Wages in sewing workshops in Vietnam and Bangladesh increased between 2020 and 2025, with varying progress depending on the country and region. Yet Western buyers have not brought their orders back home. Economic theory predicts that a disappearing comparative advantage triggers a geographical reshuffling of production chains. The reality on the ground tells another story.
The essentials
- Labor costs in Southeast Asian textiles rose between 2020 and 2025; wage changes vary significantly by country, region, and position, and no uniform regional rate has been established.
- A limited share of Southeast Asian textile factories has automated a significant portion of their production; a wage increase may raise certain unit costs, but its effect depends in particular on productivity, prices, exchange rates, and production structure.
- Recertifying a supply chain mobilizes substantial legal, logistical, and relational resources that few buyers are prepared to commit in a short timeframe.
- Declared reshoring remains nearly zero: fixed assets (machines, buildings, subcontractor networks) do not move, because migration costs are substantial and can exceed anticipated gains.
- Economists and business leaders are questioning the cost threshold at which geographical adjustment becomes inevitable.
Wages rose, factories stayed
In Vietnam, textile wages increased between 2020 and 2025. In Bangladesh, the legal minimum for ready-to-wear workers was raised from 8,000 to 12,500 taka, according to official government data. Regional minima rose, with varying progress depending on countries and regions.
These figures matter because they disrupt a calculation that has structured global fashion since the 1990s. The model rested on a simple principle: relocate where labor is cheap, adjust as wages rise, start over elsewhere. Sri Lanka, Thailand, China, then Vietnam and Bangladesh—the geography of garment manufacturing followed the map of low wages with near-mechanical regularity.
This mechanism assumed that adjustments would be smooth. They are not.
A shrinking cost gap that fails to trigger movement
Take the figures at face value. A textile operator in Portugal costs approximately 900 to 1,100 euros per month including benefits. In Romania, around 600 to 700 euros. In Vietnam, at 300 dollars—roughly 275 euros—the gap remains significant, but it was even wider in 2020. And above all, the comparison does not stop at gross wages.
A factory in Portugal or Romania benefits from a shorter logistics chain to European markets, integrated environmental regulation, and a workforce trained on different equipment. These factors mattered less when wage differentials reached a ratio of 1 to 10. At a ratio of 1 to 3 or 1 to 4, they begin to weigh in the spreadsheets of purchasing directors.
Reshoring nonetheless remains nearly zero. Major retail chains and sportswear brands have brought back only a limited share of their production. Manufacturing volumes in Southeast Asia have not declined significantly over the period. This inertia is explained by the nature of the investments at stake.
Fixed assets do not travel
A textile supply chain rests on industrial sewing machines purchased over a ten-year span, long-term building leases, and networks of specialized subcontractors (embroiderers, dyers, fastener manufacturers) located within a radius of dozens of kilometers. Moving this entire ensemble to Portugal or Turkey means reconstructing an entire industrial ecosystem, well beyond a simple supplier change.
The migration cost is substantial and unfolds over a long timeframe. It can exceed anticipated gains: if the relocated factory struggles to achieve expected volumes and quality, the buyer risks not recovering the investment spent on the transition.
Recertifying a supply chain entails social audits, environmental certification, compliance with safety standards specific to each client, and verification of subcontractors; during this phase, the chain faces operational constraints that reduce its usual capacity. For a retail chain whose collections cycle bimonthly, this delay represents a major operational risk.
This is how comparative advantage erodes without the expected reconfiguration happening immediately. Future gain remains uncertain against the present cost of transition.
Fewer than 5% of factories have automated
An upward exit does exist, though: automation. If wages rise, factories could invest in equipment that reduces their dependence on labor. This is the path taken by electronics and automotive sectors in Northeast Asia.
Textiles are a special case. The flexibility of fabrics makes automating sewing incomparably more difficult than assembling rigid components. Machines that sew autonomously exist, but they remain slow, expensive, and limited to certain standard operations—shirt collars, straight seams. For complex designs, the human hand remains irreplaceable at a reasonable cost.
Result: a limited share of Southeast Asian textile factories has automated a significant portion of their production. This is a remarkably low threshold for a sector that has endured intense wage pressure over the past five years. A cost increase can affect margins or prices, but the effect depends on productivity, contracts, purchase prices, and competition.
A few players are testing intermediate solutions: semi-automated lines for repetitive operations, coupled with human teams for finishing. Eclat Textile, a Taiwan-based group, has invested in this type of configuration for its American clients. But these experiments remain marginal at the sector scale, and they require capital that medium-sized Bangladeshi and Vietnamese workshops struggle to mobilize.
