CCTV: Famous footwear trade commercial orders are being transferred back to China, and a large number of factories in Vietnam are closing!

On August 25th, according to CCTV reports:
As a major producer of clothes and shoes, Vietnam's recent COVID-19 has worsened, and strict epidemic prevention measures have forced a large number of Vietnamese OEM factories to close.
This poses significant potential risks to the supply of goods to many large multinational companies in Europe and America, with some brands indicating that they are considering price increases.

For example, 28% of Adidas products come from Vietnam. In fiscal year 2020, almost half of Nike brand shoes are provided by contract factories in Vietnam. However, at least three Nike supplier factories in Vietnam stopped production in July. On July 19, S&P Global Market Caizhi issued a report warning that Nike shoes made in Vietnam may be exhausted.

This type of production interruption will also bring direct losses to major brands. Adidas stated earlier this month that the production capacity of most of its suppliers in Vietnam has been unavailable since mid July, and it is expected to lose $600 million in sales in the second half of the year as a result.

The company also pointed out that this production interruption will make it unable to fully meet strong demand and will consider raising prices. At the same time, some large brands have already begun to readjust their supply chains.

Affected by geopolitical risk factors such as trade frictions, some brands began to transfer production capacity from China to countries such as Vietnam before the epidemic. However, according to the Wall Street Journal, in order to reduce the supply risk caused by the epidemic, the US footwear provider Wolflin Group has already transferred some of its production capacity back to China this year. The company's head stated that the current supply situation in Vietnam is very unstable.

Adidas will raise prices

Branded relocation to China

Andy Hu, chief investment officer of an asset management company in Vietnam: Now, everyone is concerned about how to obtain the COVID-19 vaccine, which takes some time. Vietnam is facing some problems, but I think there should be vaccines coming in the next few months, so that more people can get vaccinated. If everything goes well, I think production will return to normal from the end of this year to the beginning of next year.

In mid August, over 80 American clothing and footwear companies, including Nike and GAP, have jointly written to Biden requesting the United States to accelerate 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 issues with current epidemic prevention and control measures and may consider adjusting them.