US footwear maker to move China production to Vietnam this year

By Dat Nguyen May 4, 2019 | 01:28 am PT

Jim Weber, CEO of Brooks Running, said that the shoe company is in the process of moving some of its production out of China. Photo by Reuters

Brooks Running will shift the majority of its shoes production from China to Vietnam this year to avoid trade war tariffs.

The U.S company's CEO Jim Weber said Friday that his company took the decision in January when U.S. President Donald Trump was threatening to boost shoes tariffs from 20 percent to 45 percent.

"We’re going to pull most of our production out of China," he said. "We’ve had to make a long-term decision on this picture. It’s disruptive, but the reality. So we’ll be predominantly in Vietnam by the end of the year," he told Reuters.

About 8,000 jobs will also move from China to Vietnam, he added.

Vietnam currently generates about 55 percent of Brooks’ running shoe production, while China accounts for the rest. The transition will raise Book’s shoes production in Vietnam to 65 percent and lower that in China to only 10 percent, with the remaining 25 percent produced in a third country.

Brooks sells sports footwear, apparel, bras and accessories in over 50 countries. The company is part of Warren Buffett’s Berkshire Hathaway Inc.

Since last year, Vietnam has become a preferred destination for companies looking to shift production from China due to the ongoing trade war.

The two countries are still in negotiations, with talks to continue in Washington next week.

Adidas CEO Kasper Rorsted said last May that his company was shifting footwear sourcing from China to Vietnam.

Apple’s suppliers have also made moves into Vietnam. Taiwanese iPhone assembler Foxconn has acquired the right to use property in an industrial park in northern Vietnam, while Chinese GoerTek last year asked all suppliers involved in its AirPod production to ship all necessary materials to Vietnam.

Samsung last December closed one of two phone factories in China to focus more on low-cost countries like Vietnam and India for production.

A report by recruitment firm Navigos Group released last month said that companies shifting productions from China to Vietnam plan to double or triple their number of employees by the end of the year.

Vietnam’s footwear exports in the first quarter reached $3.9 billion, up 14.1 percent year-on-year, according to Vietnam Customs. The E.U. was the largest market, followed by the U.S. They account for 63 percent of Vietnam’s total footwear exports.