Factory closures becoming commonplace as COVID restrictions tighten
Companies manufacturing in Vietnam are having to re-evaluate where they set up shop this holiday season, as the country deals with increasingly strict COVID restrictions.
Vietnam has been hit hard by the pandemic, and, with a rise in infected and a less-than-great vaccination rate, the manufacturing industry has taken a hit.
“It’s really bad timing for Vietnam,” Ankiti Bose, co-founder and CEO of Zilingo, a fashion supplier to large brands, told CNBC. “The holiday season shipments need to happen right away.”
Bose told CNBC her clients have begun to shift focus on where to conduct there manufacturing to places such as India, Bangladesh, Sri Lanka and Indonesia.
“Bangladesh and India went through major lockdowns,” Bose said, “but almost everything returned to normalcy in terms of production within a few weeks.”
Zilingo is not too impacted by the issues in Vietnam, since less than 10% of its suppliers do manufacturing there; however, Bose told CNBC the country is an important area on account of specialized material which can be hard to find in other areas.
“Vietnam specializes in synthetic fiber, and China is the quick alternative for a lot of brands,” Bose said. “We are facilitating that for most buyers very quickly through our digital channels.”
Footwear and apparel manufacturers have been struggling particularly, as a number of those companies had to shut down their factories in the southern part of the country — including Ho Chi Minh City, according to CNBC.
Nike had it shares downgraded by BTIG last week, with the stock broker citing production issues as the reason why. These issues are expected to be a major part of Nike’s quarterly reports which are due to come out after the stock market wraps up on Sept. 23.
Data suggests the economic situation in Vietnam is only going to get worse, according to CNBC, which reports manufacturing purchasing, customs exports, and industrial production all dropped substantially last month.