Focus | cut off supply! Stop production! The average daily closure of 400 enterprises! Press the pause button here

Vietnam is an important part of the global industrial chain and supply chain. However, the continued spread of COVID-19 has a serious impact on the local manufacturing industry. In order to recover its economy as soon as possible, Vietnam lifted the city closure measures in Ho Chi Minh City and its surrounding areas with developed manufacturing industry earlier this month, but a large number of workers took this opportunity to flee the city. At some checkpoints, workers even knelt down and asked for release.

Vietnam: the epidemic has not disappeared, the "sick" has been unsealed, and millions of migrant workers have fled the city

A large number of Vietnamese migrant workers who did not have time to do the new crown screening were blocked at the checkpoint on their way home. They did not hesitate to kneel down and ask the epidemic prevention department for permission. Since the beginning of this month, a large number of motorcycles from Vietnam's southern industrial zone have poured into the western region, causing congestion in many places.

According to the statistics of the Ministry of health of Vietnam, more than 1000 of the 157000 people who returned home from October 1 to 8 showed positive results. The Vietnamese government estimates that the number of people returning home may exceed 2 million.

Hundreds of employees fled because only one person was diagnosed, and the shadow of the epidemic shrouded the production line

In fact, the fear of Xinguan has been accompanied by the workers on the production line. In July this year, hundreds of employees forcibly fled from a factory in Pingyang Province, Vietnam, only because one employee in the factory was diagnosed as Xinguan that day.

In the past three months, Vietnam has added a total of nearly 770000 confirmed cases, of which 19000 people have died due to Xinguan, and the deaths are basically concentrated in Ho Chi Minh City with developed manufacturing industry.

The government had no choice but to unseal and the workers took the opportunity to flee

As many international enterprises have production lines in Vietnam, a large number of multinational enterprises have stopped production due to the epidemic in recent months, resulting in heavy losses. Under pressure from all parties, the Vietnamese government chose to unseal with illness, but it backfired. Workers took the opportunity to flee the city one after another. On October 3, a manufacturing enterprise in Pingyang province of Vietnam responded to the call to resume work and production, but the on-the-job rate of employees was less than 20%.

One third of textile workers leave their posts and production is difficult to recover

On October 6, the global footwear giant Baocheng group announced the resumption of production, but the number of on-the-job workers was no more than 30%, and more than 40000 workers had not returned to their posts. Despite the salary increase and persuasion scheme, employees' willingness to return to work is still not high. According to statistics, there are about 3 million workers in Vietnam's textile and garment industry, of which about 1 million are currently leaving or on vacation.

Pan Jine, an expert on Vietnam of the Chinese Academy of Social Sciences: in the three months from July to September, almost all factories in the South were shut down. Under this background, of course, its economy is obviously going to decline, because Vietnam's dependence on foreign trade has reached more than 200%.

Vietnam's economic performance was the worst in 35 years

According to the data, from July to September 2021, the country's gross domestic product (GDP) shrank by 6.17% year-on-year, the largest quarterly decline in 35 years. Data show that in the first half of 2021, more than 70000 enterprises in Vietnam closed down, with a year-on-year increase of nearly 25%, with an average of about 400 enterprises falling down every day.

Cut off the supply! Vietnam's processing plant stopped production and hundreds of millions of pairs of Nike shoes could not be delivered

The impact of the epidemic on Vietnamese enterprises is affecting more and more links in the industrial chain. Many internationally renowned large companies have suffered heavy losses. Apple mobile phones and Nike shoes are facing the risk of supply interruption. In European and American countries, even the upcoming Halloween is facing the embarrassment of "no ghosts to play".

Affected by the epidemic in Vietnam, nike shoes will face the risk of supply interruption in the United States.

Camilo Lyon, senior analyst of btig in the United States: Nike currently has about 116 million pairs of shoes that can not be produced.

Vietnam is an important production base of Nike, and 51% of its footwear products are processed in Vietnam. Due to the strict local epidemic prevention measures, the Nike factory in Vietnam was basically closed from July to September.

