Vietnam's textile industry is watching with interest as China tries to ease tensions with Washington and Brussels over its textile exports, but, far from cashing in, manufacturers here are worried about their own competitiveness. The crisis stemming from a surge in Chinese textile exports to Europe and the United States since the end of the 31-year-old global textile quota can only be of concern to Vietnam, analysts and industry experts say.
The textile sector is Vietnam's second biggest earner of foreign exchange after crude oil. Last year it exported 4.3 billion dollars in textiles and garments, including 2.4 million dollars of goods to the United States and 726 million dollars' worth to the EU.
In April, EU Trade Commissioner Peter Mandelson asked trade ministers from Southeast Asian nations meeting in Vietnam about the impact of the Chinese sales on their industries. "It's an issue that's being analysed deeply with the Vietnamese," a European diplomat in Hanoi told AFP."The authorities aren't panicking yet," said the diplomat. But "they know more needs to be done to improve their own competitiveness."
The figures also suggest there is no need for immediate panic.
Overall exports rose 0.3 percent between January 1 and the end of May compared to the same period last year and amounted to 1.6 billion dollars, according to preliminary government estimates.
However, despite the fact that the EU lifted its quotas on Vietnam in January and the expectation that Vietnam will benefit from curbs on China, experts warn that the Vietnamese can ill afford to rest on their laurels.
"We are cautioning the government not to look at another country's policies and bet on those," a foreign analyst said. "Similarly, we are telling them, don't count on anyone punishing China to improve your own textile industry."
Vietnam's exports to the United States are limited, irrespective of actions against China as US textile quotas on Vietnam are set to remain in place until the communist country gains entry into the World Trade Organisation (WTO).
Vietnam is consequently none too attractive for US buyers, who prefer to approach WTO members such as India and Pakistan.
While they wait for WTO admission, which looks unlikely to happen by the end of 2005 as Hanoi would like, Vietnamese manufacturers watch anxiously as goods flow into the country from over the Chinese border.
Vietnam's textile industry has an overriding fear that China, faced with restrictions in the West, will tap into regional markets by any means possible.
Textile manufacturers in Vietnam note that the China-Vietnam border is notoriously porous and express fears that the Vietnamese authorities will not be able to prevent the illegal traffic of goods.
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