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Footwear Supplier to Nike, Adidas Suspends Manufacturing Amid COVID-19 Violations

A footwear supplier to some of the world’s top athletic shoe brands is feeling the heat from social-distancing violations.

Pouyuen Vietnam, a subsidiary of the world’s largest branded athletic and casual footwear manufacturer, Pou Chen Corp., has been forced to temporarily close down operations after failing to enforce local social distancing guidelines aimed at stemming the spread of the coronavirus.

Starting Tuesday, Pouyuen Vietnam must suspend operations for two days, according to a local news source. The footwear maker claims it can produce more than 300 million pairs annually, accounting for about 20 percent of the combined wholesale value of the global branded athletic and casual footwear market.

Local administrators in Ho Chi Minh City said the decision was made to protect the community from the COVID-19 pandemic, which has infected 265 people in the country at last count, according to a report in Vietnamese state publication Tuoi Tre.

“The suspension of Pouyuen Vietnam is necessary to ensure public health as well as the operations of the company,” Ho Chi Minh City chairman Nguyen Thanh Phong told Tuoi Tre.

Pouyuen Vietnam employs around 70,000 in its facilities and offices in the city’s Binh Tan District and manufactures shoes for some of the world’s largest athletic footwear brands, including Nike, Adidas, Asics, New Balance, Puma, Timberland and Salomon.

The company also provides 800 vehicles for commuting purposes as the workers switch between three shifts.

Although Pouyuen Vietnam has enacted temperature-checking protocols and installed hand-washing sinks and partitions in its cafeteria, Phong said the company has yet to lower the number of employees working on each shift.

The decision was based on current regulations proposed by the city’s Department of Health, Phong added.

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Vietnam is in the midst of a state-enforced social distancing program, which was initially scheduled to last only until April 15. According to Tuoi Tre, Vietnamese officials will decide whether to extend the quarantine next week.

Although Ho Chi Minh City has only seen 54 cases so far, the region stands to be among the most impacted by the economic effects of the pandemic and could see widespread “financial shock” according to the World Bank.

And though the social-distancing closure is expected to be short-lived, the impacts of the global pandemic already seem to be reflected in monthly financial results reported by Pou Chen Corporation, which also operates in retail, real estate and sports wear manufacturing.

The company reported unaudited March sales of about 20.2 million Taiwan New Dollars ($670,100), versus about 27.2 million Taiwan New Dollars ($906,000) in the prior-year period, a roughly 26 percent decline. Sales in the January-through-March frame totaled about 59.5 million Taiwan New Dollars ($1.9 million), a sharp 22.4 percent year-over-year decline from $76.6 million New Taiwan Dollars ($2.5 million) in the comparable 2019 period.

Additional reporting by Jessica Binns.