GENEVA — One of Asia’s leading exporters, Vietnam, and Africa’s fastest-growing economy, Ethiopia, were the top destinations in 2016 for new commitments in greenfield foreign direct investments in textiles and apparel manufacturing, led by companies in Taiwan, South Korea, Hong Kong and mainland China, a United Nations report said.
In 2016, Vietnam was the biggest beneficiary country for new outlays in the sector with declared new projects valued at $2.7 billion, followed by Ethiopia with $636 million, and the U.S. with $494 million, according to the U.N. Conference on Trade and Development’s, “World Investment Report, 2017.”
U.N. economists said the U.S. was the top destination for new greenfield commitments in the apparel retail service sector, with investment projects — mostly by brands — worth $7 billion, followed by the U.K. with $1.78 billion; France with $1.2 billion; Australia with $932 million, and China with $812 million.
New greenfield FDI commitments by major brands in the U.S. retail service sector included France’s LVMH Moët Hennessy Louis Vuitton, Sonia Rykiel, Rick Owens, and Chanel; Italy’s Stefano Ricci, Dolce & Gabbana, Giuseppe Zanotti, Giorgio Armani and Prada; Spain’s Inditex and Puig Beauty & Fashion, and Sweden’s Hennes and Mauritz and Acne Jeans.
Other brands that earmarked new commitments in the U.S. retail market included the U.K.’s Ted Baker, Drake’s and Burberry; Germany’s Hugo Boss; Japan’s Fast Retailing; Hong Kong’s Grana; Australia’s Cotton On; Brazil’s Kalimo, and Canada’s Canada Goose.
Greenfield is a form of FDI where a parent company starts a new venture in a foreign country by constructing facilities from the ground up.
In Vietnam, “expectations by East Asian investors” of the potential benefits of the now troubled preferential Trans-Pacific Partnership trade accord, following the decision by the new Trump administration to withdraw from the pending pact, was a factor for the big outlays, Astrit Sulstarova, chief of trends and data at UNCTAD’s investment and enterprise division, told WWD.
Some of the new greenfield investments in Vietnam included outlays from Taiwan-owned Far Eastern Group, valued at $760 million to create 3,000 textile manufacturing jobs, and $60 million from South Korea’s Dongwon Textile Vietnam to create 2,835 apparel knitting jobs.
Concerning Ethiopia, U.N. analysts said China’s Jiangsu Sunshine Group invested $350 million to generate 3,000 textile manufacturing jobs, and China’s Indochine International spent $138 million to create 2,182 apparel jobs.
Overall, the U.N. report said, total global FDI in 2016 fell by 2 percent to $1.75 trillion, but it forecast that global FDI this year will increase by about 5 percent to almost $1.8 trillion, fueled by “accelerating economic growth in all major regions, a strong performance in stock markets and a rebound in world trade volume.”
In 2016, the U.S. remained the leading host economy and attracted inflows of $391 billion, up on the previous year’s $348 billion, followed by the U.K. with $254 billion and China with $134 billion.