The Nikkei Asian Review cited Pou Chen Corp Spokesman Amos Ho as saying the company has been gradually moving its manufacturing bases to Vietnam since 2012, due to rising wage and employee benefit costs in China.
“We consider economic and political conditions in Vietnam to be stable,” Ho said.
Pou Chen, which supplies Nike, Adidas and other major brands, made 42% of its shoes in Vietnam as of the end of September, up from 34% in 2013 and 39% in 2014. The company now ships more than 300 million pairs of shoes annually, with footwear and apparel accounting for 75% of the company’s revenue.
Pou Chen’s relocation to Vietnam is comprehensible as Vietnam, as a member of the Trans-Pacific Partnership (TPP) agreement, will enjoy tariff reductions or exemption for a large number of export staples such as apparel and footwear.
“As TPP countries are expected to export goods to the U.S. without customs duties, international brands like Nike and Adidas will want to buy more made-in-Vietnam products,” said Peggy Shih, an analyst at Yuanta Securities Investment Consulting. “That is why these footwear suppliers are aggressively moving their factories south to Vietnam.”
Transnational firms, including Taiwanese companies, have been moving their production bases to Vietnam from neighboring countries such as China and Thailand due to the deterioration of investment climate and Vietnam’s competitive edges.
Kenda Rubber, Taiwan’s second-largest tire manufacturer, plans to scale up its investment in Vietnam to $304 million due to soaring costs and anti-dumping measures imposed on products coming from China.
To capitalize on benefits of the TPP, Far Eastern New Century, Taiwanese leading textile maker, in early November kicked off the construction of the second factory in Vietnam. Another apparel maker from Taiwan, Eclat Textile, whose clients include Nike and Adidas, also plans to boost its production capacity in the Southeast Asian country.