Leather and Footwear Industry Seeking Ways for Stable Development

In spite of having antidumping taxes levied from the EU, the Vietnamese leather-capped shoe production capacity has been only slightly affected and the Vietnamese leather and shoe industry still needs new measures to seek stable export levels.

At present, the largest export market of Vietnam is the EU, following by the US but exports to the EU have tended to shrink since the beginning of this year. From April 07, 2006, the EU officially began imposing antidumping taxes on leather-capped shoes imported from Vietnam at progressive rates from 4.2 per cent to 16.8 per cent from September 15, 2006. From June 02, 2006, the rate was doubled from 4.2 per cent to 8.4 per cent.

 

According to the Ministry of Trade, the footwear export value in the first six months of this year rose 20.3 per cent on year to US$1.7 billion, or 51.5 per cent of this year’s target. From this result, Vietnam is estimated to earn US$3.3 billion from footwear export.

 

At a recent internal meeting, the Import-Export Department under the Ministry of Trade said Vietnam should seek measures to ensure the stable development although the export activities are still good and the EU levies the antidumping tax only on leather-capped shoes. Two basic solutions put forward by the department are to boost exports of shoes into non-EU markets and non-leather-capped shoes into the EU market and to raise the competitive capacity of enterprises in Vietnam.

 

As for the first solution, the leather and footwear industry has strongly veered its exports to the US, Japan, Canada and Mexico. The demand for imported leather footwear in these markets is still high. Besides, the Ministry of Trade said enterprises should actively seek new markets and exploit those with high potential like Australia, the Middle East and Africa. In particular they should continue enhancing trade promotion activities and seeking new distributors.

Regarding the second solution, apart from leather-capped shoes, Vietnam also has many types of key exports like sports shoes, women’s shoes, kid shoes, canvas shoes, embroidered shoes, leatherette shoes and plastic shoes. Further, Vietnam has copious sources of materials for production of canvas shoes, embroidered shoes and indoor slippers.

 

Improving competitiveness

Recently, the Vietnamese leather and shoe industry has needed a turnaround in investment. Customers, who used to place outworking orders in Vietnam, began building their own factories in Vietnam. These enterprises have very strong financial sources and have their wide export markets. Hence, nearly 70 per cent of the export turnover of the leather and shoe industry comes from foreign-invested shoemakers.

Experts from the Ministry of Trade stressed that enterprises need to continue investing in technological renewal and production of new deluxe products. At present, shoemakers pay undue attention to investment for its technical staff, managers and designers. Most of them are outworking for world-leading firms like Nike, Adidas, Reebok and Bata. Once the leather-capped shoes have the antidumping tax imposed, many companies lose outsourcing orders. Therefore, the third solution is to improve the competitive capacity, in effect a long-term solution.

 

At first, the input costs must be reduced while each product is added more values. To do this, domestic materials must be able to replace imported ones. The close link amongst enterprises and industries is inevitable when a big deal is placed and when material purchase is discussed.

 

Then, domestic enterprises must be capable of designing their own market-oriented models. Trade promotion centres in Hanoi and Ho Chi Minh City need more efforts to organisationally and systematically introduce Vietnamese products to the international market with a high competitive edge. Enterprises should cooperate with commercial organisations or consulates in the material-exporting countries like China, Taiwan and South Korea, importing markets like the EU, the US and Japan, and in potential markets like Australia and South Africa.

 

The Vietnamese leather and shoe industry is facing high hurdles due to the antidumping tax imposition on leather-capped shoes by the EU. However, this is also a chance to screen and force enterprises to grow. The Government has spent VND60 billion (US$3.75 million) on the Vietnam Leather and Shoe Association to carry out trade and investment promotion programmes. Shoemakers should grasp this chance to implement renovation programmes and define markets to reach stable production and development.