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Strike in China Factory Forces Adidas to Move Orders to Other Locations

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Published on : Apr 25, 2014

Adidas AG, a world leader in sports and fitness accessories, clothing, and shoes said that it would be shifting a part of its production operations out of the show factory run by Yue Yuen Industrial Holdings Ltd in Dongguan, China. This factory has been witnessing disruption in production for the last one-and-a-half weeks as workers are on a strike over pay and benefits. 

The company’s spokesperson, in an e-mail response to news houses said that the company has decided to reallocate a part of its future orders that were initially given to Yue Yuen Dongguan. These orders will be moved to other suppliers in a bid to reduce the impact on operations. 

Adidas that is hardquartered in Herzogenaurach, Germany said that it has in place a supply chain that is highly flexible. Other brands that have manufacturing operations allocated to Yue Yuen are: Asics Corp, Puma SE, Nike Inc., Timberland Co, and New Balance Athletic Shoe Inc. Yue Yuen is the largest manufacturer of branded footwear in the world. It also operates the 15-million square foot Dongguan complex that is located in the South of China. Since April 14, employees working at this complex have been on a strike over a dispute over benefits and compensation. The complex reportedly has 40,000 employees.

Meanwhile, a spokesperson from Yue Yuen said that it still stood “committed” to keeping production on track in Dongguan, and it did not agree to comment on the decisions of any “any particular customer.” In addition to China, the company also operates factories in other Asian countries such as Indonesia and Vietnam.

At the close of trading in Hong Kong on Thursday, the shares of Yue Yuen saw a 1.4 percent spike to HK$24.75. The company’s shares had reported a drop for two straight days. 

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