Saturday, 17 May 2014

Dispute in South China Sea Impacts Footwear Industry

One of the possible problems that can arise when importing goods is the volatility of the country in which those goods are produced. Of course, sometimes the shake-up can be quite unexpected, such as a natural disaster, while other times it may have been brewing for some time.
In the case of the most recent events in Vietnam, it appears to be the latter.
WWD is reporting that footwear factories within Vietnam have stopped all operations due to anti-China protesters.

"From our perspective, this is something that has been a concern for quite some time," noted Matt Priest, president of the Footwear Distributors & Retailers of America (FDRA), to WWD.
The cause appears to stem from Vietnamese rioters targeting foreign-owned factories due to the disagreements in regards to the South China Sea.

To provide a little more context, Reuters pointed out that "China claims almost the entire South China Sea, rejecting rival claims to parts of it from Vietnam, the Philippines, Taiwan, Malaysia and Brunei."
Looking at the big picture, we have protesters, we have factories that are shut down and we have maritime disputes. Now, how does this effect us?

Well, as WWD noted, some big-named footwear players have had to shutdown factories.
Puma confirmed the company closed its factories in the country on Thursday. Yue Yuen Industrial, who is the Hong Kong supplier of athletic shoes for Nike Inc. and Adidas AG, confirmed they too closed down their factories in Vietnam.

Here's an important fact to keep in mind as well. Nearly 95 percent of the footwear that is shipped to the U.S. goes through the South China Sea.

What else could happen due to these disputes with China? Priest spoke to WWD on that topic.
"This could quite possibly disrupt companies' ability to get product to market, clog shipping lanes and halt port activity, impacting the 2.3 billion pairs of shoes shipped to the U.S. each year."

Even though many within the industry may have been keeping an eye on this situation, Priest does point out that the situation seems to have escalated far faster than anticipated.
"We went from the skirmishes possibly impacting the movement of goods to the direct impact of having footwear factories shut down because of the skirmishes."
http://www.fashiontimes.com/articles/7129/20140517/dispute-south-china-sea-impacts-footwear-industry.htm

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