'Nike leaves Vietnam': phony news and warnings
"Nike is leaving Vietnam" has been confirmed as misinformation. Nike does not own any factories in Vietnam, but only hires partners in Vietnam to process its products.
A source from the Ministry of Industry and Trade confirmed this with VietNamNet.
Experts say that it is unlikely that foreign partners will completely stop placing orders in Vietnam because Vietnam ranks second, after China, in exporting leather and footwear and is often in the top 5 in the world in terms of textile exports.
However, Nike temporarily moved its orders to another country. In 2019, Nike Vietnam General Director Mike Shepard revealed that 50% of global Nike products were made in Vietnam.
Normally, orders for Christmas and the year-end season are usually confirmed in June or early July.
That time this year many fashion brands like Nike, Adidas ... had to wait for an answer for the question "when will Vietnam open for production" and in order to proactively keep up with year-end orders, they had to move orders to other countries. For industries such as textiles and garments, leather and footwear, transferring orders is not difficult.
Experts say that it is unlikely that foreign partners will completely stop placing orders in Vietnam because Vietnam ranks second, after China, in exporting leather and footwear and is often in the top 5 in the world in terms of textile exports. Many fashion brands also have R&D (research and development) centers in Vietnam.
In recent months, over 60% of textile, garment and footwear enterprises located in 19 southern provinces have implemented strict social distancing measures to prevent the Covid-19 epidemic. Only medium-sized enterprises, or those with highly automated production chains and few workers, are allowed to operate the '3 on-site' model.
“The textile and garment, leather and footwear industries make modest profits, while costs are higher, so they have to suspend production. To have goods for the Christmas season, fashion firms have had to transfer orders to other countries,” said an expert.
This is not about only Nike, but the whole Vietnamese textile and footwear industry. In fact, Nike asked authorities in Vietnam to gradually resume production activities. A source said that the draft interim guidelines on "safe, flexible adaptation, effective control of the COVID-19 epidemic" developed by the Ministry of Health has many similarities with Nike’s proposals. However, this draft has not been issued yet.
Vietnam is one of the world's top exporters of textiles, garments and footwear.
The epidemic has been gradually controlled, and many localities are rushing to reopen production and business. However, some southern provinces are forecasted to face a labor shortage as many workers had left the city to return to their hometown.
According to Vu Duc Giang, Chairman of the Vietnam Textile and Apparel Association (Vitas), the lack of human resources when reopening the economy is a problem for businesses, especially those in Ho Chi Minh City and southern provinces that implement social distancing according to Directive 16/CT-TTg of the Prime Minister. This is a huge challenge for the business community when the economy is reopened. There is no really optimal plan to recruit workers in new conditions.
If Ho Chi Minh City and southern provinces reopen in October 2021, it will be difficult for workers to return, because there are only a few months left until the New Year and the Lunar New Year. In addition, Directive 16 is still being applied in many localities, which is a barrier in finding alternative labor sources.
"I think the labor deficit from now to the end of the year will be around 35-37%," the Vitas Chairman said.
Phan Thi Thanh Xuan, Vice President and General Secretary of the Vietnam Leather - Footwear - Handbag Association, also said that businesses would not be able to resume production at high capacity immediately because in addition to the labor shortage, the number of orders has dropped.
According to the Vietnam Leather - Footwear - Handbag Association’s statistics one month ago, the rate of orders withdrawn from Vietnam was about 20%, which has increased to 40-50% at present. It usually takes about six months from negotiation to signing of leather and footwear orders, so it will take at least six months more for these orders to return.
“I don't think fashion orders will leave Vietnam because of the fact that Vietnam's production capacity is still good... The large workforce and many other factors are still there, so foreign partners will still take advantage of these factors," an expert said.
However, it is important to continue to improve the management quality of central and local governments so that Vietnam can attract high-quality, high-tech FDI inflows.
Recent rumours spreading on social media on Nike’s moving production out of Vietnam to China and Indonesia are incorrect, stated Phan Thi Thanh Xuan, Vice Chairwoman and General Secretary of the Vietnam Leather and Footwear Association.
Sportswear giant Nike Group has affirmed that it will continue to expand production in Binh Duong province, said Nguyen Thanh Toan, Director of the Department of Industry and Trade of the southern industrial hub.