Due to stronger US regulations prohibiting imports from China’s Xinjiang, the strain on Vietnam’s garment and footwear makers is growing, said the media report.
According to the reports, the sector has already lost almost 90,000 jobs since October in the world manufacturing hub as demand decreased.
According to a study by Reuters, the Uyghur Forced Labour Protection Act (UFLPA) has had the greatest negative impact on Vietnam among garment exporters. The regulation, which has been in effect since June, requires businesses to prove that they do not use raw materials or components created with Xinjiang’s forced labor.
The US crackdown hurts since it comes on top of a decline in apparel demand from wealthier countries, which has already affected Southeast Asian manufacturing output and exports from the region, a major supplier to well-known brands like Gap, Nike, and Adidas.
According to US customs data up to April 3, more than 80 per cent of the $15 million worth of apparel and footwear shipments held up for UFLPA checks were from Vietnam, and only 13% of its cargoes were cleared for entrance.
Although many American importers remain sanguine, their supply chains may still be affected because, according to the nation’s industry association, about half of China’s input materials are used by Vietnam’s apparel manufacturers.
Given that the sanctions have grown dramatically in the early months of this year, the value of shipments from Vietnam that have been barred from entering the United States exceeded $2 million, which is three times that of exports from China.
Weaker demand has caused the country’s second-largest employer after agriculture, the manufacturing sector, to shed nearly 3% of its 3.4 million workers since October. This has slowed growth and led to a drop in exports of 11.9% and a decrease in output of 2.3% in the first quarter of this year compared to the same period last year.
Approximately one out of every three pairs of shoes that Nike and Adidas sell worldwide, as well as 26% and 17% of their apparel, are made in Vietnam.
Nevertheless, despite Vietnam continuing to be its primary manufacturing hub, Nike has significantly decreased its apparel and footwear production there, according to its most recent annual report, which was updated to May 2022.