Vietnam production slump disrupting global supply chain: HSBC
The decline in production in Vietnam’s textile, leather and footwear industries due to Covid-19 has affected the global supply chain, HSBC said.
Workers at a garment company at the Tan Do Industrial Park in Long An Province in February 2021. Photo by VnExpress/Quynh Tran
Nearly 35 per cent of textile and garment factories in the country are shut down, according to the Vietnam Textile and Apparel Association.
Vietnam is the world's third largest textile and garment producing country behind only China and Bangladesh.
The market share of its leather and footwear industry is 15 percent after doubling in the last decade. Consumers in the US and Europe will suffer from the disruption, especially as the festive season approaches.
The international sportswear company Nike is a prime example of the importance of Vietnam in the global supply chain. Of its 112 factories, 88 are in Vietnam and produce half of all its footwear products.
Adidas is also facing difficulties since Vietnam accounts for nearly 30 percent of its global supply. Its Taiwanese supplier Pouyuen, which has factories in Vietnam, is among the companies to suspend production.
The Delta variant of Covid that has hit the country has raised questions about the viability of the Vietnamese supply chain so much so that Apple and Google have delayed their shift to Vietnam.
HSBC said the plan to live with Covid-19 that the Vietnamese government is aiming for depends largely on the ability to achieve a broad vaccine coverage rate.
Despite some progress, Vietnam still lags behind other countries in the region in ordering and using vaccines.
Vietnam earned $21.2 billion from garment and textile export, and $12.6 billion from footwear export in the first eight months of this year, year-on-year rises of 9.7 percent and 16.2 percent, respectively, according to the General Statistics Office.