Shenzhou Announced Investment 700 Million To Build Adidas Exclusive Garment Factory In Vietnam

Recently, Shenzhou International (02313) announcement announced:

"We will invest about 100 million US dollars (about 708 million RMB) to build a garment production facility specially designed for Adidas in Vietnam."

The company expects that the new garment production facilities will be put into operation in 2021. It is believed that the construction of garment production facilities in Vietnam will diversify the production base, ease the tension of production capacity, and provide flexibility in the increasingly complex international trade situation.

The announcement reads as follows:

　　 Nike and Adidas are the two big rival giants in the sporting goods industry. In order to protect the trade secrets of both sides and avoid the production of homogeneous products, Shenzhou International has set up exclusive factories for Nike and Adidas in 2006 and 2007 respectively. Such intimate behavior has also deepened the binding with downstream clients.

In addition, under the automatic production mode, Shenzhou International capacity has been expanding, and the fabric factories and garment factories have been established in Vietnam. The investment is also aimed at further improving production capacity.

　　 Extended reading:

Judging from the layout,

Shenzhou International began to set up garment factories in Kampuchea as early as 2005, and equipped with printing and embroidery production processes in Kampuchea in 2007.

In 2014, Shenzhou International Vietnam fabric factory's first phase project was put into operation.

In 2015, the first phase of Vietnam's garment manufacturing plants and the two phase capital construction of the fabric factories were completed.

From 2016 to 2017, Shenzhou International Vietnam special fabric project was put into operation, and the fabric output of the company in Vietnam reached 185 tons / day.

In 2018, Shenzhou built a garment factory in Kampuchea and Vietnam. So far, Shenzhou International production base has expanded from the initial Ningbo to Anhui Anqing, Zhejiang Quzhou, Kampuchea and Vietnam, and international employees (Kampuchea, Vietnam) account for more than 1/3.

Shenzhou International also plans to increase 5000 workers in Vietnam in the second half of 2019 (currently the total number of local workers is over 11000). Compared with the previous years, the growth rate is slower. Shenzhou International will pay more attention to improving the efficiency of workers through continuous automation.

In order to adapt to the uncertainty of the trade environment, make full use of the low cost production factors in Southeast Asia and comply with the trend of the major brands' transfer to Southeast Asia, Shenzhou International has actively promoted the process of establishing factories in Southeast Asia for many years.

Overall, the main revenue of Shenzhou International will remain double-digit growth in 2019/20, and the growth of revenue will mainly come from the contribution of Southeast Asian capacity expansion. From the demand side, the growth of the performance of the downstream brand enterprises and the trend of the sourcing of the brand enterprises to the head suppliers will be favorable factors for the growth of the company's orders.