The closure will affect more than 1,600 workers.
Truong Van Phong, deputy head of the Ho Chi Minh City Export Processing and Industrial Zones Authority (Hepza), said Tuesday that ECCO Sko A/S of Denmark, the sole owner of ECCO Vietnam Co., Ltd., had decided to dissolve the company.
The company attributed the decision to years of declining market demand, which had resulted in excess production capacity.
The factory closure is part of the group's global manufacturing restructuring plan, which aims to consolidate operations at a smaller number of its facilities.
ECCO Vietnam's factory headquarters in Bau Bang Industrial Park, Bau Bang Commune, Ho Chi Minh City, Nov. 2, 2026. Photo by An Phong
Employment contracts for workers not offered continued employment will end on Nov. 30, or earlier if their contracts expire before that date.
Some employees will be retained for a few months to assist with the dissolution process.
The company has promised to pay all outstanding wages, compensation for unused annual leave, and other amounts owed in accordance with regulations.
In addition to statutory severance allowances, it will also pay half a month's base salary for each year of service. Any period of employment shorter than 12 months will be rounded up to one year.
Workers will also receive a 13th-month salary proportionate to the time they worked during the year.
Danish footwear company shuts Vietnam factory, 1,600 workers lose jobs
Nhà máy giày hơn 1.600 công nhân ở TP HCM giải thểWorkers bid farewell after the company announced its dissolution on the afternoon of Nov. 2. 2026. Video provided by workers
Workers bid farewell after the company announced its dissolution on the afternoon of Nov. 2. 2026. Video provided by workers
Those asked to assist with the dissolution will receive an additional bonus equivalent to 50% of one day's base salary for each day worked.
ECCO Vietnam has also pledged to complete the confirmation of employees' social insurance contribution records and return relevant documents to them.
Phong said the company had not defaulted on social insurance premiums.
On Monday afternoon, Hepza, the Ho Chi Minh City Labor Federation, and local authorities met with company officials and told them to fulfill all commitments regarding workers' benefits and facilitate their hiring by other businesses.
Phong said at least eight nearby companies had expressed interest in hiring around 1,611 workers as of Monday.
He add that Hepza, trade unions, and local authorities would coordinate efforts to put affected employees onto new job opportunities.
Phung Thai Quang, deputy chairman of the Ho Chi Minh City Labor Federation, said he had instructed industrial zone and company-level trade unions to review employee lists and provide support to those losing their jobs.
The city's Trade Union Labor Consultation and Support Center will review the policies announced by ECCO Vietnam, compare them with legal requirements, and monitor their implementation.
Workers gather at ECCO Vietnam headquarters in HCMC after the announcement of its dissolution. Photo provided by workers
ECCO is a Danish footwear brand founded in 1963. Its factory in the Bau Bang Industrial Park in former Binh Duong Province began operations in April 2020.
The 12-hectare plant cost VND861 billion (US$34 million) and had an annual capacity of 8.1 million footwear products and parts.
The dissolution of ECCO Vietnam comes even as recruitment opportunities in the footwear industry remain limited.
According to the Ho Chi Minh City Employment Service Center, the garment and textile and footwear sectors had 1,306 vacancies but 2,473 applicants in October.