Shenzhou International (hereinafter referred to as “Shenzhou International”) recently issued an announcement stating that in view of the recent changes in the epidemic situation in Vietnam, the Vietnamese government will suspend operations in Ho Chi Minh City and Tay Ninh Province in Vietnam no later than 14 days from July 19, 2021. Implement social distancing measures. In order to comply with the social isolation measures of the Vietnamese government, starting from now, the production capacity of the Group’s fabric production base in Tay Ninh Province, Vietnam will be operated at approximately 30% of its normal production capacity. The garment factory in Tay Ninh Province, Vietnam will suspend operations. The production capacity of garment factories in Ho Chi Minh City will be operated at approximately 33% of normal production capacity.
In terms of the impact of the current epidemic on the actual production capacity of Vietnam’s production base, Shenzhou International expects that every Affected operations for 14 days, the company’s total annual production capacity of fabrics and clothing will decrease by approximately 2% and 1% respectively.
According to the announcement, the short-term production capacity gap during the affected period will be supported by Shenzhou International’s production areas in China and Cambodia to ensure the company’s ability to deliver orders, thus putting the pressure on customers The impact is minimized.
It is reported that in 2020, Shenzhou International’s production bases in Vietnam and Cambodia have contributed nearly 40% of the company’s garment production capacity. Shenzhou International’s fabric production capacity is distributed in Ningbo City, Zhejiang Province and Xining Province, Vietnam. Currently, the fabric production capacity of factories in Vietnam and Ningbo accounts for half each. In terms of garment production capacity, the company has garment factories in Ningbo City, Zhejiang Province, Anqing City, Anhui Province, Cambodia and Vietnam. At present, domestic factories undertake about 60% of the company’s garment production capacity. With the gradual commissioning of new garment factories in Southeast Asia, the company’s domestic and overseas garment production capacity layout will also become more balanced, and a dual vertical integration pattern is expected.
Judging from the distribution of Shenzhou International’s garment production capacity, domestic production includes Ningbo City in Zhejiang Province and Anqing City in Anhui Province, while overseas companies include Ho Chi Minh City and Xining Province in Vietnam, and Phnom Penh City in Cambodia. In 2020, the company produced 440 million pieces of various knitted garments, with a capacity utilization rate of about 90%, and an estimated garment production capacity of 489 million pieces. Domestic, Vietnamese and Cambodian garment production capacity account for 62%/22%/16% respectively, and domestic and foreign proportions are close to 60%/40%. Based on assumptions about the company’s per capita output and future recruitment plans, Shenzhou International’s garment production capacity is expected to increase by 14.9% year-on-year to 562 million pieces in 2021.
As one of the world’s largest vertically integrated knitting manufacturers, Shenzhou International has improved its competitiveness through product diversification and expansion of high-quality customers, while optimizing the production process. In the short term, some revenue has lagged behind. influence long-term growth trends. In addition, it should also be noted that due to the impact of the epidemic, market demand and supply chain supporting uncertainties have increased, so supply chain stability and rapid response capabilities are particularly important. Shenzhou International maintains close communication with relevant parties upstream and downstream of the industrial chain, gives full play to the company’s short delivery capabilities, and actively cooperates with customers to respond to market changes with the strong support of relevant suppliers.
Public information shows that Shenzhou International was established in 1988. It mainly layouts fabrics and fabrics in the apparel industry chain through a combination of commissioned design (ODM) and OEM (OEM). In the garment manufacturing process, the four production processes of fabric weaving, dyeing and finishing, printing and embroidery, cutting and sewing are integrated into one. As the core supplier of internationally renowned clothing brands such as Nike, ADIDAS, PUMA, and UNIQLO, Shenzhou International’s products cover sportswear, casual clothing, and underwear, which are mainly sold to mainland China, Japan, the United States, Europe and other countries and regions, in 2020 The company has more than 89,100 employees, the delivery room covers an area of more than 5.55 million square meters, and the construction area exceeds 4.07 million square meters.
Shenzhou International started as an OEM for the Uniqlo brand. Its initial products were mainly casual wear. Since 2005, it has vigorously developed high value-added sports by signing long-term orders with leading international sports brands. The proportion of clothing and sportswear has increased significantly from 2% to 9%. In 2010, sportswear revenue accounted for more than casual wear, and the company’s product structure has been continuously optimized. In 2020, sportswear and casual wear accounted for 70% and 20% respectively. </p
