Nike may be facing severe disruptions to its sneaker supply chain as two of its key manufacturers in Vietnam have halted production due to a new wave of coronavirus infections, reports CNBC.
Vietnam has long been instrumental to Nike’s sneaker production, with the footwear giant increasing output throughout the past years. Currently nearly half of its shoes are made in Vietnam, with Indonesia accounting for just under 25 percent of production.
Chang Shin Vietnam Co. Ltd. and Pou Chen Corp. both stopped manufacturing according to Reuters as Southeast Asia continues to battle against a raging pandemic.
Research released by Panjiva, a division of S&P Global Market Intelligence, shows Vietnam accounted for 49 percent of U.S. seaborne imports linked to Nike and its products in the second quarter of 2021 after growth of 6.6 percent year over year.
The longer the factories remain closed, the more contentious the effects on the footwear and fashion market will be, which could also affect other brands producing in the region, including Wolverine and Puma.
Nike's imports from Vietnam are led by footwear, which was included in 82 percent of shipments in the 12 months to June 30 after climbing 28.8 percent in the second quarter of 2021 versus a year earlier, according to data from S&P.