As a major producer of clothes and footwear, Vietnam’s COVID-19 epidemic situation has worsened recently, and strict epidemic prevention measures have forced the closure of a large number of Vietnamese OEMs. This has brought considerable potential risks to the supply of goods to many large European and American multinational companies, and some brands have said they are considering raising prices.
Judging from statistical data from 2013 to 2019, Vietnam is the third largest producer of footwear products after China and India. In recent years, Vietnam’s Exports of clothing products can also rank among the top five in the world. For some brands, Vietnam is particularly important in their supply chains.
For example, 28% of Adidas products come from Vietnam. In fiscal year 2020, almost half of Nike brand shoes were provided by contract factories in Vietnam. However, at least in July Three Nike supplier factories in Vietnam have suspended production. On July 19, S&P Global Market Intelligence issued a report warning that Nike shoes produced in Vietnam may run out.
This type of production interruption will also bring direct losses to major brands. Adidas said earlier this month that the production capacity of most of its suppliers in Vietnam will start from July It has been no longer available since mid-2020 and is expected to cost $600 million in sales in the second half of the year. The company also noted that this production disruption will prevent it from fully meeting strong demand and will consider raising prices. At the same time, some large brands have already begun to restructure their supply chains.
Affected by geo-risk factors such as trade frictions, some brands began to transfer production capacity from China to Vietnam and other countries before the epidemic. However, according to the Wall Street Journal, in order to reduce the impact of the epidemic Supply risks: American footwear provider Wolverine Group has transferred part of its production capacity back to China this year. The person in charge of the company said that the current supply situation in Vietnam is very unstable.
Andy Hu, chief investment officer of a Vietnamese asset management company: Now, everyone is concerned about how to obtain the new crown vaccine, and this will take some time. Vietnam is now facing some problems. But I think the vaccine should be coming in over the next few months so more people can be vaccinated, and if everything goes well, I think probably by the end of this year to early next year, production will be back to normal.
In mid-August, more than 80 American clothing and footwear companies, including Nike, GAP, etc., have jointly sent a letter to Biden, asking the United States to speed up Vaccine donations to Vietnam.
The latest news shows that Cuba will provide vaccines and technology transfer to Vietnam, and relevant Vietnamese departments have recently acknowledged some problems with the current epidemic prevention and control measures and may consider adjustments. . </p
