Appreciating Chinese yuan, increasing labour cost, and reduced duty draw back hits hard at China's export of textile and garments. Chinese textile and garment exports has reportedly seen a 3.7 per cent fall from September2007 to May 2008. The story in Vietnam is bit different, In the first half of 2008 garment and textile exports grew by 20% to US$4.5 billion, accounting for 44.21% of the whole year's US$9.5 billion target. The textile sector is expecting to achieve the target by the end of the year as they have signed up quite a lot of order for the remaining half of the year.
Even though the Vietnamese textile sector has seen a very good growth they are facing serious problems. Inflation in Vietnam is 26% ( In India 11%), because of inflation there is an increase in labour cost and labour shortage and Increase in raw material cost. This perhaps has wiped out almost 50% of profit that they have made in the first half of 2008. Government in order to cut the money supply to curb inflation has increase interest rate and to get a loan is also very difficult. Vietnam seems to have slowed down but the Vietnamese textile industry feels that they could still achieve the growth and keep the growth rate going.