From China to Vietnam : Nike ' s transform ation of manufact uring base
When a modern Chinese consumer cho oses a sne aker at a Nike store , they are likely to pick up a " M ade in Vietnam " product . Prior to 2010, China was the largest producer , with an over wh el ming share in Nike ' s foot wear production . However , more than 50% of Nike shoes are made in Vietnam . This dram atic change is an ep it ome of the global supply chain restruct uring of the past dec ade .
Three factors behind the production shift
The relo cation of this large production base is main ly influ enced by the following factors :
- Inc re ase in staff costs: With China ' s economic growth , labor costs sky ro cket , and labor - inten sive industries become less compet itive
- Chang es in the trade environment: The impact of US - China trade fri ctions has increased the need to diversi fy the risk of China depend ence
- In fr astru cture Development in Vietnam: Prog ress in the development of industrial par ks and improv ement of log istics network for gar ment industry
So uthe ast Asia Shi ft to Follow Ad idas
Ad idas , another company in the industry , has shown a similar move , shift ing its main production base to So uthe ast Asia . Produc tion ex pansion is particularly notice able in Cambodia and Indonesia , where these emer ging producers have a rich young er work force and minimum wag es are about one - th ird to one - hal f compet itive with China .
Grow th and Chall enges of the Vietnam ese Gar ment Industry
Vietnam ' s gar ment industry has experienced le ap ing growth in the past dec ade . Taiwan ese and South Korean companies , major supp liers of Nike , have built large - s cale fact ories to build a production capacity of hundreds of millions of feet per year . At the same time , however , challenges such as a sh orta ge of skil led workers and un sta ble electric ity supp lies are also sur fa cing , and further infrastructure investment is essential for sustainable growth going forward .
China ' s changing role : from quant ity to quality
China has not completely with dra wn from the production of sports goods . Even today , China pla ys an important role as a production base for high value - add ed products and technology - inten sive items . In particular , we have demonstrat ed China ' s strength s in the development and production of sole components and special materials that require advanced technology , and we have mainta ined our role as a supply base for parts to Vietnam ese fact ories .
Look ing forward to global supply chain
After the coronavirus dis aster and ge opoli tical risks , multin ational companies including Nike are likely to further promote the " China Plus One " strategy . In addition to Vietnam , we expect diversi fied invest ments in new potential production loc ations such as Bangladesh and India . On the other hand , it is also un denia ble that with the advan cement of autom ation technology , the sele ction criteria for production sites may change rad ically from " labor cost " to " tech ni cal strength " in the near future .