Textile Recycling: What Vietnamese Businesses Need to Prepare for a Circular Supply Chain

For many years, textile recycling in Vietnam was mainly viewed as a waste treatment activity or a corporate social responsibility initiative. That approach is changing. As international brands require suppliers to better control raw materials, chemicals, water, energy and product end-of-life, the ability to participate in a circular supply chain is gradually becoming a competitive criterion.

The challenge is not limited to finding new technologies to turn fabric scraps into yarn. Businesses must also address more fundamental issues: material sorting, traceability, designing recyclable products, controlling input quality and building stable relationships with collection and processing companies. Without these links, an isolated recycling project is unlikely to create significant change across the entire value chain.

For Vietnam’s textile and garment industry, this trend creates additional compliance pressure while also opening opportunities to upgrade its position in the international supply chain. Businesses can begin with relatively specific tasks instead of waiting until a complete circular system is in place.

From Scrap Treatment to Redesigning the Value Chain

In garment production, scraps arise at many stages, from fabric spreading, cutting and sewing to product finishing. The composition of this waste stream is not uniform. Some materials are single-fiber fabrics, while others are blends of polyester and cotton. The stream also includes sewing thread, zippers, labels, coatings, finishing substances and other accessories.

Differences in composition determine the appropriate processing method. Single-fiber fabrics are generally easier to introduce into mechanical recycling processes, although fiber quality may change after each processing cycle. Blended fabrics create a more complex problem because their components must be separated, or businesses must accept a recycled product with properties different from those of the original material. Products with many accessories also need to be dismantled before recycling.

Therefore, recycling should not be viewed as the final stage of the production process. If products are designed with too many types of fibers, coatings or difficult-to-separate accessories, post-use processing costs will increase and material recovery potential will decline. Conversely, selecting the product structure at the design stage can reduce the number of sorting steps and improve reusability.

This is an important turning point for the circular economy: the goal is not only to process waste that has already been generated, but also to limit waste from the design, material purchasing and production planning stages.

Major Barriers to Textile Recycling

Input Materials Are Not Sufficiently Sorted

The quality of recovered materials directly affects the quality of recycled yarn or materials. When fabric scraps of different colors, compositions and contamination levels are collected together, processors must carry out additional sorting steps. Without clear information about fiber composition, choosing the right technology also becomes more difficult.

At the factory level, sorting can begin with a simple process: separating scraps by fiber composition, color and condition; recording the weight of each group; and then handing them over to partners with suitable processing capabilities. This approach does not immediately create a closed-loop recycling system, but it helps businesses understand which material streams are being lost and which have higher recovery value.

Blended Fabrics and Accessories Increase Processing Costs

Blended fabrics are often used to help products meet requirements for durability, hand feel, stretch or cost. However, they are also one of the major challenges for recycling. Mechanical recycling technologies can reduce fiber length, while chemical recycling technologies require strict control of composition, chemicals and the quality of the material stream.

Not every material promoted as “recycled” can continue to be recycled many times. A product containing recycled materials still needs to be assessed for durability, sortability and end-of-life processing options. Therefore, the approach should not focus only on the proportion of recycled material in a product while overlooking its entire life cycle.

Lack of Data Makes It Difficult for Businesses to Demonstrate Results

International customers are increasingly interested in evidence rather than general claims about green production. Businesses need to answer questions such as where recycled materials come from, what proportion they represent, which processing methods were used, whether a quality control system exists and whether the data can be independently verified.

This requires businesses to establish material records and data-storage procedures at an early stage. Information about suppliers, material batches, delivery and receipt documents, test results and loss rates should be linked to each order or product line whenever possible. This is a data management task, not merely the responsibility of the environmental department.

Changes in International Markets

The European Union is developing a policy framework to promote more sustainable products, including requirements related to product design, durability, reparability, the use of recycled materials and product information. The Ecodesign for Sustainable Products Regulation, adopted by the EU in 2024, is part of this direction. Specific requirements will depend on each product group and implementing document.

