Puma is thinking of shifting its footwear and apparel production out of China and possibly to Bangladesh, Cambodia or Vietnam. Reason: US threat of hiking tariffs as high as 25 per cent on footwear. This has forced Puma to lock in capacity at facilities in hubs like Vietnam earlier than usual. Currently, the company makes about one-third of its products in China. The tariffs mean Puma has to accept a lower US margin or raise prices. But tariffs are not the only reason for Puma’s shift. The company has been shifting production away from China over the past couple of years because of rising labor costs.
The US and China have not yet reached an agreement to de-escalate the trade war. Moreover, the US has threatened to slap duties on another $325 billion of goods. In the light of this, more companies are pulling out of China to save themselves from unwarranted losses.
Tariffs on shoes made in China are expected to be catastrophic for consumers, the companies and the US economy as a whole. However, Chinese consumers are shielded because the factories that once churned out products for the world increasingly serve domestic customers’ needs now.
