Adidas Terminates Contract Production Lines Of 10 Foundries And Transfers Them To Southeast Asia

After the closure of the factory in China, clothing The fate of giant Adidas in China is still unclear. One wave has not ended, and another wave has started. A few days ago, 10 OEM factories that used to provide services for Adidas said they had received the notice that they would terminate the OEM contract. "We are optimizing the global procurement structure, and a total of ten supplier partners have received legal notice about our termination of the contract." When interviewed by the reporter, the relevant head of the adidas Public Relations Department said that this behavior would not have an impact on the total production of adidas in China.

Nevertheless, the notice still caused collective panic among the agents. One of the agents told reporters that they had found a lawyer and Adidas communicate. This has brought endless troubles to Adidas. When China's "world factory" aura gradually retreats due to rising labor costs, adidas's "OEM vortex" is bound to not become an isolated case.

　 The contract is referred to as "overlord clause"

Before terminating the cooperation with the OEM, adidas needs to resolve the dispute with them.

It is reported that in May this year, including Shanghai Manlang spin Ten Adidas China OEM factories, including Products Co., Ltd., have received a notice with the same content. The notice shows that adidas will terminate cooperation with these foundries between October this year and April next year.

Sun Yingli is the head of Shanghai Manlang Textile Co., Ltd. The registered capital of the enterprise is 500000 yuan, mainly engaged in knitted clothing, sweaters, sports Clothes & Accessories Production and sales of swimwear. The company has been OEM for Adidas since 1996. In 2006, the two sides signed a long-term cooperation agreement.

Sun Yingli was shocked when she received the notice that Adidas would stop ordering. This time, instead of being "humble" as she was when she contracted for Adidas more than a decade ago, she began to actively "protect rights".

"At present, we are still in the cooperation period, which will expire in April next year, and the dispute between the two parties has not yet been resolved." Sun Yingli said in an interview with our reporter on August 27 that when the contract was signed, the contract was for an indefinite period, but it was noted that adidas can terminate the contract in advance without compensation, Because the OEM enterprises were in a weak position, they did not dare to object to this clause at that time, but this contract was obviously an overbearing clause. They have already found a lawyer, and are still communicating with Adidas at present. There is no formal appeal, and they are in the material preparation stage.

According to Sun Yingli, they did not, as the outside world said, unite ten contract manufacturing enterprises to discuss with Adidas, because the nature of each factory is different, and now they are in charge of their own affairs.

What impact will the sudden notification of cooperation by Adidas have on Shanghai Manlang Textile Co., Ltd? Sun Yingli said that they had more than 300 workers, and Adidas OEM business accounted for about 25% of the company's overall turnover. The company's orders declined, and only layoffs were needed to deal with the current situation.

As for the reasons for the termination of cooperation, Sun Yingli believes that adidas is called global integration of resources, which is actually a transfer of production lines to Southeast Asia.

In addition to Shanghai Manlang Textile, Shanghai Donglong Down Products Co., Ltd. is also among the 10 agents. According to media reports, the relevant responsible person of the company said that Adidas should make appropriate compensation for the investment in its special equipment. However, when our reporter interviewed the enterprise for many times, the relevant person in charge of the General Manager's Office changed the initiative of the previous period and was unwilling to accept any interviews.

Does the termination of ten supplier partners mean that Adidas will move to Southeast Asia? The above person in charge of the public relations department of adidas told our reporter that adidas still has cooperative relations with more than 300 contract factories in China, and they will continue to fulfill their commitments to China, which was and will remain an important procurement market for adidas Group in the past and in the future.

　　 $400 and $100

Although Adidas denied moving to Southeast Asia market However, most insiders still believe that moving to Southeast Asia is the trend.

An insider close to Li Ning told our reporter that Li Ning's OEM factory mainly produces in China, but has not moved to overseas OEM for the time being. Now it is mainly Adidas that is moving, but now the cost of the entire sporting goods industry is rising rapidly, mainly because the factory rent and labor cost are rising rapidly, and the rough development of goods delivery in the past few years is too fast, As a result, it can't be digested, which affects the healthy development of the industry.

The deputy director of public relations of PEAK Sports told our reporter that PEAK Sports is transferring its production line to the central and western regions, where the cost of human resources is much lower than that in the east. PEAK has not considered manufacturing products in Southeast Asia for the time being, but with the allocation of global resources, it is hard to say whether it will come or not.

At the beginning of August, it was reported that with the rise of labor costs and other reasons, many garment enterprises have moved their OEM factories to Southeast Asia. The Internet fast fashion brand Vancl began to test the overseas garment manufacturing market as early as last year.

"The cost of human resources in China is rising to US $400, while the cost of human resources in Southeast Asia is around US $100." The relevant head of Vancl's PR Department told our reporter that for Vanke, the cost performance of products produced in Southeast Asia is higher than that in mainland China, but it is not as high as the outside world thinks, because the infrastructure in Southeast Asia is not very complete, The hidden cost is still very high. Apart from the low labor cost, other aspects do not take advantage.

It is reported that as early as the end of 2010, Vancl He began to investigate the Southeast Asian market and placed orders in the second half of 2011. Up to now, the order volume of Vanke flannel shirts produced in Bangladesh factory is about 200000 pieces.

"Bangladeshi orders account for a small proportion of the total orders of Vancl." The above-mentioned person in charge of Vancl's public relations department told our reporter that Vancl's products produced in Bangladesh are expected to start meeting with Chinese consumers in September this year, and the products currently sold in China are all domestically produced.

As for whether moving to underdeveloped areas will become a trend in the sports industry, Zhang Qing, a sports industry expert, believes that Chinese local sports enterprises are different from Adidas and Nike. They are global resource allocation. Local enterprises are mainly based in China, and the ratio of OEM is not particularly large. In the case of poor sales, production can be compressed. However, with the rise of China's raw materials and employment costs, the transfer of production lines from sports enterprises to underdeveloped areas will gradually intensify in the future.