FDI footwear firm in southern Vietnam announces Lunar New Year bonuses of $26.8 mln

Despite falling orders and difficulties surrounding the leather and footwear industry, South Korea’s Chang Shin Vietnam Co., Ltd. based in the southern province of Dong Nai has announced it will spend about VND650 billion ($26.82 million) on Lunar New Year (Tet) bonuses, a slight increase from last year.

This move shows the company’s efforts to get through “the storm" as many other footwear companies in Vietnam shut down or cut staff, said Dang Tuan Tu, head of the company’s trade union, on Monday.

According to Tu, the company boasts the largest number of workers in Dong Nai, an industrial hub bordering Ho Chi Minh City, with 37,000. It plans to pay bonuses based on the seniority of employees.

Employees with a seniority of less than 20 years will be rewarded with a bonus of 0.25-1.95 months' basic salary, while those with 20 years or more will enjoy two months' salary. As expected, the company will deliver Tet bonuses on January 26, 2024.

In addition, employees will receive an additional allowance of 5-8% of basic salary, depending on position and job title. For new employees joining the company from January 1, 2024, the company commits VND500,000 ($20.67).

Compared to last year, this year's Tet bonuses have increased VND150,000-300,000 ($12.4) per worker, depending on seniority.

Tu said the company's union held seven rounds of negotiations with the board of directors to secure Tet bonuses for workers. Amid unstable orders, the board has tried to retain workers and ensure their incomes. Early next year, the firm plans to increase it basic salary for workers by VND150,000 ($6.2) per month, he said.

Established in Vietnam in 1995, Chang Shin, with a charter capital of VND803 billion (2020), has a 14.3-hectare factory in Tan Phu Industrial Park with a total investment of $100 million in 2019 and an annual capacity of more than 27 million pairs of shoes.

Currently, Chang Shin Vietnam is a main supplier of the U.S. sports shoe brand Nike. Its Dong Nai factory was the first factory in Vietnam rated "gold" by Nike's Manufacturing Index.

The company ranked 4th among the top FDI giants in the leather and footwear industry at its peak in 2019-2020, after Pouchen and Fengtay of Taiwan, and Tae Kwang from South Korea.

However, Pou Chen, Fengtay, and Tae Kwang are facing certain difficulties and have announced layoffs and even factory closures. In August this year, Pou Chen Vietnam Co., Ltd., a subsidiary of Taiwan’s Pou Chen Group, announced an additional 1,200 layoffs, bringing the total from the beginning of 2023 to 9,000, due to a decline in orders.

Similarly, in April, TKG Taekwang MTC Vietnam Co., Ltd., headquartered in Loteco Industrial Park, Bien Hoa town, cut its remaining 800 workers and closed its factory.

Meanwhile, Fengtey is gradually restoring production and business after a difficult period. Previously, it had to lay off thousands of workers and close its factory in 2021.

According to Dong Nai authorities, in addition to Changshin, Hyosung Vietnam Company Limited, located in Nhon Trach 5 Industrial Park, announced a 2024 Lunar New Year bonus of 150% of their basic monthly salaries, along with many incentives. Workers will receive 100% of their basic monthly salaries on February 2, 2024 and the remaining 50% on April 10.