Did the US-China Trade Spat Inadvertently Help Manufacturers Limit Coronavirus Damage?

The nearly two-year trade war between the U.S. and China may have had an inadvertent upside for American footwear manufacturers: they are seemingly less susceptible to major shipping delays caused by global concerns about the rapidly spreading coronavirus.

Top shoes executives attending the FFANY trade show, held this week in New York, said that while the virus is impacting their travel plans to visit Chinese factories, many had already sought out alternative countries for production at the outset of the back-and-forth trade threats between the two powerful nations.

According to Philippe Meynard, CEO of Earth Shoes, the company had been moving production to other countries over the past year, with less than half of its sourcing taking place in China. The executive said Earth Shoes has expanded its manufacturing in countries such as Vietnam, Cambodia, India, Portugal and Brazil.

“We have small production [runs] in different areas and moving [it around] as we feel comfortable,” he said, adding the company is also increasing its product development in its own offices in Waltham, Mass.

Similarly, Bob Goldman, founder and CEO of Chinese Laundry, said that a sizable portion of his 42 Gold line is being made in Brazil. “We started down there because of the worsening tariffs situation but we’ve since expanded out production not because of the coronavirus but because we have gotten equal pricing in Brazil as in China.”

While footwear production has shifted around the globe, there is still reason to worry that shipments from China could cause major disruptions in the later quarters of 2020.

A number of consumer brands with stores in China closed their doors, businesses scaled back activities in the country and luxury labels lowered forecasts over fears of the spreading disease.

What’s more, many factories in China are shut down for the next two to three weeks, which is causing some uncertainties.

“We know there will be delays from vendors [factories] shipping from China, but uncertain what the delays are now,” Meynard said.

At Montreal-based Pajar, global brand director Greg Nicoghosian said factory closings could result in delays of goods slated for the third quarter, since typical production cycles generally take 60 to 90 days.

“There will be huge pressure on inventories for third quarter,” he noted.

— With contributions from Barbara Schneider-Levy

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