Nike supplier halts production at 3 factories in Vietnam due to COVID-19

Nike shoes are on display at a sporting goods store in New York, New York, United States, May 14, 2019. REUTERS / Mike Segar

HANOI, July 15 (Reuters) – Changshin Vietnam, a South Korean shoemaker, on Thursday became the second major supplier to Nike (NKE.N) to suspend production in Vietnam by closing three of its factories near Ho Chi Minh City due to a coronavirus outbreak.

Factories in Dong Nai province, which employ nearly 42,000 workers, will remain closed until July 20, the Vietnamese government said in a statement, adding that many of the 177 cases of infection detected in the province were from factories.

Nike did not respond to Reuters’ request for comment after hours in the United States, while calls to Changshin went unanswered.

Taiwanese company Pou Chen Corp (9904.TW), which makes shoes for Nike Adidas (ADSGn.DE), suspended operations at its factory in Ho Chi Minh City on Wednesday. The plant will be closed until July 23 for “health and safety considerations,” the company said, adding that it did not expect a major financial impact.

Vietnam had until recently been successful in containing outbreaks of the coronavirus, with limited disruption to its crucial manufacturing sector. However, since the end of April, it has had record cases for several days this month, most of them in the Ho Chi Minh City shopping center and its neighboring industrial provinces of Dong Nai and Binh Duong.

The country has recorded 38,200 infections and 138 deaths in total, a large majority since May.

Almost all Nike shoes are made outside of the United States. The company said contract factories in Vietnam produced around 50% of total Nike-branded footwear in fiscal 2020, but did not specify the volumes from Changshin or Pou Chen.

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“Shutting down factories for a week or two for Nike is going to pose a major problem for its supply chain,” said Shaun Rein, analyst with China Market Research Group, adding that the shutdown would cause prices to rise.

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Eclat Textile Co, a Taiwan-based clothing and fabrics supplier, has suspended production at its Dong Nai factory 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

Our Standards: Thomson Reuters Trust Principles.

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