Vietnam taking over as world sneaker king

For American manufacturers, it is hard to quit China and its unrivalled factories. But one industry is defying that reality as it shifts more production to Vietnam, write Alexandra Stevenson and Tung Ngo from Ho Chi Minh City

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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.

For the business world, quitting China is hard to do, with its hold on raw materials and its factory prowess that has powered profits and kept consumers happy. The sneaker industry is showing how it can be done. 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. After President Trump threatened Vietnam with a 46% tariff, the stock prices of Nike and Adidas came crashing down. The two countries have since announced an initial trade pact that lowered the new tariffs to 20%.

The uncertainty that Trump's tariffs have caused over costs is forcing a reckoning in the industry. Nike said global tariffs would lead to around $1 billion in extra costs this year. To blunt the impact, it is scaling down production further in China, where tariffs are now higher than they are in Vietnam. But some companies, worried about being too dependent on any one country, are also debating whether to move work out of Vietnam.

THE OPENING OF VIETNAM