Leather footwear is sprinting

	Footwear makers told to invest
	VN shoemakers too reliant on imports
	Footwear: EU free trade benefits don’t outweigh the costs

Photo: Tran Viet

Orders slumped

There are only a few days of 2016 left but exports of leather footwear and handbag shave a growth rate of over 8% so far. As the latest statistics from General Department of Customs show, by the end of November, footwear exports reached $US 11,668 billion US dollars, up by 8.1% compared to the same period last year. Bags-suitcases reached $US 2,853 billion, increased by 9.5%. Thus, the entire footwear-handbags leather industry reached $US 14,521 billion. The main export markets were the US, EU, Japan, China.

Compared with the target set at the beginning of year which was $US 17 billion with 10% growth, it can be seen that the target will be hard to achieve. The reason is the monthly averages of leather footwear-handbags export are around $US 1.2-1.4 billion, the highest is $US 1.6 billion. The highest export turnover of the whole sector can only reach $US 16 billion if summing up the highest monthly turnover.

The problems of the leather footwear industry derive from many factors, including difficulties in the market. In fact, the world economic situation has not recovered so the import demand is still reduced. Sharing with reporters of Customs Newspaper, Ms. Phan Thi Thanh Xuan - General Secretary of Viet Nam leather, footwear and handbag Association (Lefaso) said, export to small markets was maintained but some major markets had changed considerably.

The most visible example is the EU market. Mrs. Xuan said, the unrecovered economic situation had significantly impact on the EU economy. Due to unstable consumption power as well as the economic and political situation, customers reduced the quantity of orders. Britain and Germany are two main markets in the EU, but this year export to England fell by 30%. Particularly, there are export enterprises with a decline of 60%.

Notably, the difficulty of leather footwear enterprises also came from continuously rising input costs such as labor, salaries, logistics ... whereas the amount of orders fell, export prices did not increase but also were forced to decline. On the other hand, though some Free Trade Agreements (FTA) came into effect, more opportunities for leather footwear enterprises were promised, but the results did not appear because there are many barriers.

Gearing up for next year

Failure to meet expected results, but leather footwear exports also had certain progress in maintaining the market. In particular, many companies were growing steadily and high growth companies which led the industry's export turnover reached the rate of 8%. Specifically, in 2016, Thai Binh Shoes Group reached 28 million pairs of footwear and 13 million handbags and now in continuous production for timely delivery. Or as Dong Hung JSC, Dong Vang Ltd., also kept manufacturing pace with stability of manufacturing orders. "These enterprises have good foundation and internal capacity so customers always feel secured to order", Mrs. Xuan said. Besides, these companies also invested in facilities, put factories in areas which have labor advantageous to make use of local labor, so they do not have to use migrant workers, and actively produce.

Along with maintaining production, many enterprises have expanded investment in the development of materials such as Viet A Chau Company, Rang Dong Plastic Company ... This is the solution to help domestic enterprises to reduce dependence on imported raw material and supply for domestic manufacturing enterprises in order to reduce costs, accelerate delivery progress.

Increased investment in raw materials is an important step for enterprises to take better advantage of opportunities from the FTAs in the next year. If enterprises want to benefit from the FTAs, they have to meet the rules of origin as per agreements. According to Lefaso, the localization rate of products which were produced by Viet Nam enterprises should be raised to 60% to meet the standard of the rules of origin in the FTAs ​​that Viet Nam has joined, helping to reduce the logistics costs and enhance the activeness of Vietnamese enterprises.

Leather, footwear firms move to seize opportunities from FTAs Many Vietnamese leather and footwear firms have been implementing new production and business strategies to seize opportunities ...

Next year, leather footwear experts evaluate that this industry will be more promising because enterprises are making a great effort to prepare for Vietnam-EU FTA implementation, while gearing up to welcome the opportunity from Vietnam-Asian Economic Union - Europe FTA. However, according to Mrs. Xuan, 2017 will also be more volatile and influenced by objective and subjective factors. Therefore, enterprises should always actively get information to make the right decisions, thereby adjusting production and business strategies. Enterprises also need strong links, because if you go to global market, a single enterprise can be easily defeated. Another point that Mrs. Xuan stressed is the internal capacity building and human resource development, science and technology applications, reducing costs to be able to survive and compete.