Vietnam's 'Corona Shutdown' Halts Garment Factories... Winter Clothing Prices to Rise by 10%

'World's Largest Apparel Production Base' Factory Operating Rate Falls Below 30%
Fashion Companies Struggle with Supply... Diversifying Production to Neighboring Countries

The photo is not related to the article content.

[Asia Economy Reporter Seungjin Lee] The year-end shopping chaos is expected due to the resurgence of COVID-19 in Vietnam, the world's largest clothing production base. With local factory operating rates remaining below 30% for several months, numerous fashion companies are facing difficulties in securing winter products, leading to a significant rise in winter clothing prices.

Winter Clothing Prices to Rise by More Than 10%

According to the fashion industry on the 8th, clothing products this winter are expected to increase in price by at least 10% compared to last year. The rapid decline in operating rates of overseas production factories due to COVID-19 caused production bases to move domestically, sharply increasing production costs.

Fashion brand A plans to raise the prices of knit products by around 10-15% this winter. Knit long-sleeve products that sold for around 150,000 won last year will be sold for about 180,000 won this year. Although prices increased by more than 30,000 won, profit margins have decreased compared to last year. This is due to shifting production from Vietnam to domestic manufacturing.

The operating rate of A's product manufacturing factory located in Ho Chi Minh City, Vietnam, has been below 30% for four consecutive months. This is because factory shutdowns have been repeated due to COVID-19. As the operating rate sharply dropped during the peak winter season production period, A hastily began domestic production, but labor costs, which are nearly five times higher, became a burden.

An A company official explained, "Due to the nature of clothing products that inevitably require human labor, labor costs are an absolute factor in product prices," adding, "We tried to endure somehow, but without raising prices, the structure became such that selling products would only lead to losses, so we had no choice."

Small and medium-sized domestic fashion companies, highly dependent on Vietnam, are experiencing similar situations as A but have no alternatives. A fashion industry insider said, "Considering labor costs and sewing skills, Myanmar was the only alternative to Vietnam, but the recent military coup makes it difficult, and India is facing a more severe COVID-19 situation than Vietnam," adding, "They have no choice but to respond to sales declines caused by supply disruptions by raising product prices."

Police are dismantling barricades set up in lockdown areas to prevent COVID-19 in Vung Tau, near Ho Chi Minh City, Vietnam's largest city, on the 30th of last month (local time). [Image source=Yonhap News]

Fashion Industry Leaving Vietnam

Domestic and international fashion companies are rushing to relocate their production bases. LF has increased domestic production proportions and advanced the production of winter season products. Samsung C&T is reducing its production base share in Vietnam and diversifying into neighboring countries such as Indonesia and Cambodia. Kolon FnC is also partially relocating production to countries other than Vietnam.

Overseas fashion companies are facing similar situations. Nike announced that after shutting down its Vietnam factories and halting shoe production for 10 weeks, it will move factories to neighboring regions such as China to produce shoes and clothing. Crocs also announced plans last month to relocate its Vietnam factories to India and Indonesia.

This content was produced with the assistance of AI translation services.