HANOI: Pou Chen Corp, the world’s largest contract shoemaker, which supplies Nike, Adidas and other major brands, is moving a large portion of its operations from China to Vietnam to take advantage of its lower labor costs and more favorable tariffs.
Pou Chen made 42% of its shoes in Vietnam as of the end of September, up from 34% in 2013 and 39% in 2014. The company, based in the central Taiwanese city of Taichung, now ships more than 300 million pairs of shoes annually, with footwear and apparel accounting for 75% of the company’s revenue.
Company spokesman Amos Ho said the company has been gradually moving its manufacturing bases to Vietnam since 2012, due to rising wage and employee benefit costs in China. “We consider economic and political conditions in Vietnam to be stable,” Ho said.
Pou Chen faced unprecedented challenges in 2014, when its Hong Kong-listed subsidiary Yue Yuen Industrial Holdings, which runs the group’s manufacturing operations, was hit by strikes by thousands of workers in the southern Chinese city of Dongguan.
Workers demanded better benefits after they found out the shoemaker has been underpaying on its social insurance contributions for years, a common practice among companies in China. Eventually Yue Yuen was forced to pay $90 million to settle the dispute, which hurt Pou Chen’s bottom line last year.
