place to where costs are lower. Textile and
garment sector under the influence of the scientific and technical advances have the
potential to impact on the Textile and garment sector. ....
2.2.3. The competitive level of the textile and garment sector
According to several studies, the textile industry competitive with 4 levels: Level
1 is based primarily labor costs; Level two, technological elements of machinery and
equipment is important; Level 3, the level of competition here is relatively complex,
demanding process of accumulation and long-term development, require resources to
accumulate large enough; Level 4, At this level consists of 2 main factors: Brand and
material technology.
2.2.4. The criteria for evaluating the competitiveness of textile and garment
sector
2.2.4.1.Thi export.
2.2.4.2. Labour productivity
2.2.4.3. Revenue
2.2.4.4. Profit
2.2.4.5. System will display comparative advantage industry
2.2.4.6. Investment in research and deployment
2.3. Analysis of factors affecting the competitiveness of the textile and
garment sector.
M. Porter came up method competitiveness analysis structure for each sector,
whether domestic or foreign operations, the nature of competition in the 4 factors and
these factors interact with each other , creating different motivations for competing
sectors: conditions of production factors; Demand conditions; The support and related
industries; Capacity and industry structure. To better suit the new conditions, the
Dunning J. (1988) was based on the model of 'diamond' of Porter to build models
'diamond' improvement using 2 factors are the State and investment foreign. In


- In the period from 1990 to 2007
- In the period from 2008 to the present
3.1.2. Market and product structure of the export of textile and garment sector.
Markets include the US, EU, Japan, the domestic market ....
3.1.3. Supply chain of the textile and garment sector in Vietnam.
Vietnam's garment stages now use more than 8.5 billion m2 fabric which
imported nearly 7 billion m2, remaining in the country provided more than 1.5 billion
m2. However, this material can not be produced Vietnam, most are imported, this has
led to reliance on the price of raw materials and materials from abroad
Table 3.2: The capacity of each segment in the chain stitch Vietnam’s textile
and garment compared to the current global.
Quantity

Suture
clip

Detail

Unit
Global

China

Viet
Nam

Percentage
VN / Global
(%)


250

120

6,2

2.48

Textiles

Few

billion m²

170

86

1,7

1.00

Export

Garments

Billion

770


using low-tech, value-added revenue is not high
- Button bottlenecks in weaving, dyeing, finishing
Compared with competitors in the region, labor costs of Vietnam's garment relatively
low, but the cost of production - not the low trading
- Selling prices of textile goods Vietnam compared to other countries is relatively
high, the product quality is not high
3.2.4. Related industries and support textile and garment sector.
The number of industrial enterprises to support the textile and garment industry
in 2013 is approximately 1,278 enterprises, accounting for 31.26% of the total
business sector. The fabric manufacturing enterprises accounted for 52% the highest
number, followed by the enterprises producing yarn, sewing and dyeing 22%, is 14%
complete. These figures are very low on the value of intra-regional levels shows that
will be a challenge for Vietnam enterprises to shift capital input supply is largely in
China, Taiwan to the market under the TPP. On input, Vietnam imported textile
materials largely from abroad, in which 39.34% are from China. The dyeing and
finishing industry, machinery industry - textile equipment, chemical industry, fashion
industry, other industries, marketing and distribution activities are limited
3.2.5. Foreign investment for the textile and garment sector.
In the recent period the textile and garment sector had attracted sizeable FDI
inflows, with many projects scale.
3.2.6.Vai State game
These elements provide the foundation for creating sustainable development for
Vietnam's textile and garment sector industrial park planning; transportation
infrastructure; environmental issues, waste water treatment; stable tax policy, fees,


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procedures and policies ... wages. The guidelines and policies of the government has
been actively supporting the sector. However policies for development and improve
competitiveness for the textile and garment industry is limited, such as textile industry

textile labor productivity

0
Year 2010 Year 2011 Year 2012 Year 2013 Year 2014 Year 2015

Chart 3:12: Labour productivity of the textile and garment sector.
Source: Statistical Yearbook and author's calculations.
Currently, labor productivity is one of the weaknesses of Vietnam, not only in
this industry which is the current situation for the whole country. Labor productivity in
Vietnam the average is very low if compared with other countries in the region of 40%
of Thailand as well as from a number of Member States TPP. Labor productivity index
of the manufacturing sector was only 2.4 Vietnam; while countries other big textile
production such as China, Indonesia is 6.9 and 5.2.
3.3.3. Sales of Vietnam's textile and garment sector.


