Stocks choke Indonesia, Vietnam lays off 30,000 people

Stocks choke Indonesia, Vietnam lays off 30,000 people

Vietnam and Indonesia down. Manufacturers’ excess stocks, a consequence of lower sales, mean that incoming orders in Vietnam and Indonesia are falling. With natural consequences for employment. For some years now, China has been losing its dominance as the world’s only factory. Vietnam had proved to be the stronger alternative. Indonesia has also increased its production capacity. But 2023 seems to be bucking the trend. As Eddy Widjanarko, president of CIFA (Confederation of International Footwear Association) and the Indonesian Footwear Association (Aprisindo) tells La Conceria. And as the numbers from Vietnam show.

Vietnam and Indonesia down

Indonesian footwear exports grew after the pandemic. From USD 4.8 billion in 2020, it rose to USD 6.1 billion in 2021 (+28.8%). And to 7.7 billion in 2022. It is mainly branded sports and casual footwear, mostly in leather. But in the first four months of 2023, the value dropped by 22% due to the stock held in the warehouses of large buyers. For example: Nike and Adidas,” says Widjanarko.

Indonesian confidence

Widjanarko, however, is confident about the future. “In 2023, 78 new footwear companies were established. Companies are making major investments to increase product quality and the profitability of production facilities. From USD 608 million in investments in 2020, we have increased to USD 1.18 billion in 2022. And we expect export growth of 20% in 2024. Despite strong market competition from China, India, Turkey and other countries”.

30,000 jobs in 3 months

In Vietnam, the footwear industry lost over 30,000 jobs from April to June. Layoffs concentrated in cities and provinces with important industrial parks: Saigon, Binh Duong and Bac Ninh. In addition, many footwear companies decided to reduce working hours. Measures taken to cope with the significant drop in orders since the fourth quarter of last year, as The Saigon Times reports. Many dismissed employees have moved to work in the service sector.

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