Footwear giant announces Vietnam’s factory construction

With the spread of trade war, in order to disperse risks and reduce the impact, many large shoe factories have chosen Southeast Asian countries.

Baocheng, the leading footwear company in the world, and Yu Qi held a speech on May 22. Their views on the trade war between the United States and China expressed that in order to avoid being affected by the next wave of expanding taxation, customers have been demanding to speed up the decentralization of production bases. Therefore, the distribution of production capacity in non-China areas has become the main consideration for future expansion of factories.

The next day, a large shoe material company adopted a follow-up strategy after Baocheng, the leading shoe company, held a law Conference on the 22nd.
Vietnam set up factories to supply large shoe factories nearby
The picture was taken in Italy.

On May 23, Cai Weiqiang, general manager of Taiwan Oak Company, said at a press conference:

“Look at many of the world’s major shoemaking factories have been laid out in Vietnam, Taiwan Oak in Vietnam to build new shoemaking factories, looking forward to supplying customers near to reduce costs, but also decentralized production life insurance.”

Cai Weiqiang said that besides synthetic rubber, TPE advanced material business also has good performance. Except for Kaohsiung Gangshan factory’s production line, Vietnam has set up a shoe material factory to produce shoe material in Vietnam, which can supply customers nearby, save freight, and in addition to the growth of high-grade shoe material after years of deep cultivation. The production of shoe materials in Gangshan, Taiwan and Vietnam can also diversify risks.

He pointed out that Kaohsiung Gangshan Shoe Factory has an annual production capacity of about 5,000 tons and Vietnam’s designed production capacity of about 7,000 tons, which will be produced in the first half of next year.
The picture was taken in Italy.

He assessed that in terms of the current international market situation, the trend of synthetic rubber will continue to be weak in 2019, especially in China.

Tai Oak is facing a difficult challenge. This year, the focus of its operation strategy is to focus on improving the production capacity and quality of high-grade shoes and special chemicals, and to build a new high-quality thermoplastic rubber (SEBS) production line in Nantong and a new high-grade shoes material production line in Vietnam. These two capacity expansion projects are expected to meet the medium and long-term needs of Tai Oak. Periodic operation will make sustained contributions.
A large amount of foreign capital poured into Vietnam Market
Photo Source: Yue Tong News Agency

According to Yue Tong News Agency Hanoi on May 24:

Since the beginning of 2019, Vietnam has attracted nearly US$15 billion in foreign direct investment, an 81% increase over the same period last year. (China) Hong Kong has become Vietnam’s largest source of foreign investment, followed by Korea and Singapore.
According to data from the Ministry of Planning and Investment of Vietnam, there are 1082 new registered projects in the country, with registered funds reaching 5.34 billion US dollars, an increase of 50.4% over the same period last year.

Economists believe that the biggest change in investment activities since early 2019 is that Japan’s status as Vietnam’s largest source of investment has been replaced by China. Specifically, Hong Kong, China, has become Vietnam’s largest source of foreign investment, with a total investment of nearly US$5 billion, accounting for nearly 33% of the total foreign investment.
Labor Cost Advantage in Vietnam
Despite the rising tide, it is still far below the domestic level.

Picture of workshop of Vietnam Shoe Factory

According to Vietnam’s requirements, each foreigner needs to match nine Vietnamese local employees with foreign investment. The low labor cost is one of the main reasons for the shift of factories in the world.

At present, the average wage of workers in the park is about 2000 yuan. According to reports, at present, the per capita cost of workers is more than 2000 yuan, and with more and more foreign investment in Vietnam, the labor cost is also rising. Nevertheless, even if it exceeds 2000 yuan, Vietnam’s wages are still far lower than those in China.

In Vietnam, the cost of diet is not high, for example, the daily snack of Vietnamese French stick is less than 10 yuan. But compared with the average monthly wage of about 2,000 yuan, it is not easy for industrial workers to bear the rent in big cities with concentrated industries.

It is worth mentioning that the average age of Vietnamese population is less than 30 years old, and 70% of them are under 35 years old. With the continuous standardization of enterprise management in recent years, the working efficiency of workers has been greatly improved.

Some bosses also said that Vietnam’s young industrial workers are obviously less efficient than those in China, but it is also because of their young age and strong plasticity that enterprises need to invest more in standardized management costs and strengthen the training of employees.

Post time: Jun-11-2019
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