Bags / Shoes & Accessories

Major shoe manufacturers Baocheng Industrial (9904) and Winterthur (9910) have recently issued announcements on the suspension and extension of Vietnam factories, most often until August 15.

Not only Baocheng and Fengtai, but also the Longdian and Hongfu shoe factories, which are mainly based in Vietnam, have been faced with the problem of work stoppage due to the inability of the government to implement the "three-in-place" policy. According to industry sources, "transportation costs, The increase in raw materials, coupled with the unsatisfactory production, has not been reflected in retail prices yet, but American brands have always said that they will increase prices. It is estimated that they will not be able to suppress it!"

Footwear giants cannot cooperate with the government's "three places"

Since the large-scale diagnosis caused in April this year in Vietnam, nearly 140,000 people have been diagnosed. Among them, Ho Chi Minh City and its surrounding provinces and cities in the south are the hardest hit areas. For example, Binh Duong Province, an industrial town, has been reported in the latest wave of epidemics. Ten thousand people are infected with the epidemic.

It is understood that Vietnam only started to vaccinate in June this year. The vaccine was given first from factories with large populations in industrial areas. In June, most people from large Taiwan-funded factories had AZ. The factories are relatively safe, but the infection outside is very dangerous.

However, nowadays large Taiwan-funded factories have reported suspension of work, mostly because they cannot cooperate with the government's "three-site" (eating on-site, local production, and local living) policy. Only factories that truly achieve the "three-site" can operate. .

Lai Qijian, secretary-general of the Taiwan Footwear Industry Association, said that except for the infected factories that need to be temporarily suspended for disinfection, the remaining factories that meet the "three locales" can continue to operate, "but most factories can't do it, and most of the factories are production lines. , Pass one by one, it is difficult to maintain social distancing.

Vietnam is different from China. Vietnam focuses on family life and comes home after get off work. Therefore, most factories do not have dormitories and it is difficult to live on-site. "

Nike's Vietnam factory shuts down, freight costs tripled

Price increases may be unavoidable

According to an industry source, every Nike factory in Vietnam has stopped work and delayed shipments are serious. If there is a way to maintain the quarantine measures, stop and stop, and production is not smooth; the mainland production lines are also short of jobs, with an average salary of 1,000. In dollars, the original drawdown was temporarily unable to find workers. In addition, the raw materials and shipping costs have increased three times during this period. "Although the cost has not yet been reflected on the retail side, some American brands have always said that they will increase prices. Can't hold it down." However, there is no clear announcement of the time and amount of price increase for brand shoe manufacturers.

Analysts pointed out that after the implementation of the measures to extend the downtime, in terms of production capacity, Vietnam is one of the main production locations of Baocheng's footwear business, accounting for about 45% of Baocheng Group's shoe production capacity, and Fengtai's position in Vietnam The production capacity also accounts for about 50%. The extension of the factory shutdown in Vietnam has had a significant impact on the short-term operations of the two major shoe manufacturers. At present, the industry plans to work overtime after the shutdown is lifted to increase output in response to customer orders.

However, it is estimated that even if the closure and resumption of work in the future are released, the production capacity will not rise too quickly, and the shoe industry will not achieve a return increase in one time. It is expected that full capacity production can be resumed between the end of the third quarter and the fourth quarter.