Leading footwear firm shifts production to VN
Leading footwear firm shifts production to VN
Pou Chen Corp, the world's largest contract shoemaker, is moving a large section of its operations from China to Viet Nam, Nikkei.com reported.
The corporation, which supplies products of Nike, Adidas and other major brands, aims to take advantage of Viet Nam's lower labour costs and more favourable tariffs.
Pou Chen made 42 per cent of its shoes in Viet Nam as of the end of September, up from 34 per cent in 2013 and 39 per cent in 2014.
The company, based in the central Taiwanese city of Taichung, now ships more than 300 million pairs of shoes annually, with footwear and apparel accounting for 75 per cent of the company's revenue.
Company spokesman Amos Ho said the company has been gradually moving its manufacturing base to Viet Nam since 2012, due to rising wage and employee benefit costs in China.
"We consider the economic and political conditions in Viet Nam to be stable," Ho said.
Although sales grew eight per cent, Pou Chen's net profit in 2014 was $264.3 million, down 19 per cent year on year.
Pou Chen's smaller Taiwanese rival, Feng Tay Enterprises, has made more than half of its shoes so far this year in Viet Nam, possibly hoping to benefit from Viet Nam's status as a member of the Trans-Pacific Partnership (TPP) agreement, which aims to create the world's largest free trade bloc.
"As TPP countries are expected to export goods to the United States without customs duties, international brands such as Nike and Adidas will want to buy more made-in-Viet Nam products," Peggy Shih, an analyst at Yuanta Securities Investment Consulting, said.
"That is why these footwear suppliers are aggressively moving their factories south to Viet Nam," Shih said.
Many Taiwan businesses have also been moving their factories to Viet Nam.
Taiwan's leading textile firm Far Eastern New Century (FENC) planned to invest $307 million in its new factory in Viet Nam in June.
FENC's new factory in Viet Nam is expected to start production in the second half of 2016.
