Vietnam lockdown traps garment makers around the world

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HANOI, Vietnam: This photograph taken on September 21, 2021 shows workers working at the Maxport factory, which manufactures sportswear for various textile clothing brands, in Hanoi. – AFP

HANO: 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 reliant on the nation’s manufacturers. ‘South East Asia. The increases at 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. At a fabric factory east of Hanoi, Claudia Anselmi – the Italian director of Hung Yen Knitting & Dyeing, a key cog in the supply chain of several European and American clothing giants – worries daily if the factory 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, “travel restrictions have compromised all entry and exit logistics … this has created long, long delays,” she told 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 across, as well as in and out of the country.

Hamza Harti, managing director of FM Logistic Vietnam, 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.

Relocation of production
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 percent of the garment 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 shortages 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 shut down. 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, which owns the popular Uniqlo brand, also blamed the situation in Vietnam for delays on sweaters, sweatpants, hoodies and dresses, while Adidas said the problems supply chain, including within the country, could cost it up to $ 500 million. euros ($ 585 million) in revenue 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 Prime Minister Pham Minh Chinh, major trade associations representing the United States, European Union, South Korea and countries in Southeast Asia sounded the alarm bells regarding the displacement production outside Vietnam, warning that 20% of its manufacturer members had already left.

“Once the production changes, it’s hard to come back,” they wrote. Nguyen Thi Anh Tuyet, deputy general manager of Maxport Vietnam, whose 6,000 employees make sportswear for Lululemon, Asics and Nike, told AFP the company was “very worried” that customers were withdrawing orders – although he was one of the lucky few to have made it through these brutal recent months largely unscathed. Without foreign clients, “our workers would be unemployed,” she said.

Coffee, cars
The pandemic has not only hit the country’s textile industry, but also threatens global coffee supplies, with Vietnam being the world’s largest producer of robusta beans, the variety used in instant coffee. Raw material prices are now at a four-year high.

The automakers have not escaped either. The shortages have been compounded by increased demand in the West after a virus-induced crisis. Back at his textile factory near Hanoi, Anselmi believes companies will stick with Vietnam if it can return to some sort of normalcy in October. “If we can keep the factories running, then I think the confidence (in Vietnam) is still there. “

Vietnam’s economy suffered its biggest contraction on record in the third quarter, officials said yesterday, after a devastating wave of COVID-19 forced the widespread suspension of manufacturing in the export-dependent country. Gross domestic product fell 6.17% year-on-year during the July-September period, with the General Bureau of Statistics (GSO) saying it was the biggest drop since the Asian nation Southeast began recording quarterly figures, apparently in 1986.

Last year, Vietnam was among the best performing economies in Asia and one of the few in the world to grow after maintaining low virus counts and widely open businesses. But the latest wave of coronavirus, which started in April in its northern industrial parks and quickly spread south to the business center of Ho Chi Minh City, “has had a serious impact” on the city. economy, the GSO said. – AFP


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