It’s been a tough year for shoe factories across China and Southeast Asia. Production has slowed, according to recent reports from several Asian manufacturers, and the road ahead looks just as challenging as competition heats up.
Much of this slowdown was expected—brands have been adjusting their operations in response to the back-and-forth of tariffs and trade uncertainties introduced during former U.S. President Donald Trump’s administration.
The good news? Those Trump-era worries have largely faded—for now—giving factories a chance to catch their breath.
Trade deals shake up production
Trade agreements are reshaping the landscape once again. China, in particular, is back in the spotlight, with Trump pledging not to raise tariffs on Chinese footwear through at least November 2026. This could tempt brands to shift some production back to China, potentially leaving Southeast Asian factories with fewer orders.
“I’m hearing a lot of really competitive pricing options in China these days. Some members have said that they are historically competitive,” said Matt Priest, president and CEO of the Footwear Distributors & Retailers of America (FDRA). “Right now, tariffs on shoes from China are pretty much the same as those from Southeast Asia. That’s definitely making brands think twice about where they make their shoes.”
Priest also noted that monthly production reports can be misleading. Many brands front-loaded their orders earlier in the year to beat potential tariff increases, creating the appearance of a slowdown in the second half—though long-term trends may look very different.
Mixed results across the region
Financial results from leading footwear companies reflect this complicated picture:
- Yue Yuen Industrial (Hong Kong) saw a 21.9% drop in revenue for the nine months ending September 30, falling to $275.6 million from $352.8 million the previous year.
- Feng Tay Enterprises (Taiwan) reported November revenue of 7.16 billion New Taiwan dollars, down 11.8% from last year, though it’s an improvement from a 23.4% drop in May. Its best month in 2025?
- Cambodia has become a key hub for brands like Adidas and Timberland. But rising wages—from $204 to $210 per month—could influence whether companies keep production there. Factories with labour agreements may have a more secure future, while others might feel the pull of China’s competitive pricing.
Vietnam: The big winner
Vietnam has emerged as the clear winner in recent years. After production began moving out of China in 2019, Vietnam now dominates the sneaker manufacturing market, producing roughly half of Nike’s footwear and nearly 40% of Adidas’. November exports to the U.S. hit $721 million, a solid rebound from September’s dip.
A preliminary U.S.-Vietnam trade agreement sets a 20% reciprocal tariff rate, layered on top of existing duties. Nike CEO Martin Hoffmann noted that while this timing mismatch between price increases and tariffs offered a small short-term margin boost, it’s unlikely to last.
For shoe brands and factories alike, the next few years promise more twists and turns. Between trade deals, rising wages, and global competition, China, Vietnam, and Southeast Asia are all vying to stay on top—and the shoes we wear may be telling the story of this ongoing shuffle.
