Nike supplier quits Vietnam after quitting China - finding tariffs inescapable
NIKE sportswear supplier Eclat Textile of Taiwan quit China in 2016 having found it unsuitable for manufacturing, but now finds his new base in Vietnam equally bad because of the Sino-American trade war
17 July 2019 - 19:00
With the US hardening its attitude towards Vietnam, calling it the biggest trade abuser and slapping higher import duties on steel, firms are realising that no nation is tariff-proof.
'Judging from the global situation, the most important thing now is diversification,' said Eclat Textile chairman Hung Cheng-hai.
'Clients also want us to diversify risks and don't want production bases to be in one country. Now 50 per cent of our garments are made in Vietnam, so we are not diversified enough,' he told Bloomberg News.
Heightened trade tensions between the US and China have disrupted global supply lines, forcing companies to pivot production into other countries such as Taiwan, Vietnam and Bangladesh.
Eclat is now looking to set up multiple, smaller regional manufacturing hubs that can be nimble in servicing clients. The textile maker won't consider adding plants or expanding in Vietnam in the next three years, Mr Hung said.
The company instead will invest in new facilities in Southeast Asian nations such as Indonesia or Cambodia. It expects to invest US$80 million in setting up 120 production lines in the region, with the board deciding specific locations later this year.
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