Pou Chen, the Taiwanese group that controls Yue Yuen, announced on March 30 that it has decided to shut down temporarily its production of athletic shoes for Adidas and Nike in Myanmar for safety reasons. The local management and essential staff will remain in place for maintenance purposes.
A Taiwanese news service indicates that it should be easy for the group to shift the production to its other plants in Vietnam or Indonesia. Together, the group’s factories in Mynamar, Cambodia and Bangladesh account for only about 4 percent of its total production capacity.
It will not be so easy, however. There will inevitably be some disruption in the supply chain as the required raw materials are probably already in-house or on their way over to Myanmar at the current initial stage of the production schedule for the autumn/winter 2021/22 season. The factories in other countries have already planned production lines, infrastructure and people in place for other models.
For the world’s largest manufacturer of athletic footwear, the move is a reaction to the violence caused in Myanmar by the military coup that seized control of the country two months ago and the crackdown of the ensuing popular protests, which has killed more than 450 civilians so far, according to various sources, including over 100 people last Saturday alone..
We would not be surprised if other footwear or apparel manufacturers have taken or will take similar measures, affecting the local low-paid workforce.
Governments around the world have condemned the overthrow of the newly elected government of Aung San Suu Kyi by the military on Feb. 1 and the armed forces’ violence against the subsequent peaceful protests. After imposing sanctions on local businesses and individuals including Myanmar’s chief of police, Than Hlaing, the U.S. government decided on March 29 to suspend all “diplomatic trade engagement” with the country, effective immediately and “until the return of a democratically elected government.”
We understand that the suspension will not affect business-to-business trade among entities in the U.S. and Myanmar, at least for the time being. According to CNN, it affects an agreement signed in 2013 under which the U.S. government was going to cooperate with the former Burma on trade and investments to support its integration into the global economy, following the end of a lengthy military regime in 2011.