Vietnam’s Textile and Garment Industry Faces the EU Market’s Shift to Circular Production

The European textile and garment market is moving from an approach focused only on the origin of materials and production conditions toward managing the entire product life cycle. A garment placed on the market is no longer assessed solely on its selling price, sewing quality, or delivery time. Design, durability, repairability, fiber composition, product information, and end-of-life treatment are increasingly becoming part of commercial requirements.

This direction is reflected in the European Union Strategy for Sustainable and Circular Textiles, published by the European Commission in March 2022, together with the Ecodesign for Sustainable Products Regulation, which entered into force in 2024. These documents do not immediately create a single set of standards applicable to every garment shipment, but they establish the foundation for the EU to issue more specific requirements for individual product groups.

For Vietnamese businesses, the biggest change does not lie in any single procedure. The issue is that the production model must shift from simply fulfilling orders to being able to provide reliable data for the entire value chain. Businesses that view environmental requirements merely as supplementary documentation may face difficulties when European customers incorporate these criteria into product design, contracts, and supplier-control processes.

The EU is changing how it assesses a textile and garment product

The EU Strategy for Sustainable and Circular Textiles aims to ensure that textile products placed on the European market are more durable, easier to repair and recycle, and produced with lower environmental impacts. The strategy also seeks to limit a consumption model in which products have short life cycles and quickly become waste.

A notable point is that the policy does not target only finishing or waste-treatment processes. The EU approaches the issue from the design stage. Once the weave, fiber composition, accessories, dyes, and method of connecting components have been decided, much of the product’s potential for reuse or recycling has already been determined. Therefore, treating a garment after consumers discard it cannot fully compensate for a design that is difficult to disassemble or contains too many different materials.

The Ecodesign for Sustainable Products Regulation, commonly known as the ESPR, expands the scope of the EU’s ecodesign policy to many product groups beyond the energy sector. Textiles and footwear are among the groups identified by the EU as relevant in its implementation roadmap. The regulation provides a basis for requirements concerning durability, reusability, repairability, recycled content, resource efficiency, and product information. Specific requirements still need to be established for each product group.

Businesses therefore need to distinguish between two policy layers. The first is the EU’s general direction, such as the goal of promoting sustainable products and a circular economy. The second consists of the technical requirements, procedures, or mandatory criteria that will apply to specific products. Not every element of the strategy should be treated as an inspection condition that is already immediately effective, but businesses should also not wait until the final requirements are issued before beginning to prepare their data.

Product data is becoming part of export capacity

One of the ESPR’s important tools is the concept of the digital product passport. Under the EU’s direction, this passport may provide information related to a product’s sustainability, composition, and other characteristics through digital means. The specific implementation will depend on regulations for each product group, but the general trend is that environmental data will no longer be kept only in a factory’s internal documents or in supplier commitments.

For the garment industry, this creates a requirement to link data from multiple stages: incoming materials, spinning, weaving or knitting, dyeing, finishing, cutting and sewing, packaging, and transportation. A garment company that does not directly produce yarn must still clarify the information requested by customers from its suppliers. If data is stored separately, only in spreadsheets or emails without a verification process, compiling information for a specific product sample will be time-consuming and prone to discrepancies.

This is not only an issue for large corporations. A medium-sized garment factory may also need to manage material codes, composition percentages, certificates, supplier-change histories, and quality-inspection records. The level of complexity depends on customer requirements and the product group, but the governance principle is the same: data must have an accountable person, a traceable source, and the ability to be cross-checked.

Impacts on Vietnam’s textile and garment businesses

Vietnam’s textile and garment industry holds an important position in international supply chains, but many businesses still operate under a contract-manufacturing model with limited decision-making authority over design and materials. As market requirements shift toward product life-cycle management, a company’s position in the supply chain may directly affect its ability to comply.

A business that only receives materials and performs sewing operations may not decide the fiber composition or product structure. However, it must still demonstrate the correct use of materials, chemical management, quality control, and the preservation of production records. If it wants to move toward higher-value orders, the business needs to participate earlier in product development instead of merely receiving samples and specifications from the buyer.

Design and materials need to be considered together

Sustainable design does not mean that every product must use one type of fiber or a fixed recycled-content ratio. Each use case requires different characteristics in terms of durability, moisture-wicking capacity, elasticity, safety, and sensory qualities. What matters is that businesses have a basis for selecting materials and can explain that choice using appropriate data.

