On February 18, 2025, Vietnam officially abolished the VAT exemption policy for small goods imported by express delivery. Previously, goods worth less than 1 million Vietnamese Dong (about 288.8 yuan) could enter Vietnam duty-free via express delivery. This policy adjustment for China's textile export enterprises may bring a series of cost increases and market changes.
The main purpose of the government's adjustment policy is to ensure the consistency and adequacy of the national tax policy, while encouraging consumers to choose more domestic products.
Vietnam's caller market has developed rapidly in recent years, and its e-commerce market size has exceeded $25 billion in 2024, and is expected to reach $32 billion in 2025. With the rapid expansion of the e-commerce market, the Vietnamese government has gradually tightened its tax policy to adapt to market changes.
A direct impact on China's textile exports
Cost and price advantage
Vietnam is one of the important export markets for Chinese textiles. According to Vietnamese customs data, there are about 4 million to 5 million small order packages entering Vietnam from China every day, of which the average daily order volume of clothing, shoes and hats reaches 850,000, which is one of the most affected categories. The addition of the tax will directly push up the cost of exports, and it is estimated that the cost of Chinese goods may increase by 10% to 20%.
Vietnamese buyers may prefer to purchase from lower-cost Southeast Asian countries (such as Indonesia and Thailand), or increase support for the local textile industry, resulting in a decrease in Chinese orders.
Global chain reaction
Vietnam's policy echoes the United States' move to eliminate tax exemptions for Chinese parcels under $800, reflecting a global trend of closing loopholes on small imports.
The European Commission has also announced that it will officially cancel the "duty-free import of goods under 150 euros" policy, which has been implemented for many years, and plans to impose additional fees on each package. This could prompt more countries to follow suit, further squeezing the profit margins of China's textile exports.
The timing of this policy adjustment is highly coincident with the US tariff action against China, and although Vietnam denies "following the US", it still has geopolitical implications.
How to deal with the small tax exemption strategy
1. Optimize supply chain layout: Chinese textile export enterprises can consider establishing production bases in Vietnam or neighboring countries to reduce logistics costs and tariff impact.
2. Enhance the added value of products: through technological innovation and brand building, improve the added value of products and enhance market competitiveness.
3. Expand diversified markets: reduce dependence on the single market of Vietnam, and actively explore other Southeast Asian countries or global markets.
4. Pay attention to policy developments: Enterprises should pay close attention to tax policy changes in Vietnam and adjust business strategies in a timely manner.
Sino-vietnam trade ties' double-edged sword '
Although the cancellation of the small tax exemption policy in Vietnam will directly increase the cost of China's textile exports, the actual impact depends on the ability of enterprises to pass on the cost, the elasticity of market demand and the speed of supply chain adjustment, but the overall bilateral trade between China and Vietnam still maintains a good trend. In 2024, bilateral trade exceeded 260 billion U.S. dollars, and China has remained Vietnam's largest trading partner for more than 20 years. With the upgrading of the Regional Comprehensive Economic Partnership (RCEP), China and Vietnam will further promote trade and investment liberalization and facilitation.
The cancellation of the small tax exemption policy in Vietnam is both a challenge and an opportunity for Chinese textile export enterprises. Enterprises need to actively respond to the pressure of rising costs, and at the same time make use of the broad prospects of China-Vietnam economic and trade cooperation to optimize the market layout and enhance their competitiveness.
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