Giant Companies Reportedly Will Leave Vietnam, Here’s Why

JAKARTA, KOMPAS.com – Giant companies that place their production plants in Vietnam are in confusion, following the continued extension of the implementation of restrictions on community activities to suppress the spread of Covid-19 in the country.

The results of research conducted by BTIG show that movement restrictions in Vietnam pose serious problems related to the production of various products, especially shoes, belonging to a number of giant companies, such as Nike, Tapestry, Under Armor, Columbia Sportswear, and Lululemon.

Production problems have the potential to cause stock shortages from a predetermined demand or backlog. Although not yet visible in the third quarter of 2021, the impact of backlog will begin to appear in the holiday season which falls in the fourth quarter of 2021 or the first quarter of 2022.

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“Many brands are proactively stopping production orders in anticipation of capacity constraints and baclog after the factory resumes operations after lockdown,” said BTIG analyst Camilo Lyon, quoted by CNBC, Saturday (18/9/2021).

“Many big brands have moved or are trying to move their production to other countries,” he continued.

BTIG also found that production normally only took 3 months for production in parts of Asia, but now it takes 12 weeks longer due to backlog that happened.

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“It may take 5 to 6 months for the factory to be able to operate normally again after lockdown. This includes 4 to 5 weeks delay in receiving raw materials and another 8 weeks for a factory to work on backlog production,” said Lyon.

For information, on Monday (13/9/2021), the authorities announced a two-week extension of restrictions in Ho Chi Minh City, Vietnam’s business center.

Currently, business actors are still waiting for changes in the impact of these restrictions on manufacturing activities.

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The post Giant Companies Reportedly Will Leave Vietnam, Here’s Why appeared first on Newsy Today.

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