Pou Chen Corp., the world's leading contract shoemaker for Nike, Adidas and other major footwear brands, is shifting a large portion of its operations from China to Vietnam to bank on lower labor costs and more favorable tariffs.
Pou Chen Corp., the world’s leading contract shoemaker for Nike, Adidas and other major footwear brands, is shifting a large portion of its operations from China to Vietnam to bank on lower labor costs and more favorable tariffs.
According to Nikkei Asian Review, Pou Chen had produced 42% of its total shoes in Vietnam as of the end of September this year, up from 39% in 2014 and 34% in 2013.
The Taiwanese company now ships more than 300 million pairs of shoes a year and sees footwear and apparel accounting for 75% of its total revenue.
Pou Chen’s spokesman Amos Ho was quoted by Nikkei as saying that the company has been gradually relocating its manufacturing facilities to Vietnam since 2012, due to higher wages and employee benefits in China.
Pou Chen is not the only foreign company expanding production in Vietnam. Its Taiwanese rival, Feng Tay Enterprise, is looking to benefit more from Vietnam as this Southeast Asian country is a member of the Trans-Pacific Partnership (TPP), an agreement that aims to create the world’s largest free trade bloc.
Experts said as member states of the TPP are expected to export goods to the U.S. with favorable duties, international brands like Nike and Adidas will buy more made-in-Vietnam products. That is why footwear suppliers are relocating their operations from southern China to Vietnam.
More foreign textile and garment enterprises have invested in large-scale factories in Vietnam to make the most of opportunities from the TPP before Vietnam and 11 other Pacific Rim countries concluded negotiations in Atlanta in the United States.
Data of the General Department of Customs showed Vietnam posted footwear export revenue of US$9.7 billion in the first 10 months of this year, US$1.41 billion higher than in the same period last year. Of the figure, shipments to the U.S. reached US$3.34 billion, up 24.8% and accounting for 34.4% of total footwear export turnover.
(Source: SGT)
