Vietnam’s Textile and Garment Industry Faces New Requirements for Data, Design and the Circular Economy

For many years, the textile and garment industry’s green production story has mainly been viewed through indicators such as electricity, water and chemical consumption or the share of renewable energy used. These factors remain important, but a broader requirement is emerging: companies must demonstrate how products are designed, what materials are used, where they are produced, to what extent they can be repaired or recycled, and whether the related data is reliable.

This change is particularly significant for Vietnamese manufacturers participating in global supply chains. The European Union has placed its strategy for sustainable and circular textiles among its long-term policy priorities, while also issuing the Ecodesign for Sustainable Products Regulation. These instruments do not concern just one stage of factory operations. They affect how companies select fibers, develop products, manage suppliers, store production records and exchange information with customers.

For Vietnamese textile and garment companies, the circular economy is therefore no longer simply a matter of collecting fabric scraps or using a portion of recycled fibers. The core issue is to build a sufficiently consistent data chain to support compliance, reduce order-related risks and increase product value.

From Green Production to Responsibility Throughout the Product Life Cycle

The European Commission published the EU Strategy for Sustainable and Circular Textiles in 2022. The strategy aims to guide the textile industry toward products that are more durable and easier to repair and recycle, while reducing environmental impacts throughout the product life cycle. This approach differs from assessing a factory solely on the basis of its resource consumption during sewing.

For a garment, environmental impacts may be associated with many stages: fiber production, weaving or knitting, dyeing, finishing, cutting and sewing, transportation, use and treatment after disposal. If a company improves only one stage but cannot control the remaining stages, it is still difficult to demonstrate the overall result.

The EU’s Ecodesign for Sustainable Products Regulation, issued under number 2024/1781, establishes a legal framework for setting requirements concerning durability, repairability, recyclability, resource efficiency and product information for selected product groups. This regulation is not a standalone standard intended only for textiles, but textiles are among the sectors receiving attention under EU policy and may be subject to specific product requirements in subsequent steps.

A notable point is that responsibility is being pushed back to the design stage. A product that is difficult to disassemble, uses many blended materials or lacks information about its composition will be more difficult to recover and recycle after use. Conversely, the choice of materials and product structure at the outset can determine how effectively the life of a product can be extended.

Product Data Is Becoming Part of Competitiveness

In textile supply chains, data is often dispersed among many entities. Fiber suppliers hold information about input materials; weaving or knitting facilities manage fabric specifications; dyeing facilities retain records on chemicals and water treatment; and garment factories track consumption norms, accessories and quality inspections. When this data is not connected, companies find it difficult to fully answer the increasingly common questions raised by international customers.

For example, a brand may need to know the basis on which the percentage of recycled fiber in a product is calculated, where the material comes from, what types of chemicals are used in the dyeing process, or how long a supplier’s certification remains valid. This is not merely a documentation requirement. Inconsistent data can delay sample approval, increase inspection costs or force companies to provide the same information repeatedly.

The EU’s sustainable product regulatory framework also paves the way for the use of digital product passports, commonly known as Digital Product Passports. Under the EU’s direction, this tool is intended to provide electronic information related to products, components, materials and factors supporting sustainability. The specific implementation approach depends on the relevant product regulations and standards, but the general trend is for product information to become more digitalized and shared in a more structured manner.

Companies Need to Standardize Data from Suppliers

For Vietnamese companies, the first step does not necessarily have to be immediate investment in a complex technology system. More important is to agree on the categories of data that need to be collected and how that data will be checked. Fiber composition, material sources, consumption norms, dye information, water use, electricity consumption, emissions and scrap rates can be developed into shared information fields used across departments.

Companies also need to distinguish between self-reported data, data measured directly and data verified by third parties. These three types of information do not have the same level of reliability. Without clear classification, a reporting system may appear complete while still being unable to meet customers’ or regulators’ verification requirements.

Digitalization is meaningful only when data is updated according to the same rules. A factory may have separate software for production planning, inventory, quality and environmental management, but if these systems cannot exchange information, the company will still have to consolidate data manually. This is a point where discrepancies can easily arise between material purchasing figures, production figures and the figures disclosed in product records.

