Bags / Shoes & Accessories

Companies in textiles, footwear and electronics are starting to cut working hours as global consumer demand declines. Vietnam has experienced a 6-month post-pandemic economic recovery, but Ho Chi Minh City-based production companies have begun to face shortages of materials and orders, which directly forced companies to scale down production or reduce working hours. At the same time, workers’ incomes were also affected.

Labour-intensive industries such as garments, footwear and electronics have been hit the hardest by lower orders from the US and Europe, said Tran Viet Anh, vice-president of the HCMC Union of Business Associations.

More than 40,000 workers at Taekwang Vina, a shoe-making company in Dong Nai province, took three days off in August and September. In addition, from last month, the minimum wage for workers has been increased by VND 260,000, and bonuses have been increased by VND 100,000. Input costs have risen, demand has fallen in many key markets, and businesses are under increasing pressure.

Nguyen Huu Phuoc, market director of Nguyen Phuoc shoe manufacturer, said that before the company received orders a quarter or two ago, but now the orders are only 2-3 months in advance. While sales in the first half were satisfactory, orders are expected to continue to decline in September and October. Now many shoe-making enterprises can only "subsistence". Orders are not as plentiful as they used to be. Some partners have even cancelled orders due to a sharp drop in demand.

Nguyen Quang Vu, chairman of Binh Duong Leather and Footwear Association, confirmed that orders for footwear products in August, September and October fell by 30 percent compared to the same period last year.

Thanh Xuan, vice-chairman of the Vietnam Leather Association, said that the members of the association are facing challenges, and the stock of footwear products is as high as 40%. From August 2022 to the first quarter of 2023, some companies will have to suspend production due to lack of orders.