Phuong Nguyen and Khanh Vu

HANOI (Reuters). Despite record COVID-19 infection rates, Vietnamese manufacturers of smartphones and shoes will continue to produce. They are reversing a previous policy that imposed broad lockdowns on global supply chains last year.

Vietnam, one of the most important garment-producing countries in the world, reported almost 26,000 new infections Sunday. This is nearly twice last year’s peak. Nike (NYSE:), Zara (NASDAQ:), Apple (NASDAQ:), and Samsung (KSS:) were all closed for several months.

However, unlike ninety-nine months ago, when the Delta virus was rapidly spreading among a majority of unvaccinated people, today millions have been fully vaccinated, and Omicron is showing less severity, according to the government.

According to Dang Duc Annh, Director of the National Institute of Hygiene and Epidemiology (Reuters), “the risk of widespread lockdowns this year is very low because Vietnam has successfully completed its COVID-19 vaccine campaign.”

Vietnam is easing its restrictions in recent months. Schools reopened last week, and on Sunday the government announced that it would remove all international travel restrictions.

According to the Health Ministry, 76% have received two or more vaccines, an increase of 3.3% from September 2013.

American Chamber of Commerce Hanoi is a representative of U.S. business and urged Hanoi’s government last year to reduce its restrictions. According to Adam Sitkoff its executive director, they expect a more prosperous 2022.

Sitkoff said that he didn’t expect any countrywide lockdowns because the serious cases in many parts of the nation are at a manageable stage and the authorities had learned that economically-crippling restrictions were not sustainable.

Up from 2.5% growth in 2021, the government targets an economic increase of 6%-6%.

Smooth operations at the factories of Vietnam, second-largest exporter to America after China of clothing and footwear, will allow for the elimination supply chain bottlenecks which have been causing high inflation in the United States.

Duc Minh Nayen is a partner in the accounting firm EY. He stated that Vietnam’s ability to maintain strong manufacturing capabilities and high factory output will support global supply chains, especially for industries like textiles and agriculture.

SHIFTING SUPPLY CHINS

Vietnam has been a popular alternative manufacturing hub for those looking to lower their China exposure in the last decade.

If Vietnam manages to escape the Omicron wave without major damage and Beijing maintains its tight control on infection, this trend should continue.

Raphael Mok from Fitch Solutions, Asia Country Risk Head, stated that Vietnam will benefit greatly from shifting supply chains. This is especially true for low-value manufacturing, relocating out China, and electronic production.

Vietnam was praised for its early efforts to curb the spread of infections in the pandemic. However, a flare up last summer due to the Delta variant caused millions of workers home from lockdowns in Ho Chi Minh City.

Businesses began to consider moving production from other locations in September during the peak of the lockdowns.

Lululemon (a Canadian clothing retailer) moved production from Vietnam to September. Due to closures at factories in Vietnam, Nike’s 2022 forecast for sales of footwear was cut by half.

Truong Van cam, vice chairman and general secretary, Vietnam Textile and Apparel Association, stated that 95% to 95% of textile and garment workers now have resumed work since the Lunar New Year holiday.

Vietnam’s factory workers who make an average of $330 per months are trying to make up the earnings loss last year.

Nguyen Vand Hoang, 28, a 28-year-old worker in a Ho Chi Minh City Leather Factory said “Things have been pretty good now…there are many orders to be delivering so it is possible to work overtime to make more.”

“Factory lockdowns won’t be a trend in the near future,” says “I doubt it.”

Ninh Thi Ty, chairwoman of Ho Guom Group, which makes garments for firms such as CK, Mango, Zara and H&M, said she expected the government would soon designate COVID-19 an endemic illness.

“More lockdowns would hurt businesses like ours, as we wouldn’t be able to deliver products to customers,” said Ty, whose garment factories employ 6,000 workers in Vietnam.