Kasper Rorsted, General Director of Adidas, said that Vietnam produced 44% of its output in 2017, while China, which used to be its biggest manufacturer, only made 19%.
The German company expects that production will continue to shift from China to Vietnam, and that Vietnam will produce more than half of Adidas footwear by the end of 2019.
According to a source from Nike, the company began investing more in Vietnam around five to seven years ago thanks to the reasonable labour cost and now accounts for almost half of Vietnam’s total footwear exports.
For Puma, the company also has 30% of its products made in Vietnam, and plans to do more business here if the US hikes taxes on Chinese footwear and clothing.
Nguyen Duc Thuan, Chairman of the Vietnam Leather, Footwear and Handbag Association (LEFASO), said many multi-national footwear and clothing companies are making their products in this country because of the affordable labour costs and Vietnam’s free trade agreements with many countries.
Though labour costs have been rising over the years, it is still cheaper than some other big shoes markers like China, India and Thailand.
The experienced workforce which has been working with multinational brands also makes Vietnam an attractive location for big footwear brands.
According to LEFASO, Vietnam exported around US$14.67 billion worth of footwear last year, ranking second in the world.
It shipped to over 100 countries.
In the first four months of this year, the industry’s exports were worth US$4.5 billion, and the full-year target is US$20 billion.
More than 80% of exports are by foreign-invested companies.