Vietnam was able to welcome many producers escaping China (some due to the trade war between the USA). But today it must face the Coronavirus outbreak, which is cutting the vital bridges between the country and the People’s Republic. Covid-19 is breaking up the grand plans of Vietnam’s leather segment, but isn’t erasing them.
Covid-19 breaks up leather’s plans
Vietnam has to manage its dependency from China, both in terms of people and material. Many workers have just celebrated in China the new year’s festivities, and upon return are forced to be quarantined for 14 days. The problems also come from the lack of raw material. In a tannery located in the Thanh Hoa province, writes South China Morning Post, circa 12,000 workers were invited to use their vacation days as there isn’t enough raw material for them to work on. Ray Lu, director of Product Development at Starwood Furniture (Binh Duong province) has stated to Furniture today: “We are having issues with China’s supply chain with regards to textiles, leather, USB ports and other components ordered at the end of December 2019”. Lu also added that material they had in stock will run out by the end of the month. Lu pointed out that they are looking for alternative sources, but the centre for many materials is China: “We have textile suppliers in India – he concludes -, but they get dyed in China”.
Testimony from the USA
Andy Polk, vice-president of FDRA (Footwear Distributors and Retailers of America) warns Footwear News: “The problem has to do with many textiles, polyester and synthetics, as well as components that are made in China. If there aren’t enough stocks, plants will begin to shut down and workers will be left without stipends, which could cause the economic system to crash”. Polk expects supply chain-related costs to increase in the next few months.
Testimonies from Italy
So far, there haven’t been any issues directly impacting Italian companies doing business in Vietnam. Finproject has a production site inside the country. We contacted the company, which said it wasn’t being hit with any specific criticality: “All is moving forward regularly”. Another footwear brand, DATE, which assembles its sneakers in Vietnam, tells us there are no particular issues now: “Our materials are almost exclusively Italian, so we have no issue with supplies. Shipments are regular and production managers in Vietnam say they are working as per usual”.
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