Product Design Determines Recyclability

Textile recycling is often mentioned as a solution for dealing with used clothing. However, recycling efficiency depends significantly on the product’s design from the outset. A product with multiple material layers, difficult-to-remove accessories, special coatings or complex blended-fiber compositions will be more difficult to sort and process.

This does not mean that every product must be made from only one type of fiber. In practice, designers and manufacturers must balance many requirements: durability, wearing comfort, color retention, cost, customers’ technical requirements and environmental impacts. However, these decisions need to be assessed early rather than considering recyclability only after the product has been completed.

Designing for greater durability is also an important approach. Products that are used for longer may reduce the need for replacement, although the final effect also depends on consumer behavior, washing methods and actual usage time. Therefore, companies should not equate a single attribute, such as the use of recycled fibers, with the entire concept of sustainability.

For contract manufacturing factories, influence over design often comes through the sample development process and brands’ technical requirements. Companies capable of advising on consumption norms, materials, seam strength, the removability of accessories or the reduction of cutting waste can participate more deeply in the value chain instead of merely accepting orders based on pre-existing specifications.

Direct Impacts on Vietnamese Companies

The biggest change may lie in compliance costs. Companies will need to allocate additional resources to data collection, supplier assessment, material testing and staff training. Smaller facilities that rely heavily on paper records or fragmented data may face greater difficulties when customers request information in a standardized format.

However, investment in data does not create costs alone. When material and production information is standardized, companies can gain a clearer view of consumption levels, defective-product rates, excess fabric and energy-use efficiency. These data support internal waste reduction rather than serving only as customer reports.

The new requirements may also change relationships between garment companies and their suppliers. A factory cannot make commitments about material sources without mechanisms to verify information from spinning, weaving, dyeing or accessory suppliers. This makes selecting suppliers based solely on price and delivery time less suitable.

Conversely, companies with strong management systems can gain an advantage during order negotiations. The ability to provide records quickly, consistently and with supporting evidence helps reduce verification time. As international brands manage environmental and supply-chain risks, this capability may be no less important than delivery capacity.

Opportunities for Domestic Solution Providers

The above trend is opening a market for providers of traceability software, emissions inventories, chemical management, life-cycle assessment and material classification solutions. However, technology solutions are effective only when they match the scale and operating capabilities of textile and garment companies. A system that is overly complex but dependent on manual data entry may increase the burden instead of solving the problem.

Domestic technology companies can begin with specific challenges such as connecting material-batch data with orders, tracking certifications, managing consumption norms or creating product records. The ability to connect with international customers’ systems and ensure data security will be factors that need to be considered from an early stage.

Prepare According to a Road Map Instead of Waiting for Final Requirements

Not all EU policy requirements apply simultaneously to all products and all companies. Specific requirements often need to be further established through implementing legislation, technical standards or individual customer requirements. Therefore, companies should avoid waiting until a regulation is fully in force before beginning preparations.

An appropriate road map could begin by mapping the supply chain for key export product groups. Companies can then determine what data is already available, what data is not yet reliable and what data must be verified externally. Testing the approach on one product line or one group of suppliers will help companies identify bottlenecks before expanding.

Alongside data, circularity criteria need to be incorporated into product development. Design, purchasing, engineering, quality and environmental departments should participate from the early stages. If material decisions are made without considering traceability, durability or end-of-life treatment, the factory will find it difficult to correct the situation at later stages.

For regulators and industry associations, the challenge is to help companies, particularly small and medium-sized enterprises, access practical guidance and data standards at a reasonable cost. Green production will be difficult to expand if it is viewed only as an inspection requirement imposed by major customers rather than as a shared capability across the entire industry.

The circular economy in textiles will not be created by a single recycling technology or a new type of material. It requires coordination among design, materials, production, data and post-use treatment. For Vietnam, this process creates additional compliance pressure while also opening an opportunity for companies to move from contract manufacturing toward providing higher-value production solutions. Companies that develop reliable data systems and the ability to control materials will be better positioned as sustainability requirements penetrate individual products and contracts.