Nike Inc, a leading sportswear and equipment producer based in the United States, reaffirmed that Vietnam is its extremely important production base.
This remark was made by Mr Nick Athanasakos, Vice President in charge of Global Supply Chain, during his visit to Vietnam last week. He held a meeting with Vietnamese Planning and Investment Minister Bui Quang Vinh.
Nick Athanasakos said Nike exports some 158 million pairs of shoes labelled Nike and Converse each year from Vietnam. “Approximately a half of footwear exports of Vietnam are Nike. The group’s export value to the United States alone accounts for more than US$2 billion a year,” he said, adding that the group’s products are manufactured by 40 factories in Vietnam which are now employing some 300,000 Vietnamese workers.
These figures show the huge influence of the leading US-based sportswear producer on the Vietnamese leather and footwear industry in particular and Vietnam’s export development in general. In return, Vietnam is a first-choice production base for many world-leading corporations.
In July 2011, Vietnamese media quoted a Chinese media source as saying that Vietnam had overtaken China to become the largest manufacturer for Nike sportswear in the world. According to the Chinese newspaper, in 2000, China was the largest contract manufacturer of Nike in the world, with 40 percent of the group’s output, compared with just 13 percent in Vietnam.
In 2005, Vietnam climbed to second position with 26 percent of the group’s output, only after China with 36 percent. In 2009, Vietnam and China shared the top place with the same 36 percent of the group’s output. However, in 2010, Vietnam made up to 37 percent of Nike products, compared with 34 percent by China.
A lot of reasons have been cited for why Nike chose Vietnam, and labour costs play a very important role. However, Mr Nick Athanasakos, pointed out that Nike is pinning high hopes on Vietnam when the Southeast Asian nation joins negotiations on the Trans-Pacific Strategic Economic Partnership Agreement (TPP) and Vietnam - EU Free Trade Agreement (FTA ).
“TPP is very important to Vietnam. We hope that Vietnam can successfully negotiate this agreement. The EU is an important market not only for Vietnam, but also for Nike Inc. Vietnam’s footwear and apparels will enjoy more favourable conditions when exported to this market,” he affirmed.
Interestingly, Nike does not invest in production facilities, but hires local contractors. Indeed, many wonder how much added value in offshore outsourcing contracts Vietnam gets while most input materials for apparel and footwear production are imported.
Mr Athanasakos said Nike Inc is striving to localise input materials to reduce production costs. “When first setting foot in Vietnam, Nike had to import up to 98 percent of input materials for shoe production, but that rate has since dropped to 56 percent. In the future, locally made inputs will completely replace imported ones,” he noted.
Regarding this issue, Minister Bui Quang Vinh added that Vietnam will reduce the licensing of import-reliant outsourcing projects in the coming time because they do not generate very much added value.
Besides, Vietnam will continue developing supporting industries to ensure the sufficient supply of input materials. “We will provide the best support for Nike’s investment plans in Vietnam,” said Minister Bui Quang Vinh.
D.T
Vietnamese
