Vietnam is now on par with China in terms of apparel exports to the US in the first six months of 2020, South China Morning Post (SCMP) reported.

SCMP cited data from the US Department of Commerce that US apparel imports from China, by value, dropped from almost 30% in 2019 to 20% during the period, while Vietnam improved its market share from 16% to China’s level over the same period.

Seven months ago, China was still the largest supplier of products for fashion companies in the US but its significant advantage over Vietnam has since evaporated because of the coronavirus and the decoupling tensions between the world’s two biggest economies, according to SCMP.

The erosion of the Chinese position in the US fashion supply chain partially reflects growing tensions, as American fashion firms are forced to reduce their exposure to Chinese suppliers in response to the trade war, the coronavirus pandemic and deteriorating bilateral relations.

A survey by the US Fashion Industry Association, which polled 25 executives from leading fashion companies in the second quarter, found that while most imported from a mixture of countries, including China and Vietnam, 29% said they sourced more from Vietnam than China this year, up from 25% last year.

“Should US-China trade tensions continue to escalate, it is likely that US fashion companies will substantially cut their China sourcing further, even if it is not a preferred choice economically,” Sheng Lu, associate professor of fashion and apparel studies at the University of Delaware, was quoted by SCMP as saying.

The worsening ties between the US and China has also accelerated the move already underway by Chinese manufacturers and exporters to shift some productions out of China to nearby countries to take advantage of lower labour costs and avoid American import tariffs. However, the shift has been slowed this year due to travel restrictions caused by the pandemic.

“Foreign investments have truly played a critical role in helping Vietnam develop and expand its garment production capacity,” added Lu from the University of Delaware.

Over the past three decades, foreign direct investment flowing into Vietnam’s textile and garment industry totaled US$19.5 billion, with South Korea being the top source, followed by Taiwan, Hong Kong and China, according to the Ministry of Planning and Investment in Vietnam.