It is estimated that Nike's current commodity inventory in the United States has reached the lowest record in 30 years, and can only maintain sales for about one month. The data show that the products made in Vietnam account for about 1 / 3 of the U.S. footwear manufacturing industry and 1 / 5 of the U.S. garment manufacturing industry.

Also trapped by the epidemic is Adidas, a German clothing giant, which has lost about $600 million due to the delay of delivery at the agent factory. In the whole European and American region, the most "terrible" thing about the upcoming Halloween is that you may not be able to buy costumes that play tricks, because related products are difficult to produce in Vietnamese factories.

In mid August, more than 80 shoe and clothing enterprises such as Nike and gap wrote to US President Biden, saying that "the soundness of Vietnam's shoe and clothing industry directly affects the soundness of the US industry."

Pan Jin'e, an expert on Vietnam of the Chinese Academy of Social Sciences: in the area of clothing, Vietnam's export volume is still large. The shutdown will have a great impact on the supply of clothing, shoes, hats and electronic products in Europe and America.

The plant shutdown also affected technology enterprises in Vietnam. The camera modules of four models of iPhone 13 are assembled in Vietnam, and the lack of parts supply has significantly affected the product supply. At present, the waiting time for some iPhone 13pro models in the United States is four weeks, while the waiting time in China and Japan will be as long as five weeks.

Not only apple, but Samsung also had a hard time in Vietnam. The three major factories were forced to shut down. Samsung lost about $15 million, or about 100 million yuan, every day.

Earlier, the US giant Intel also planned to invest a huge additional US $475 million, or about 3.06 billion yuan, in Vietnam. Finally, the plan also pressed the pause button due to the impact of the epidemic.

Poor response to the epidemic affected investment sentiment, and "made in Vietnam" suffered a heavy blow

Disturbed by the epidemic, not only foreign-funded enterprises that set up factories locally, but also Vietnam's ambition to develop manufacturing industry. Can Vietnam's manufacturing industry recover under the severe challenge of the epidemic?

Vietnam's "powerlessness" in the face of the epidemic has seriously affected the psychological mood of investors. Data show that in August, the investment in Ho Chi Minh City, Vietnam decreased by 43.6% compared with the same period last year.

Some multinational enterprises began to stop the process of moving factories to Vietnam, and a large number of production orders are also transferring to other countries. Recently, a group of new executives of American protective clothing manufacturer Lakeland industries took office. Their main task is to help enterprises transfer production capacity from Vietnam to China in a few weeks.

Charles Robertson, CEO of American Lakeland industries: this will help Lakeland industries transfer production capacity from Vietnam to China in a few weeks with optimized costs and tariffs.

Coincidentally, lovesac, an American furniture manufacturing company, recently began to move production from Vietnam to China.

Recently, the four major chambers of Commerce representing European, American and Korean investors jointly wrote to the Vietnamese Prime Minister, saying that at least one fifth of manufacturing enterprises have transferred some production to other countries.

Song Hua, Professor of Business School of Renmin University of China: Vietnam has become a destination for many western countries in the process of further adjustment and transfer of global supply chain in recent years. Many multinational companies readjust their status in Vietnam's industrial chain. Many orders returned to other regions to cope with the peak sales in the west before the end of the year.

Recently, enterprises across Vietnam are resuming production in accordance with the "three local" principle required by the government, that is, local production, local dining and local accommodation, so as to avoid external contact. However, because Vietnam is mostly labor-intensive enterprises, only about 30% of enterprises are qualified to adopt this high-cost employment method. This means that for a factory with 2500 employees, the average monthly accommodation and pick-up cost of each employee is about 48 million Vietnamese Dong, about 13600 yuan. The average monthly wage of Vietnamese workers is only 1500-2000 yuan. The labor cost is 7.8 times higher than before.

Pan Jin'e, an expert on Vietnam of the Chinese Academy of Social Sciences: in terms of processing and manufacturing industry, Vietnam accounts for an increasing proportion, but I think it is limited in terms of affecting global industries and markets. Its entire market scale, capacity and production capacity can not be reached. Vietnam can become some links in the global production chain. Only when the whole Southeast Asia cooperates can it become a "world factory".

Source: CCTV Finance

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