Blog: Michelle RussellStrikes underscore Vietnam challenges

Michelle Russell | 13 April 2015

Strikes and protests are rare in Vietnam, but recent demonstrations by thousands of footwear factory workers underscore some of the challenges facing one of the industry's main manufacturing hubs. It also exposes a looming pension crisis and worker shortage in a country that many see as a key sourcing alternative to China.

The week long strike against a new social insurance law due to kick in next year involved up to 70,000 workers at Taiwanese-owned Pou Yuen, which makes footwear for major brands such as Nike, Adidas, Puma and Asics.

With regard to US apparel imports, Vietnam produced a surprise performance in February, with shipments slipping for the first time in more than two years. Shipments fell 1.5% to 222m SME - the country's first decline since September 2012, when it reported a 3.9% drop.

The multilateral Trans-Pacific Partnership (TPP) free trade pact has the potential to reshape the global apparel sourcing landscape, but after five years of talks it continues to face an uphill battle - and the role of China remains unclear.

While Mark Green, executive vice president for the global supply chain at PVH, told delegates at the recent Prime Source Forum in Hong Kong that he believes TPP will happen, William Marshall, a partner in the Hong Kong/China Taxation Practice Group at global law firm Baker & McKenzie, says it's hard to envision the regional trade pact without China.

Meanwhile, the living wage issue continues to rumble on. The Fair Wear Foundation (FWF) has launched a new Living Wage Portal to show brands and retailers the steps they can start taking to move from paying minimum wages to living wages to the workers in the factories making their clothes.

FWF's solution is aimed at taking talks to the next level. Its new online Living Wage Portal has been set up to encourage industry-wide debate on the challenge of paying living wages to apparel workers, along with examples of the work being done by some of its member companies.

One apparel company that claims to be seeing "positive developments on many fronts" in its work towards fair living wages in its supply chain is Swedish retailer H&M. Its progress, however, has been criticised by labour rights groups who are calling for evidence to back up its claims.

The company last week published its 2014 sustainability report, in which it revealed it is adding fabric and yarn mills to its publicly published supplier factory list, in a further bid to increase supply chain transparency.

In other news, Wal-Mart has set out plans to improve sales and market share, including more competitive apparel prices, better assortments, and "systematic" sourcing; VF Corp has formed a strategic partnership with nanofibre solutions company FibeRio Technology to develop performance apparel fabrics using nanotechnology; garment factory owners in Cambodia have rejected claims they are violating workers' rights by pursuing legal action against union leaders; and the first lawsuit was filed under China's new environmental law.

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