In recent times, the shutdown of factories in Vietnam has caused considerable losses to multinational giants. Nike alone has lost the production of 180 million pairs of shoes. As Vietnam decided to go to work “while sick”, American giants such as Nike and Apple finally breathed a sigh of relief. However, what they did not expect was that the Vietnamese production chain once again let them down.
The latest news on October 11 shows that the long-term shutdown has caused millions of workers to flee factories and return home. According to Vietnamese estimates, although officials have provided return transportation facilities and factories have increased wages and benefits, due to the approaching Spring Festival and the possibility of another shutdown at any time, these measures have had little effect, and more than 2 million people may still be unwilling to return to work.
Take the world’s largest sports shoe manufacturer Baocheng Group as an example. On October 6, the company announced the resumption of work in Vietnam , but more than 40,000 workers have not returned to work, and the rework rate does not exceed 30%. The shortage of labor has made Baocheng Group’s goal of 100% return to normal before mid-November an empty talk.
Faced with many obstacles to resuming work in Vietnam, there are even rumors that Nike has begun to withdraw from Vietnam. Since Nike does not have a production base in Vietnam and relies entirely on local OEMs for OEM production, if the US company really decides to withdraw from Vietnam, it means that 50% of its production orders will be transferred to other countries. However, officials from Vietnam’s Ministry of Industry and Trade have denied the authenticity of the news.
Although Nike has only temporarily transferred some orders, the Vietnam Leather-Footwear-Handbag Association estimates that with the negotiation, contract signing and other procedures, local companies will have to recover all losses. Orders take at least 6 months. You should know that due to the delay in resuming production smoothly, a large number of companies have withdrawn orders from Vietnam from 20% to 40-50%.
The months-long shutdown of production has not only impacted the production of more than 80 US companies, but Vietnamese companies have also suffered considerable losses. Official statistics show that from January to September this year, the total number of companies in the country declared closure and bankruptcy was as high as 90,000. Important people in Vietnam also have to admit that the country will not be able to achieve the 6% economic growth target this year, and may even only achieve 50% of the original plan. </p
