HANOI, July 15 (Reuters) - Changshin Vietnam, a South Korean
shoemaker, became the second major Nike supplier to
suspend production in Vietnam as it shut three of its factories
near Ho Chi Minh City on Thursday due to a coronavirus outbreak.
The factories in Dong Nai province, which employ nearly
42,000 workers, will remain shut until July 20, the Vietnamese
government said in a statement, adding many of the 177 infection
cases detected in the province were from the factories.
Nike did not respond to Reuters request for comment outside
U.S. business hours, while calls to Changshin went unanswered.
On Wednesday, Taiwan's Pou Chen Corp, which makes
footwear for Nike Adidas, suspended operations at its
plant in Ho Chi Minh City. The plant will be closed until July
23 for "health and safety considerations," the company said,
adding it did not expect a major financial impact.
Vietnam had until recently successfully contained
coronavirus outbreaks, with limited disruption to its crucial
manufacturing sector. However since late April, it has seen
record cases on many days this month, most of those in the
commercial hub Ho Chi Minh City and its neighboring industrial
provinces of Dong Nai and Binh Duong.
The country has recorded 38,200 infections and 138 deaths
overall, a vast majority of those since May.
Almost all of Nike's footwear is manufactured outside the
United States. The company has said contract factories in
Vietnam produced about 50% of total Nike brand footwear in
fiscal 2020, but did not specify the volumes that came from
Changshin or Pou Chen.
The latest resurgence in virus cases could signal another
hiccup for the world's largest sportswear chain in 2021, after
container shortages and U.S. port congestion held up Nike's
inventory earlier in the year.
"Having the factories shut for one or two weeks for Nike is
going to cause a massive problem for its supply chain," China
Market Research Group analyst Shaun Rein said, adding the
shutdown would lead to price hikes.
Nike also saw its China sales take a hit after calls to
boycott global brands for their comments around forced labor in
Eclat Textile Co, a Taiwan-based garment and fabric
supplier, has suspended production at its Dong Nai plant until
July 17, it told the Taipei stock exchange.
(Additional reporting by Ben Blanchard in Taipei, Joyce Lee in
Seoul and Aishwarya Venugopal in Bengaluru; Editing by Ed
Davies, Martin Petty and Shinjini Ganguli)