Where are Adidas’ Factories Located in Vietnam?

Vietnam is a manufacturing powerhouse when it comes to producing sportswear, sports equipment, and footwear for Adidas. Here’s where Adidas’ factories are in Vietnam and why they’re there.

In 2021, roughly 40 percent of Adidas footwear was produced in Vietnam. This follows a big shift over the past decade, with Adidas moving more of its supply chain out of China and south to Vietnam.

This is part of a broader trend in the garment and apparel manufacturing sector as wages in China rise and companies look for new low-wage workforces to produce their goods.

Not only that, but trade tensions between China and key export markets like the US, and supply chain disruptions as a result of COVID-19 border restrictions, have also provided impetus for sportswear companies to diversify their supply chains.

As an early mover, how Adidas has structured its supply chain in Vietnam can provide vital insights into infrastructure, labor availability, and location selection for sportswear companies looking to establish manufacturing operations in Vietnam.

So where are Adidas’ contract factories in Vietnam and why have these locations been selected?

What does Adidas manufacture in Vietnam?

Adidas manufactures apparel, footwear, and accessories in Vietnam.

In 2022, Adidas had seven factories manufacturing accessories and employing 15,552 people. It had 24 factories producing apparel and employing 63,513 people and it had 21 factories producing footwear with 114,233 workers.

On a side note, as the official sponsor of the 2022 World Cup, Adidas also listed several key suppliers in Vietnam among factories producing sports equipment, apparel, and footwear for the world’s biggest sporting event.

See also: No World Cup for Vietnam but Still Key Player in World Football Market

Where is Adidas manufacturing in Vietnam?

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As of July 2022, Adidas had 51 primary suppliers in Vietnam employing just over 190,000 Vietnamese workers. These factories were primarily concentrated in the south in the manufacturing hubs of Ho Chi Minh City, Binh Duong, and Dong Nai.

Adidas primary suppliers in Vietnam by province, region

Source: Adidas 2022 Global Factory List

Why does Adidas manufacture in southern Vietnam?

Vietnam’s biggest port system

Ho Chi Minh City’s port system is vast. In 2019, the Port of Saigon ranked number 26 among the biggest ports in the world. It was number five in the ASEAN region.

Cai Mep-Thi Vai Port, around 80 kilometers to the south of Ho Chi Minh City, also helps to move goods into and out of Vietnam. As a deep water port it allows bigger ships to dock which means greater volumes of goods can be shipped more easily. This can significantly reduce shipping costs.

The Cai Mep-Thi Vai Port, in Ba Ria-Vung Tau province, borders both Dong Nai and HCMC, the two provinces with the most Adidas suppliers in Vietnam.

Collectively, ports in and around HCMC account for around 67 percent of Vietnam’s seaport throughput.

See also: Port Infrastructure in Vietnam: 3 Regional Hubs for Importers and Exporters

Experienced, low-cost labor

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As a textile and garment manufacturing hub, southern Vietnam, has developed a relatively high-skilled workforce in the manufacture of garments and textiles. This labor is also low-cost providing vast benefits to companies making garments in the Southeast Asian nation.

Vietnam’s biggest population center, Ho Chi Minh City, is also located in Vietnam’s south. Ho Chi Minh City had a population just shy of nine million people in 2019 according to the General Office of Statistics. Workers are, therefore, relatively easy to come by.

See also: Salary and Wages in Vietnam

Adidas-Vietnam partnership to continue

Adidas has been steadily diversifying its supply chain out of China for over a decade. This strategy has seen Vietnam become a sportswear manufacturing powerhouse.

This has been mutually beneficial to both Adidas and Vietnam – with Adidas benefitting from a lower bottom line and Vietnam benefitting from huge foreign direct investment in-flows.

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And this is expected to continue. In October, the Prime Minister of Vietnam, Pham Minh Chinh, met with the head of Adidas CEO, Kasper Rorsted, to discuss Adidas’ expansion plans in the country, according to state media.

This suggests that, although recent economic turmoil has seen growth in Vietnam’s manufacturing sector slow down, over the long term, it still offers promise for big brands like Adidas.

For more information about garment and textile manufacturing in Vietnam and the benefits Vietnam may provide, contact the business intelligence team at Dezan Shira and Associates.

A complete list of Adidas primary suppliers as of July 2022

Source: Adidas 2022 Global Factory List

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