The geography of the next adjustment
If reshoring to Europe or the United States remains a working hypothesis rather than a measurable reality, supply chains are not frozen either. Supply chains are partially reorienting toward other low-wage countries rather than toward consumer markets.
Countries like Myanmar, Cambodia, and certain segments of Bangladesh are gradually absorbing part of price-sensitive orders. This is classical logic, the same that had already driven the shift from South Korea to Sri Lanka, then to China, then to Vietnam. The map is being redrawn, but on the same principles.
This dynamic directly concerns countries like India, which is attempting to capture part of the volumes lost by China in the post-2022 geopolitical reshuffling. India creates 3 million formal jobs for 12 million labor market entrants: this gap illustrates why textiles, even at rising wages, remain a strategic industry for employment in developing economies. Losing these volumes to second-generation Myanmar or Bangladesh constitutes a heavy adjustment with major consequences.
The threshold for triggering relocation remains uncertain. Migration costs would become acceptable to buyers at a wage level that current data does not yet allow us to determine. Researchers working on comparative advantage theory, from Ricardo to modern versions developed by economists like Dani Rodrik on industrial policy and value chains, had modeled a world where transaction costs are negligible. The 9 to 18 months of recertification, immobilized assets, and supplier relationships built over ten years enter into a calculation that standard theory underestimates.
One might wonder whether the 2030 horizon will see a tipping point. Projections remain fragile: a further 30% rise in Vietnamese wages over the next decade, combined with declining automation costs in textiles, could shift the calculation. But this conditional scenario remains to be proven. For now, inertia dominates.
The actual strategy of buyers
Faced with wage pressure, major retail chains have not triggered massive reshoring. They have adopted three strategies that deserve to be named precisely.
The first consists of passing part of the increase along to retail prices. Apparel inflation observed in Europe between 2022 and 2024 owes partly to this dynamic, not only to post-Covid logistics costs.
The second strategy is supplier consolidation. Rather than working with fifty scattered workshops, buyers reduce their base to fifteen or twenty partners capable of absorbing larger volumes and negotiating tighter cost terms. This concentration movement benefits large integrated manufacturers, Korean and Taiwanese groups present in Vietnam, for example, and weakens medium-sized independent workshops.
The third strategy is defensive geographical diversification: keep Vietnam as the primary anchor, add Bangladesh for price-sensitive volumes, test Pakistan or Cambodia to reduce country-risk exposure. This approach is often presented as resilience policy; it is mainly a way to defer the relocation decision without ever making it.
These strategies have in common that they do not resolve the long-term problem. They buy time. The fact that the textile sector shares this logic of gradual adjustment with other industries under wage pressure, forced part-time work has lasting effects on career trajectories and social protection systems, suggests that the inertia of employment structures is a more general phenomenon than industrial geography alone.
Pace and scope of foreseeable adjustments
Current inertia does not last indefinitely. Global supply chains have already undergone profound reconfigurations; the shift of textiles from China to Vietnam between 2010 and 2018 is the most recent example, but these transitions unfolded over ten to fifteen years, not two or three.
What is new in the current period is the conjunction of several simultaneous pressures: wage increases, tightening of due diligence standards in Europe (EU Directive 2024/1760 on corporate sustainability due diligence), geopolitical instability that raises logistics costs, and the emergence of traceability demand that long and fragmented chains struggle to satisfy. All these factors create structural tensions that exceed isolated adjustments.
For Vietnamese and Bangladeshi manufacturers, the most viable medium-term exit runs through trading up, producing more complex items, better-paid pieces, that justify higher wages. This is the path followed by South Korea in the 1980s, then Taiwan. But this transition requires investments in training, equipment, and business development that most current workshops cannot afford to undertake alone. It also assumes active public policies, skills development programs, investment incentives, mid-range export support, which are unevenly deployed across the region.
The question that remains open is not whether textile supply chains will reconfigure. They will, as they always have. It concerns who finances the transition, who pays its social cost, and whether current producing countries emerge with stronger industries or simply less visible ones in global trade.
Sources
- World Bank, Labor and Economic Indicators Database
- Vietnam General Statistics Office, Annual Report on Wages and Employment 2025 (General Statistics Office of Vietnam, Hanoi)
- International Labour Organization, ILO Global Wage Report 2024/2025 (International Labour Office, Geneva)
- World Bank, World Development Report 2024: The Middle Income Trap (Washington D.C.)
- Better Work / ILO, Textile Sector Compliance Reports Bangladesh and Vietnam 2024
