Even as Donald Trump’s tariffs & tweets become a daily feature of our lives, the world in general and Asia in particular continues to evolve. In particular, Trump’s tariffs are leading to a realignment of trade flows within Asia. For India the speed with which these trade flows are moving is an object lesson in why we need less red tape and more entrepreneurial verve to survive in the Trumpian world. Alexandra Stevenson and Tung Ngo report for the NYT:
“China is the world’s factory for cars, toys and computers. But not sneakers. China is losing that title to Vietnam’s Ho Chi Minh City. Factories that ring the fast-paced city churn out foam soles, squishy insoles, cotton laces and mesh fabric. The parts are ferried by trucks to warehouses to be assembled into shoes. Then at nearby ports, shipping containers are stuffed with boxes for Nike, Adidas, Saucony and Brooks Sports and sent down the Dong Nai River to the sea..
Big brands still have huge factories in China that now mostly make shoes that are sold in China. But Vietnam has overtaken China as the No. 1 source of sneakers sold to the world by Nike, Adidas and Brooks and others.
The emerging centrality of Vietnam to the business of making sneakers hit home on April 3.”
Vietnam secured its place as the best place to make sneakers in the decade prior to the second Trump Presidency:
“Vietnam offered…a growing population of young people looking for work. By the time of Trump’s first presidency in 2017, factories in Vietnam were grinding out running shoes, even as brands deepened their presence in China for the local consumer market. After Trump confronted China on trade in 2018, other multinational companies across industries followed the footwear industry into Vietnam.
For the most part, though, sneaker companies were still reliant on China for raw materials and components including rubber and insoles.
Everything changed in 2020, when China shut its borders near the start of the COVID-19 outbreak. Business leaders with factories that were shut down realized how dependent they were on China. It was not a difficult choice for shoe executives to start shifting resources into Vietnam…
The initial trade deal between Vietnam and the United States that was announced in July has left many questions unanswered. One of the biggest questions involves goods that are transshipped. The Trump administration wants to slow the flow of goods onto U.S. shores that start in China and pass through countries like Vietnam. It said it would impose a 40% tariff on such imports but has not said how it would define what qualifies.
Shoe production in Vietnam has “very little reliance on China,” said Jim Salzano, CEO of Jones & Vining….”
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