Saigoneer

BackHomeStoriesStories CategoriesAsia Adidas, Uniqlo and Nike Factories Are Leaving China for Vietnam

Adidas, Uniqlo and Nike Factories Are Leaving China for Vietnam

Vietnam now produces twice as many Adidas shoes as China, according to company filings.

If you had guessed that in 2018, China’s garment industry would be shifting abroad, most economists would have called you crazy. China invented high-volume garment exports, with entire cities in the country growing around the production and perfection of certain types of clothing.

At one point, Datang, China's 'Sock City,' made most of the world’s socks in a given year, an estimated nine billion pairs. Other garment cities that specialize in things like children’s clothing, underwear or sweaters, similarly tower over an internationally competitive landscape in which China, with its low salaries and organized infrastructure, has long been top dog.

But that’s no longer the case for shoe manufacturers, who have begun to seek a bluer competitive ocean in Vietnam. Salaries here trend to about half of those in China, according to the Japan External Trade Organization, which has been attracting large-scale international players.

Company filings, first analyzed by Quartz, indicate that both Adidas and Nike now make more of their shoes in Vietnam than they do in China.

It’s a significant role reversal. In 2008, roughly 30% of Adidas’ shoes were made in Vietnam, and about 45% were made in China. In 2017, those positions were effectively switched. China now only produces 20% of Adidas’ shoes, while Vietnam produces around 45%.

With lower wages and increasingly efficient infrastructure, that production shift is not likely to change course.

Kasper Rorsted, Adidas’ CEO, hinted last week at an annual shareholders meeting that the trend would likely continue. Adidas has experienced increased success in recent years, particularly in North America, despite dealing with a mercurial brand ambassador in Kanye West, who they’ve promised to standby. Expect them to also stand by their apparently successful shift into Vietnam.

Nike, too, now produces an estimated 45% of its shoes in Vietnam, up from 30% in 2008. Other fashion brands like Uniqlo have begun to move their factories to Vietnam as well. Last year, Uniqlo increased its production in the country by 40%, according to Nikkei Asian Review, while also increasing production in Cambodia and Thailand.

China’s garment industry most likely won’t fall apart anytime soon, however. As fashion analyst Mark Bain suggests in Quartz, skill increases in the country's workforce have spurred higher-end brands to produce in Chinese factories, leading to an increase in luxury exports. Companies such as Burberry, Armani and Prada have already begun producing clothing there, according to Marketplace. Already an estimated 20% of Prada’s collections bear “Made in China” labels.

The departure of lower-end manufacturing from China could be an omen of a further change in the near future. Indeed, Datang, China's 'Sock City,' has long been in decline, owing to falling exports and suppliers shifting abroad.

Now it seems that shoes will be the next to follow.

[Top image via Quartz]


Related Articles:

In 6 Years, Vietnam's Population of Convenience Stores Has Quadrupled: Report

[Photos] Saigon's Convenience Craze: How Corporate Chains Are Creating New Space for Civic Life

At a High School in China, Top Students Are Rewarded With Raw Pork