Nike and Adidas are suffering from large-scale supply disruptions after over a third of garment factories in Vietnam shut amid fresh COVID outbreaks.
Around 35 per cent of Vietnam’s textile and garment factories are now shut according to the Vietnam Textile and Apparel Association (VITAS).
The two sportswear brands have been hit hard by the closures after Taiwan’s Pou Chen, one of the main manufacturers for both brands, suspended its operations last month.
Vietnam’s response to the pandemic started off well, with the country managing its cases and keeping them below 100 per day.
However the emergence of the Delta variant has caused new cases to skyrocket, with the nation seeing between 7,000 and 8,000 new daily cases.
Adidas said last week it could miss out on €500 million in sales as the closures mean it cannot produce enough stock to meet demand.
Its main rival Nike is also suffering from the closures as Vietnamese contract factories make up a huge 50 per cent of branded footwear last year.
Around 49 per cent of all Nike’s seaborn imports to the US came from Vietnamese suppliers in Q2 of this year.
Despite the pandemic ripping through Asia last year, Vietnam was one of the few Asian economies than managed to sustain a level of growth.
The small country in south east Asia overtook Bangladesh to be come the world’s second largest garment exporter behind China.
The vaccination rate among Vietnam’s factory workers is still very low, prompting the country’s trade group to call on the US and Vietnamese governments to help vaccinate workers amid the rising Covid cases in the country.