Vietnam Apparel Plants Struggle as China Lockdowns Hit Supplies

Date: Tuesday, May 10th, 2022
Source: Bloomberg

Vietnam’s clothes and shoe factories are struggling to meet orders as supplies of Chinese material used to make everything from sneakers to pants are drying up amid China’s Covid-19 lockdowns.

“Every apparel factory is facing a material shortage problem now,” said Pham Xuan Hong, chairman of the Ho Chi Minh City Garment, Textile Embroidery Knitting Association. “It hurts our production and exports and is delaying our deliveries to clients.”

The Southeast Asian nation is the second-largest supplier of clothes and shoes to the U.S., according to the American Apparel & Footwear Association, which represents more than 1,000 brands. Adidas SE said Friday supply bottlenecks in Vietnam have reduced the availability of products.

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Some clothes orders are not being completely filled, Hong said. China’s Zero Covid strategy is “dramatically” reducing key material at shoe factories, which derive about 60% of supplies from China, said Phan Thi Thanh Xuan, vice chairwoman of the Vietnam Leather Footwear and Handbag Association. It is also driving up the costs of logistics, she said.

Vietnam’s Ministry of Industry and Trade said this week that some sectors have been constrained by shortages of raw materials and high prices during the first four months of the year.

Production of televisions dropped 18.9%, mobile phones fell 9.9% and fabric decreased 9% during the period, the ministry said, without providing reasons for the declines. China’s continued strict disease control procedures at some border gates in northern Vietnam have resulted in supply chain disruptions and restrictions in the flow of some products, it said.

Many Vietnam assembly lines were shut during the summer and fall last year as Covid-19 spread across the country, particularly in the nation’s southern industrial belt, and officials imposed tough lockdowns.

 

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