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Shoemakers upbeat on prospects for 2015

Shoemakers upbeat on prospects for 2015

2015-02-09

Source:vietnamnet

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With the advent of the TPP in 2015 and the steady shift by leading footwear brands away from China to Vietnam, enhancement of the country's production capacity and its competitiveness capacity - there is much well founded buoyancy in the footwear sector over prospects for increased prosperity in 2015.

US made footwear accounted for only 2% of the US shoemaking industry in 2014, with the rest coming from imports, mainly Chinese, according to official government statistics.

With the Trans-Pacific Partnership (TPP) coming into effect in 2015 and many of the current import tariffs ranging from 3.5 to 57.4% to be abolished, Vietnamese exporters are savouring the growth prospects.

So much so, that the Vietnam Leather, Footwear and Handbag Association (Lefaso) has upped the export target to a monumental US$14 billion for the year.

According to Lefaso, footwear obtained impressive results for 2014 and was one of the nation’s key products with overall exports escalating 22.96% on-year to US$10 billion.

Last year, exports to most markets saw positive growth with the US topping the list with 20% acceleration to US$3.228 billion trailed by Belgium, climbing 27.68% at US$659 million and Germany, swelling 31.10% at US$600 million.

Export growth to Brazil skyrocketed a staggering 392.89% although the total value of exports remained a modest US$266 million.

Experts said that the robust growth in the US was principally attributed to importers’ shifting orders from China to Vietnam due to improved price competitiveness of Vietnam’s products.

Most notably labour costs in the Chinese market have been much higher than in Vietnam and the nation’s labour productivity has been steadily appreciating as the industry retools installing more modern machinery and equipment.


Vietnam’s manufacturers are also gaining in reputation for the quality of craftsmanship as they continue to invest in the latest technologies.

These advantages have been synergistically elevating Vietnam’s image as a place to do business and steadily attracting more and more foreign investors to the Southeast Asian country.

Lefaso also said that FTAs with the Republic of Korea (RoK) and the Customs Union (Russia-Belarus-Kazakhstan) and the EU are expected to be signed in the first half of 2015, which should provide an added boost to exports.

Not only do the FTAs benefit Vietnam by reducing tariffs in line with the ASEAN Trade in Goods Agreement (ATIGA)’s tax roadmap but they help Vietnam by expanding export markets in addition to strengthening supply chain formation.

However, in the next few years, the footwear sector could still face stiff competition from India, the second largest footwear producer in the world, Lefaso said.

India also has advantages of lower labour costs than China and other production costs competitive with Vietnam. Additionally, the Indian government has recently issued a new set of preferential policies for foreign investors.

Other experts have also pointed out that when Vietnam’s market opens, foreign footwear makers will be allowed to utilise the nation’s preferential tax policies. If domestic firms do not timely respond, opportunities will be lost to foreign companies.

US manufacturers will also attempt to create trade barriers for Vietnam, aiming to protect its own sector when the TPP comes into effect Lefaso has said cautioning domestic firms should keep abreast of the market changes to protect their best interests.

To take full advantages of FTAs, local businesses should be proactive in procuring material supplies, making sure there is adequate diversification so they are not overly dependent on any one supplier.

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