For products with multiple components, recyclability may be affected by blends of different fibers, coatings, adhesives, zippers, buttons, and sewn labels. A design that is easy to disassemble may facilitate repair or sorting, while a product optimized only for cost and sewing speed may be difficult to process at the end of its life cycle. This is an issue that needs to be addressed during sample development rather than waiting until the final inspection stage.

The use of recycled fibers also needs to be assessed carefully. Recycled fibers may help reduce demand for virgin materials in some cases, but their actual effectiveness depends on the material source, processing technology, fiber quality, and traceability. Businesses should not use general claims about being “green” or “sustainable” in place of specific information about composition, processes, and the scope of certification.

Factories must manage both resource efficiency and evidence

In production, requirements related to water, energy, chemicals, and waste are often viewed as operational issues. When customers request information across the supply chain, these also become matters of demonstrating capability. A factory may already have implemented numerous efficiency measures, but if it cannot define the measurement boundaries, recording period, and calculation method, the results will be difficult to use in the product’s documentation.

Therefore, the first preparatory step does not necessarily have to be an immediate investment in a complex technology system. Businesses can begin by mapping material and data flows, identifying the indicators customers commonly request, standardizing forms across departments, and then checking where weaknesses or breaks are most likely to occur. Once the process is clear, the business will have a basis for selecting traceability software or integrating it with its existing management system.

This approach also helps limit the risk of turning every activity into a matter of “certification.” Third-party certification can be useful, but it does not replace internal data control. A certificate is meaningful only within the scope, validity period, and criteria it covers. Businesses need to understand that scope correctly before using it in commercial communications.

Opportunities to upgrade the supply chain instead of merely responding to regulations

The EU’s changes create additional compliance costs, but they may also encourage Vietnamese businesses to improve their position in the supply chain. When material data, production capacity, and quality are better organized, businesses are more capable of participating in orders that require product development, collection-based production, or the management of more stages.

This capability is particularly important as international buyers seek to reduce supply risks and may allocate orders to suppliers that can demonstrate stability. A reliable environmental profile does not automatically generate orders, but a lack of data may cause a business to be excluded from the assessment process at the outset.

At the industry level, another opportunity lies in developing a domestic ecosystem for materials and recycling. If recycled fibers, accessories, testing services, and waste-treatment solutions are supplied only in fragmented ways, garment businesses will find it difficult to build a continuous data chain. Conversely, cooperation among yarn producers, textile and dyeing companies, garment factories, logistics providers, and recyclers can reduce the time required to verify information.

However, the circular economy should not be understood simply as collecting old clothes and recycling them into new products. Circularity also includes extending product use, repair, reuse, reducing production waste, and designing products so they can be sorted at the end of their life cycle. Each solution has its own technical conditions and business model; not every product is suitable for the same approach.

What businesses should monitor

First, businesses need to monitor the EU’s specific implementation documents for textiles and footwear instead of relying only on general slogans about sustainable development. They need to clearly distinguish between regulations that have entered into force, standards still under development, individual customer requirements, and the company’s voluntary goals.

Next, they should review their product portfolio using three questions: What materials make up the product? What data is already available? What data cannot yet be substantiated? The results of this review should be linked to each product code or product group, because the same factory may produce items with very different requirements.

Businesses also need to bring purchasing, technical, quality, production, and sales departments into a single process. If the sales department commits to a recycled-material percentage but the purchasing department cannot verify the source of the materials, risks will emerge during delivery or an audit. Similarly, if the technical department changes a material without updating the records, the digital product passport data may no longer match the actual goods.

Finally, the transition should be viewed as a long-term program tied to competitiveness, not as a communications campaign. A business can begin with one group of products exported to the EU, establish a data process, measure the results, and expand after weaknesses have been addressed. A step-by-step approach helps avoid scattered investment while creating practical evidence for customers.

The EU market is bringing issues once considered internal factory matters—from fiber selection to record management—into the center of commercial relationships. For Vietnam’s textile and garment businesses, competitiveness in the coming period will not be determined solely by labor costs or delivery speed. The ability to design suitable products, control material sources, and provide verifiable data will increasingly determine whether a business is viewed as a contract manufacturer or as a partner in a sustainable value chain.