For Vietnamese businesses, the impact may come through brands and buyers before appearing directly as a legal requirement applicable to each factory. Brands may ask suppliers to provide data on material composition, resource consumption or traceability. Suppliers that cannot prepare this data will face difficulties even when their products continue to meet traditional technical requirements.

In addition to policy, changes in brand strategies are also putting pressure on factories. Commitments to reduce emissions and waste and increase the use of materials from recycled sources require businesses to coordinate with more partners, from yarn manufacturers and chemical suppliers to collection and recycling companies.

However, these requirements do not mean that every business must immediately invest in a recycling plant. For most garment businesses, a more practical priority is to clearly identify waste streams, establish handover standards, select capable partners and develop mechanisms for checking data. Investment in technology is effective only when there is a stable supply of materials and a suitable outlet.

Where Should Vietnamese Businesses Begin?

Assessing Material Flows in the Factory

The first step is to map material flows. Businesses need to determine at which production stages scraps arise, what they contain, how their quantities fluctuate and how they are currently handled. This helps distinguish scraps that can be reused internally, scraps that can be recycled and waste that must be handled in accordance with regulations.

The analysis should also include defective products, samples, returned goods and obsolete inventory. Some of these items may be repaired, redesigned or redirected to other uses before becoming waste.

Introducing Circularity Criteria into Material Purchasing

Material orders should include information about fiber composition, accessories, dyes and any special treatments. When this information is requested at the purchasing stage, production and post-use processing teams will have a better basis for sorting.

In addition, supplier assessments should be based on quality consistency, the ability to provide documentation and the level of transparency, rather than simply comparing prices. A cheaper material that is difficult to trace or recycle may create costs at later stages.

Conducting Controlled Trials Instead of Scaling Up Too Quickly

For businesses newly entering this field, a small-scale pilot program is often more suitable than changing the entire product portfolio. One option is to select a product line, a group of materials or a customer with clear requirements to test the ability to collect, process and reuse materials.

Pilot results should be assessed not only by the volume of recovered scraps, but also by product quality, energy and water consumption, logistics costs, loss rates, the ability to meet customer requirements and the reliability of data records. If these indicators are not yet suitable, the business can adjust its processes before expanding.

Opportunities for New Links in the Industry

The textile recycling trend may create demand for a wider range of specialized services. These include scrap sorting, accessory removal, fiber composition testing, material traceability, product repair and redesign. These activities were often outside the scope of traditional garment businesses, but they may become part of a new supply ecosystem.

Yarn manufacturers also have opportunities to develop material lines with recycled content suitable for the technical requirements of individual products. However, recycled materials need to be controlled like any other material: they must have input standards, testing methods and clear usage limits. Using recycled materials cannot replace requirements for product durability, safety and quality.

For brands, product design can become an important tool for reducing pressure on end-of-life processing. Reducing the number of material types, limiting difficult-to-remove details and providing clear material information are changes that can support recycling without necessarily requiring entirely new technology.

What to Monitor in the Coming Period

The textile recycling market will continue to depend on three factors: the cost of virgin materials, the quality and supply of recovered materials, and the level of specificity in requirements from brands and regulators. If recycled materials are unstable or processing costs are too high, businesses will find it difficult to scale up even as demand for green products increases.

Therefore, a sustainable solution does not lie in an isolated statement about the recycling rate. Material management capabilities, long-term cooperation with processing partners and greater data transparency are the elements businesses need to build. Factories that perform these tasks well will have an advantage when customers shift from evaluations based on price and sewing capacity to assessments of a product’s overall footprint.

Textile recycling should therefore not be viewed as a side project in corporate social responsibility. It is an operational and strategic issue involving design, purchasing, production, data and customer relationships. For Vietnamese businesses, the starting point may be to understand their own material flows clearly. When data is reliable enough and processes are stable enough, the first steps toward a circular supply chain will have a more practical foundation.