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Revenue Vietnam's textile and garment sector in the period 2009 to 2014 have
increased, sales of both garments and textiles sector increased (Figure 3.13). Sales of
both the textile and garment industry has increased. Revenue of the industry more than
80% as exports bring. The growth rate of garment export turnover of Vietnam is
relatively high compared with competitors in the region such as Indonesia, Malaysia,
Thailand and Cambodia. Yet there is a paradox of Vietnam's textile and garment sector
but revenue increased profits tend to fall.
3.3.4. The profits of the textile and garment sector in Vietnam.
Although growth peaked but the nature of the industry profits remained low.
Currently, the value added this industry profit margins low as 5-10%, and 70% simply
cut garments, but to move to a higher position in the value chain, requires investment
big in technology and human resources. If compare the profitability of business type
Vietnam's textile garment sector than China in 2010, the enterprises generally Vietnam

share of the textile industry continued to increase in recent years. Vietnam became a
textile exporter in the top 5 in the world. In the value chain of the textile and garment
is seen with the most outstanding strengths capable of competing on the big markets
like the US, Japan, EU, ... trade promotion has been increasingly expanding by joining
the FTA, especially the new generation FTA.
Third, the domestic textile and garment market not only focus on exports as
many years ago, the last time, the textile business - may have been considered more
important than the domestic market makes the textile market - domestic sewing day
The more prosperous. Some brands of the industry has been known to consumers.
Fourth, Sewing equipment has been innovating and modernizing to 90%, the
business environment in Vietnam has changed more suitable for foreign investors. Full
localization ratio textile and garment sector has been increased considerably and tends
to increase, though not meet the development requirements of the sector
3.4.2. Limit
First, the value added textile and garment sector in Vietnam is low, export
processing methods mainly for export processing. Besides textile industry focuses too
heavily on export markets such as the US, Japan, EU ... It is difficult markets and
difficult to control, vulnerable. Meanwhile, the domestic market has not been adequate
attention, are open to the surrounding countries. Production costs of Vietnam's textile
garment sector despite high labor costs are relatively low. Distribution activities of the
Vietnam Textile enterprises today still depends on foreign traders, the business support
services is poor. Trade promotion activities, providing market information is limited.
Second, industry support for the industry is under-developed in terms of both
quality and variety; Domestic production is heavily dependent on imported raw
materials, creating the development imbalance and vulnerable. Technology,
equipment, textile machinery uncompleted, yet modern, lack of investment capital
should the production capacity of the textile industry has not met the demand for
export garment industry led to a situation "The textile industry , the garment industry
is not required; The garment industry needs, textile no ".
Third, labor productivity is low textile and garment sector. The quality of human

synchronous development. Supporting industrial development requires expensive
textile processing environment for very high, so their products have higher costs of
imported products should not attract the attention of manufacturers, and local means
nor salty. Rate of return on invested capital for manufacturing materials for low, long
payback period. Yarn and fabric products domestic production is not diversified, high
quality should not only use 20-25% of the production for export garment industry
output leads to the lack of a major raw material for the development of joining the
FTA new generation. Besides the ability to manage the production, research and
development is weak; textile mechanical engineering, fashion design, production and
auxiliary materials .. not meet development requirements ..


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2. The quality of human resources is limited: human resources of Vietnam in line
with the current structure of the textile and garment sector, but has not met the
requirements for restructuring the industry to develop the upstream stages as textiles
dyed ... .The factors preventing the development of Vietnam's textile and garment
issue of workers consciousness; qualified laborers plus low technology equipment
sector enterprises spinning, weaving, dyeing more backward countries in the region;
most of the staff personnel in the textile business from other industries are switching
to, but with experience in management but lack the specialized knowledge, thereby
reducing the effectiveness of human resource management in business ... Besides
training issues in-depth human resources for the textile industry and dyeing and
finishing is limited, skilled engineers lack dyeing, human fashion designer trained in
Vietnam only capable of small-scale business that can not design and implement
production to commercialization with the scale of the whole sector; not build national
brand to grow on the world market; the training of manpower for the textile industry is
failing to meet the actual needs ... The cooperation and links between textile industry
cluster with research institutes, universities - colleges - vocational training and
institutional support is very limited, failing to meet the requirements of industrial

