Companies compete to shift manufacturing from Covid shattered Vietnam for vacations

A woman walking in Ben Thanh Market in Ho Chi Minh City on June 27, 2020.

Manan Vert Yayana | AFP via Getty Images

Vietnam The strict Covid mitigation policy has “completely collapsed,” said Ankiti Bose, co-founder and CEO of Zilingo, a fashion supplier for major brands that sell products. Amazon When Shopify..

Due to the increase in Covid infections and low vaccination rates, the Vietnamese government has closed many factories that manufacture apparel and shoes.

“It’s a really bad time for Vietnam. Holiday season shipments need to happen soon,” Bose told CNBC.

She said clients are trying to expand their manufacturing footprint outside of Vietnam.

“Bangladesh, India, Sri Lanka and Indonesia are all good options,” she said. They are “currently functioning in terms of factory capacity … Vietnam can lose much in the very short term.”

Joyce Cheung, Head of Global Research at JP Morgan, said, “Despite strict protection policies, new cases of Covid-19 in Vietnam are still rising and macroeconomic stress is in the manufacturing industry. It has spread to. “

BTIG analyst Camilo Lyon said factory closures are more important in southern cities where many shoe and apparel companies manufacture products, such as Ho Chi Minh City.

Quote serious production problems Nike BTIG last week since it last reported earnings Downgrade Share of US sneakers and athletic apparel giants.Supply chain challenges Expected to be the main focus When Nike reported its latest quarterly results after the stock market closed on Thursday.

Multiple data points indicate a deteriorating economic situation in Vietnam.

Customs exports, industrial production and manufacturing purchases all plummeted in August, and JP Morgan lowered Vietnam’s third-quarter GDP forecast from 4.1% to 3%.

As part of that, Singapore-based Zilingo is scrambling to help clients move production to other manufacturing hubs. “Bangladesh and India have experienced a major blockade, but within a few weeks almost everything has returned to normal production,” he said, minimizing the impact on brands manufactured in these countries.

Less than 10% of Zilingo’s suppliers are in Vietnam. However, the country is an important hub as it specializes in the types of materials that are difficult to find elsewhere. “Vietnam specializes in synthetic fibers and China is a quick alternative to many brands,” says Bose. “We are most buyers promoting it very quickly through digital channels.”

Backed by Sequoia and Temasek, Zilingo has expanded its portfolio of fashion brands as companies seek to diversify their manufacturing capabilities across Asia. Zilingo also provides the technology used by companies on the factory floor to increase transparency and enable companies to better track finished products.

Companies compete to shift manufacturing from Covid shattered Vietnam for vacations

Source link Companies compete to shift manufacturing from Covid shattered Vietnam for vacations

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