The Delta variant of the COVID-19 virus is spreading in largely unvaccinated southeast Asian countries, affecting the production of many goods sold around the world.
The Wall Street Journal reports that the Delta variant of COVID-19 is surging throughout Asia and disrupting world supply lines and leading to rising consumer prices for goods.
Western brands such as Adidas, Crocs and Steve Madden depend tremendously on Vietnam to manufacture their products. Vietnam is second only to China in American shoe imports, which accounts for more than 30%.
Last year, Vietnam imposed stringent COVID-19 measures, including strict lockdown guidelines, and was successful in containing the initial COVID-19 outbreak for over a year. Now as the highly contagious Delta variant has touched down in Vietnam and with less than 3% of its population vaccinated, the country has seen an increase in cases over the past six weeks.
Government authorities have mandated factory shutdowns, affecting the country's ability to manufacture goods. One factory in Vietnam reportedly reduced its workforce from approximately 600 workers to just 150.
To counter production delays, companies are searching for alternative suppliers in Asia, such as China, but they are facing greater costs for airfreight as a result of the sudden shift in production.
Lockdowns in Vietnam and other Asian countries are expected to increase the prices of consumer goods; for example, the cost of shoes rose 4.6% in July compared to last year.
German shoe company Adidas reports the loss of sales is estimated at $600 million for the second half of the year.