The Coronavirus (COVID 19) outbreak is wreaking havoc on Southeast Asia’s garment supply chain. Transport and supply chain disruptions in China are spilling over into Southeast Asia. Uniqlo’s shipments from Vietname suppliers have been delayed by about two weeks. Uniqlo has already pushed back the launch of some new product lines. Garment makers in Vietnam, Cambodia and Myanmar still depend on China, Asia's biggest economy, for raw materials – 60 per cent of the materials used for Vietnam’s sewn products, for example, come from China. More than 60 per cent of raw materials for Cambodia’s apparel industry come from China. These garment makers have become increasingly important to global fashion brands. May 10, a supplier for brands such as Gap and Tommy Hilfiger, imports 50 per cent of raw materials from China and is facing difficulties meeting March and April orders. Saigon 3 Garment, which produces for Uniqlo and Nike, has only enough materials for production until March.
Textile production is more capital intensive than sewing, and China remains dominant in material production even as brands diversify their manufacturing bases. Factories in China are operating at a reduced rate due to staff shortages caused by restrictions on movement of people.
The impact of the virus will likely have a legacy on how companies source in future. Having yarn/fabric/product finishing all done domestically will reduce future risks to global supply of materials.