Product shortage hits brands around the world
HANOI (AFP) – From shoes and sweaters to auto parts and coffee, Vietnam’s strict and prolonged coronavirus lockdown has triggered product shortages among global brands such as Nike and Gap, which have become increasingly dependent from the makers of the Southeast Asian nation.
The increases in Vietnamese factories are part of a larger crisis around the globe that is pushing inflation up and raising concerns about the pace of the global economic recovery.
In a fabric factory east of Hanoi, Italian director Claudia Anselmi of Hung Yen Knitting and Dyeing, a key cog in the supply chain of several European and American (US) clothing giants, is worried daily if the plant can keep the lights on.
His production plunged 50% when the last devastating virus wave in Vietnam first hit in the spring, and he faces perpetual problems getting the yarn he needs for his synthetic material.
“At first we were short of staff (to work) because everyone was stuck at home,” said Anselmi, whose company fabric is then used in swimwear and sportswear for women. customers such as Nike, Adidas and Gap.
Now, “the travel restrictions have compromised all the entry and exit logistics … it has created long, long delays,” she said. AFP. “We only survive if we have the stock.”
As lockdowns gradually loosen across the country as infections steadily decline, millions of Vietnamese have been on stay-at-home orders for months.
And a complex web of checkpoints and confusing travel permit regulations have made life impossible for truck drivers and businesses trying to move goods through, as well as inside and out. from the country.
FM Logistic Vietnam chief executive Hamza Harti said several drivers in the Mekong Delta were forced to wait three days and three nights in their vehicle to enter the city of Can Tho.
“They were without food, without anything,” he told a French Chamber of Commerce roundtable in Hanoi.
Delays and restrictions are a major headache for foreign companies, many of which have pivoted to Southeast Asia from China in recent years – a trend accelerated by the deadly trade war between Washington and Beijing.
In the south – the epicenter of Vietnam’s fight against Covid-19 – up to 90% of the clothing sector’s supply chains have been severed, the Vietnam Textile and Textile Association said in August. clothing (Vitas), according to official media. Nike – which warned last week that it was grappling with a shortage in its sports equipment and slashed its sales forecasts – notably singled out Vietnam, saying 80% of its factories in the south and near half of its garment factories in the country had closed.
The sports colossus obtains about half of his shoes in the communist country.
While some factories were able to set up a system where staff could eat, work and sleep on-site to bypass lockdown restrictions, Vitas said the cost was prohibitive for many.
Japanese retailer Fast, owner of popular brand Uniqlo, also blamed the situation in Vietnam for delays on sweaters, sweatpants, hoodies and dresses, while Adidas said the chain issues supply – including in the country – could cost it up to 500 million euros. in sales by the end of the year.
Even with the prospect of easing lockdowns, many are concerned about the long-term impact on Vietnamese manufacturing, with Nike and Adidas admitting they were looking to temporarily produce elsewhere.
In a letter to Vietnamese Prime Minister Pham Minh Chinh, major trade associations representing the United States, the European Union (EU), South Korea and the countries of Southeast Asia have sounded the doorbell. alarm regarding the relocation of production out of Vietnam, warning that 20% of its manufacturer members had already left.
“Once the production changes, it’s hard to come back,” they wrote.
Maxport Vietnam deputy general manager Nguyen Thi Anh Tuyet, whose 6,000 employees manufacture sportswear for Lululemon, Asics and Nike, said AFP the company had “been very worried” that customers were pulling orders – even though it was one of the lucky few to have made it through the brutal recent months largely unscathed.
Without foreign clients, “our workers would be unemployed,” she said.