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Puma may shift from production from China with US trade tariffs

Puma may shift some production from China to other Asian markets if US tariffs are imposed on footwear. The German sportswear maker currently makes about a third of its products in China. It is looking to move sourcing of footwear to countries like Vietnam and Indonesia and apparel to Cambodia and Bangladesh.

Apparel and footwear could be included in tariffs to be imposed by the US on Chinese imports. The tariffs could mean Puma has to accept a lower US margin or raise prices. However, Puma might have an advantage over larger rivals Adidas and market leader Nike in being able to move sourcing faster because its volumes are smaller.

For Puma first quarter sales in the Asia-Pacific region jumped 35 per cent. Puma has about 1,400 points of sale in China, compared to about 10,000 for its rivals. The brand has already been shifting production away from China over the last couple of years due to rising labor costs. However, it’s unlikely tariffs could shift footwear production back to the United States, although medium to long-term it makes sense to move sourcing closer to its major markets.

Moving production for the US market could take about 12 months. The capacity freed up could also be used to make products for the booming Chinese market, where Puma’s sales growth was exceptional in the first quarter. <p