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The Impact of Covid 19 on Vietnam’s Apparel Industry
However, much big custom clothing production factories have faced many challenges under Covid-19. The following report is the Covid effect to Vietnam apparel industry.
First effect is that 2 million Vietnamese workers fled the factory and causes the labor shortage.
Under the continuous impact of the epidemic, Vietnamese factories are facing more and more workers (especially female workers) fleeing the city in horror. And with the recent relaxation of months-long travel restrictions that restricted workers in cramped housing, millions of people are preparing to join the returnees. The resulting labor shortage has further exacerbated the crisis in Vietnam’s factories and even the global supply chain.
Second effects are that many factories were punished for delayed delivery.
Vietnam’s “Saigon Economic Online” reported on October 9 that on October 8, the Vietnam Textile Association (VITAS) and the Vietnam Leather, Footwear and Handbag Association (LEFASO) jointly conducted an investigation on the Vietnamese textile, leather and footwear industries. Many textile and footwear companies participating in the survey said that this year’s delayed delivery will be punished by some brands, and new orders will be suspended or reduced by partners in 2022. After some companies negotiated with their partners to extend the delivery time, they had to switch to very expensive air transportation.
Third effect that the apparel companies face increased operating costs.
Up to 68.1% of companies said they were fined by the brand for delaying delivery; 12.2% of companies applied to cancel orders with their partners and had to pay contract liquidated damages; 21% of companies said they were cancelled by the brand, but they did not force them to compensate; 13.1 %The brand cancels the order that is preparing to sign the contract.
The survey results also show that due to workers returning to their hometowns to maintain social distancing time and severe labor shortages, textile and apparel, leather and footwear companies are bearing a heavy cost burden.
Among the companies participating in the survey, more than 40% said that the cost of fighting the epidemic accounts for about 20% of their company’s operating costs. Du Qiongzhi said that this is the reason why many companies cannot maintain “3 on-site” production.