The prolonged blockade due to COVID-19 in Vietnam is heavily affecting the supply of goods of major corporations in the world such as Nike, Adidas, Gap … causing these corporations to consider the relocation plan to move their production facilities out of Vietnam.
Not only footwear and clothing items, but also coffee and car equipment are also in serious shortage because of the prolonged blockade and strict epidemic prevention regulations that force large production facilities in Vietnamad to shut down completely for the past several months.
AFP quoted Ms. Claudia Anselmi, Italian director of Hung Yen Textile and Dyeing Factory, a key base in the product supply chain for many European and US clothing corporations such as Nike, Adidas, Gap… , said factory output fell by 50% as the COVID-19 wave broke out in Vietnam in late April and travel restrictions were causing long delays in the transportation of production materials. “We can only survive if we have (material) reserves,” she told AFP.
In the US, while the biggest buying occasion at the end of the year is approaching, retail businesses are worried and anticipating the possibility of a shortage of goods due to delays in production lines, labor costs, and shipping costs skyrocketed.
Everlane Company said it is facing the possibility of goods being delayed from 4-8 weeks, depending on the status of the closed factories with which it is cooperating in Vietnam. Meanwhile, Nike cut its sales forecast last week, citing a 10 week loss of production in Vietnam since mid-July and the reopening is expected to begin in phases on October 10, New York Times reported.
In recent years, Vietnam has emerged as the second largest supplier of apparel and footwear to the United States, after China. However, since the outbreak caused by the Delta variant, epidemic prevention measures and delays in COVID-19 vaccination have forced factories to stop production, causing a great impact on the global supply in general and the Vietnamese economy in particular.
Many retailers that previously moved their production from China to Vietnam over the past decade because of rising costs as the administration of President Donald Trump imposed new tariffs on China are now having plan to leave Vietnam.
Last month, the Vietnam Textile and Apparel Association said that more than 90% of businesses in southern industrial zones stopped production, disrupting the global supply chain for big brands that ordered production in Vietnam.
According to this association, 62% of the export turnover of the textile industry is located in factories in the southern region, but only Ho Chi Minh City has implemented vaccination for workers in industrial zones. The remaining 18 provinces out of the 19 localities that have implemented distance according to Directive 16 have not injected or injected very little, making the vaccination rate of the textile and garment industry very low.
Last week, Nike said it was struggling with a shortage of sports products and had to cut its sales forecast. The group says 80% of its factories are in the south and nearly half of its garment factories in Vietnam have closed.
Even as Vietnam begins to gradually ease the blockade, many businesses are still worried about the long-term impact on Vietnamese production. Nike and Adidas admit they are looking to temporarily manufacture elsewhere.
In a letter to Prime Minister Pham Minh Chinh last week, leading business associations representing the United States, the European Union, South Korea and Southeast Asian countries warned about relocating production lines out of the country, at the same time, said that 20% of association members have left.