The textile giants are increasingly upset by the health crisis in Vietnam. Nike and Adidas are even considering relocating production, risking a collapse of the local economy.
The textile sector is in great difficulty. Between the soaring cost of raw materials and the resurgence of Covid in countries where manufacturing plants are located, companies are worried.
While Vietnam has had almost no cases since the beginning of the pandemic, the number of patients has been rising sharply since May. The problem is that in the midst of the Sino-American trade war, several companies had chosen to locate part of their production in this less politically exposed country, which is very competitive in terms of production costs.
A large part of Vietnam's textile industry is now paralysed. A third of the population has been confined for several months, leading to the closure of many factories with huge production delays.
As a result, major international brands such as Nike, Adidas and Uniqlo are at risk of supply shortages. To avoid this disaster scenario, they are considering temporary production in other countries.
Local industrialists are worried about this situation. According to them, 20% of their customers have already left the country and they fear that this exodus will become permanent. This situation would be a further blow to an economy already heavily impacted by the crisis. In the third quarter of the year, Vietnam's GDP collapsed by 6.2%, its worst slowdown in 35 years.
Another difficulty for the sector is that production costs are soaring. Between the explosion in global demand generated by the economic recovery, the surge in raw materials and energy prices, and transport problems, costs have been exploding for several months. In just three months, the price of cotton has jumped by almost 40%.
Textiles are not the only sector affected. Several products are likely to be in short supply for the same reasons, such as toilet paper, where the price of paper pulp has risen by 60% over 8 months.
