Adidas overseas SpeedFactories: how will it affect VN footwear industry?
Adidas’ tendency of relocating production bases to places near major markets is expected to have adverse effects on Vietnam’s footwear industry.
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Made by robots for humans’ is the phrase used to introduce the shoes made at Adidas Speedfactory in Germany. The products are made by robots with designs inspired by the largest cities in the world.
It takes Adidas 18 months to design, manufacture and bring products to consumers. However, it hopes the process will be shortened to 45 days thanks to Speedfactories like the one in Germany.At present, Adidas relies on over 1 million workers at factories in Asia. China and Vietnam alone churn out 600 million pairs of shoes and other products a year. Vietnam is the third largest footwear producer in Asia, after China and India, and the fourth largest producer in the world.
However, Adidas is planning the relocation of production bases to places near major markets. This will help bring products to customers more quickly and cope with the increasing labor cost in Asia and higher transportation fees.
PM Nguyen Xuan Phuc, during his visit to the US earlier this year, when mentioning Vietnam-US trade relations, said if a pair of Nike shoes is valued at $100, Vietnam would pocket $22, while the other $78 belongs to the US.
However, the policies on relocation production bases will have certain impact on Vietnam’s footwear industry.
“Foreign manufacturers may relocate parts of their production divisions to their home countries, which will impact Vietnam’s footwear industry, but it won’t be a big impact,” said Than Trong Phuc from VinaCapital.
He said that the factories in China are equipped with robots, which means that the works done manually will be transferred to countries where the production cost is still low like Vietnam. In other words, the number of jobs to be lost by the relocation of production facilities would be offset by the transfer.
Sharing the same view with Phuc, an analyst said there was no need to be worried because Vietnam has time to prepare to protect domestic production. However, he said, instead of undertaking simple works which bring low added value, Vietnam should invest in supporting industries for the manufacturing of phones and cars.
Vietnam should also strive to do R&D instead of focusing on doing outsourcing, he said.
This was the path to success followed by Thai Binh Shoes.The company now has 3 R&D centers which meet international standards and a labor force of 700 experienced workers who develop 75,000 sample pairs of shoes and 10,000 handbags a year.
PM Nguyen Xuan Phuc, during his visit to the US earlier this year, when mentioning Vietnam-US trade relations, said if a pair of Nike shoes is valued at $100, Vietnam would pocket $22, while the other $78 belongs to the US.
However, the policies on relocation production bases will have certain impact on Vietnam’s footwear industry.
“Foreign manufacturers may relocate parts of their production divisions to their home countries, which will impact Vietnam’s footwear industry, but it won’t be a big impact,” said Than Trong Phuc from VinaCapital.
He said that the factories in China are equipped with robots, which means that the works done manually will be transferred to countries where the production cost is still low like Vietnam. In other words, the number of jobs to be lost by the relocation of production facilities would be offset by the transfer.
Sharing the same view with Phuc, an analyst said there was no need to be worried because Vietnam has time to prepare to protect domestic production. However, he said, instead of undertaking simple works which bring low added value, Vietnam should invest in supporting industries for the manufacturing of phones and cars.
Vietnam should also strive to do R&D instead of focusing on doing outsourcing, he said.
This was the path to success followed by Thai Binh Shoes.The company now has 3 R&D centers which meet international standards and a labor force of 700 experienced workers who develop 75,000 sample pairs of shoes and 10,000 handbags a year.
