Currently, Japanese people spend US$40 billion a year on clothing, but its domestic production can meet only 5 percent while the remaining 95 percent is offset by imports. Hence, Japan is a fertile market for apparel and garment exporters, including Vietnam. In recent years, Japan has repeatedly surpassed the European Union (EU) to be the second largest importer of Vietnam's garments and textiles after the United States. Although apparel and textile shipments to Japan do not hold a big market share, this is a traditional loyal market for Vietnam’s garments and textiles.
Currently, Japan is the second largest importer of Vietnamese apparels and textiles, accounting for 12.9 percent of Vietnam’s garment and textile export turnover. Vietnam’s earnings from garment and textile exports to Japan account for 16.8 percent of its exports to Japan. Presently, over 600 companies are exporting garments and textiles to Japan, with more than 120 units earning more than US$1 million a year.
The Ministry of Industry and Trade of Vietnam said the country earned US$1.17 billion from apparel and textile exports to Japan in the first 6 months of 2014, up 14.3 percent year on year. In 2013, Japan spent US$2.37 billion importing apparels and textiles from Vietnam, up nearly 18 percent over 2012. According to the Vietnam Textile and Apparel Association (VITAS), the strong growth of Vietnam’s garment and textile exports to Japan is attributed to tax benefits from bilateral and multilateral trade agreements with Japan.
In addition to lower FTA taxes, Japan’s policy to reduce imports from China is also an opportunity for Vietnam to broaden penetration into this market. Japanese companies are shifting its production bases in China to Southeast Asia, including Vietnam.
Major importers of Vietnamese apparels and textiles are Japan's world-leading multinational corporations, including Uniqlo, Itochu, Mitsubishi, Marubeni, Mitsu, Aeon, Katakura, Nomura and Minori. They are now very close to Vietnam.
Vietnam’s key exports to Japan are manufactured from cotton and knitwear, including T-shirts, shirts, sweaters, suits, ensembles, jackets and sportswear.
Vietnam’s apparel and textile export prospects to Japan are optimistic and the country needs to grasp fashion trends and tastes to promote its advantages of low labour costs and reasonable prices.
Due to prolonged economic stagnation, consumer spending has dropped in recent years and spending habits have also changed. Japanese consumers spend less on expensive brands but more on fashion items with acceptable quality. Young Japanese consumers tend to combine casual wear rather than use expensive brands. This is a good opportunity for exporters to design and make modern popular, easy-to-modify clothes to meet this growing demand. Understanding Japanese consumer demands, Vietnamese companies are investing to improve product quality and diversify designs, colours and types. They actively buy winning designs at fashion contests in Japan to produce exports to this market.
Vietnam is calling for Japanese investors to establish cooperation in weaving, dyeing and finishing. Vietnamese companies are still weak at these stages. As the TPP Agreement is now under negotiation, many Japanese investors have discussed this content of cooperation with Vietnam.