Meeting the challenge of China: The Vietnamese garment industry in the post MFA era

Kenta Goto, Kaoru Natsuda, John Thoburn

Research output: Contribution to journalArticlepeer-review

29 Citations (Scopus)


Although China has diversified into sophisticated, higher value-added exports, it is still a formidable competitor in global markets for basic labour-intensive products. It is the world's largest exporting country of textiles and garments, the archetypical driver of industrial growth both in developed countries in the past and in most newly industrializing countries more recently. When the export restrictions under the Multi-Fibre Arrangement (MFA) ended at the start of 2005, it was predicted that China would greatly increase its market shares at the expense of most competitors, except perhaps India. Vietnam has proved to be an effective competitor in the garment industry in markets where China is dominant. In this article, we investigate how key export-oriented garment suppliers of Vietnam have been coping with competitive challenges in the post MFA era at a time when global buyers have been reorganizing their international production networks. We emphasize the influence of different global value chains on upgrading since Vietnamese suppliers switched to the US market after the implementation of the US Bilateral Trade Agreement in 2001. We note the uneven performance of Vietnamese garment suppliers, with some lagging behind others in upgrading and competitiveness, and their different responses to Vietnam's growing labour shortages. We base the article mainly on interviews conducted over the 2001-2008 period with garment companies and global buyers in Vietnam, Hong Kong and China.

Original languageEnglish
Pages (from-to)355-379
Number of pages25
JournalGlobal Networks
Issue number3
Publication statusPublished - Jul 2011



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