US apparel brand Columbia Sportswear is in the process of ‘near-shoring’ its manufacturing operations out of Asia (Columbia Sportswear has around 190 contract suppliers in Vietnam) to Central America, the New York Times is reporting. Key Columbia Sportswear executives quoted cite their move from China to Vietnam as problematic with everyone having the same idea and costs and capacity quickly becoming a challenge. They also mention disruptions to their Vietnam supply chains as a result of COVID-19, and point out that the reduced shipping costs and shorter shipping time from Central America counterbalance the increased manufacturing costs.
Why it matters: The recent reworking of supply chains has been framed as a shift out of China–the phrase China plus one has been bandied around a lot (probably too much). The reality is though that a lot of the challenges that come with manufacturing in China are common throughout the region which is partly why manufacturing in Southeast Asia is so cheap. In this context, what the aforementioned article highlights is that many international firms are not simply looking to get out of China, but rather to address the reworking of their supply chains in a more holistic manner.