while the textile industry with innovative technology speeds much slower. Due to the
textile industry needs large investment, implementation time and long payback, so the
rate of investment as well as capital for the sector in general remains difficult, the
normal take about 2 years can go into production so projects planned implementation
is often slow start or not feasible. Many businesses, especially small businesses, or
both, do not have enough capital to meet the needs of expanding production facilities,
upgrade technology ... while it is difficult to search for formal credit sources. This
situation is due to the construction business was not strategic or business plan
compelling enough, while the procedures for bank loans remains difficult, strict, and
sometimes not facilitate for Business. Moreover, businesses are often small scale, so
the loan is primarily up to the high interest rate rise will increase costs and reduce the
competitiveness of products. Thus investment in spinning, weaving, fabric last time
still mainly from the business sector FDI.
5. In terms of state policy: There is a contradiction in the policy of the State to
invest textile and garment ; The business environment for the textile industry is still
limited. The policy support and development of textile and garment sector is
inadequate, failing to meet the requirements set out for integration, especially TPP,
such as institutional capacity of the Vietnam insufficient to effectively implement
policies , the policy of the state, especially at the local level; lack of specific guidelines
for the implementation of policies should the same policy many different
interpretations; general lack of coordination between departments in the
implementation of policies; greater capacity to convey and implement the central
policies at the local level is very limited. State policies on SI, training and specialized
inspection, credit policy, exchange rate policy · Contains ...... really clear and
effective, sometimes making it difficult for businesses in the sector. Along with the
competitiveness of the lowest countries in the fields of science and technology,
education and training, innovation .... has affected the textile and garment sector.
Planning and development-oriented garment sector is inadequate and unsuitable to the



participating Partnership Agreement Trans-Pacific.
4.1.3. The problems posed to Vietnam textile and garment sector in view of
competitiveness required by the Agreement on the Trans-Pacific partners
The problem posed to the textile and garment sector to be solved, such as rules of
origin from yarn onward; implementation of commitments on labor; environmental


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pollution problems in the textile and garment sector; technical barriers and trade
remedies, intellectual property ....
4.3. Views and orientations improving the competitiveness of Vietnam’s
textile and garment sector in the context of Partnership Agreement Trans-Pacific
4.3.1. Viewpoint improving the competitiveness of vietnam’s textile and
garment sector in the context of the Partnership Agreement Trans-Pacific
One is, should take advantage of the opportunity to participate the TPP to attract
investment to upgrade the textile and garment value chain.
Second, take the added value, the development of supporting industries to target,
and is a measure of the competitiveness of the textile industry when joining TPP
Thirdly, the need to restructure the textile and garment sector to make the most of
the advantages that the new generation FTA brings, including TPP
Fourth, develop and enhance the competitiveness of textile and garment sector in
defending the need to balance the benefits and environmental protection
4.3.2. Orientation of improving the competitiveness of Vietnam’s textile and
garment sector in the context of the Partnership Agreement Trans-Pacific.
First, the need to upgrade and strengthen the links and cooperation in textile and
garment clusters
Second, improve competitiveness at both the national and sector level
Third, in the short term should focus on developing and improving
competitiveness for export garment industry to take advantage of market opportunities
Fourth, strengthen cooperation with professional training facilities to create highquality workforce

Regarding administrative reform; business environment; additional industrial
development policy support textile sector; For import and export procedures, test
subjects; To encourage innovation, technological innovation and create the most
favorable for business.
4.4.6. Branding, cost savings for enterprises in the textile and garment sector.
Currently branding of Vietnam Garment remains weak. High production costs
and low productivity are the barriers to the competitiveness of Vietnam's garment
sector.
4.5. Conditions for the implementation of measures to improve the
competitiveness of Vietnam’s textile and garment sector in the context of
Partnership Agreement Trans-Pacific.
4.5.1. For State
4.5.2. For Textile and garment Association, Vietnam Association of Cotton
Yarn
4.5.3. For textile and garment enterprises