The sector is predicted to see bright prospects as the consumer demand for footwear products in the nation’s main export markets continue to rise.
In addition to this positive sign, the industry will enjoy further growth opportunities with China choosing to continue its policy of shrinking investment in textile, garment, leather and footwear sectors while instead preferring to focus on hi-tech industries.
As a result, footwear and handbag processing orders will continue to shift from China to other nations, including Vietnam.
Despite facing a number of difficulties in recent years, the country’s export earnings from leather and footwear industry have seen consistent increases. For example, the sector’s turnover made close to US$15 billion in 2015, over US$16 billion in 2016, whilst 2017 saw a number of breakthroughs with nearly US$18 billion.
Last year, the industry maintained its growth momentum with a total export turnover of US$19.63 billion, an increase of 9.3 per cent compared to the same period in 2017.
At its 7th Congress for the 2019-1024 tenure held recently in HCM City, the Vietnam Leather, Footwear and Handbag Association (LEFASO) announced that the sector earned more than US$10.33 billion in export turnover during the first half of the year. This figure includes US$8.53 billion made from footwear and US$1.8 billion made from handbags. It is hoped that export earnings from the sector will hit US$21.5 billion this year, a rise of 10 per cent compared to last year.
Currently, the US is Vietnam’s largest export market, followed by the EU, China, Japan, and the Republic of Korea.
In terms of the level of skill and technique of the workforce in the industry, Vietnam is second to none in the region. Indeed, in recent years, the country's leather and footwear products have been shipped to hundreds of countries worldwide with export earnings raking in dozens of billions USD.
LEFASO noted that Vietnam currently ranks second in the world in terms of leather and footwear exports, and third for their production of these products.
At present, the leather and footwear industry has attracted the participation of over 2,000 businesses whilst simultaneously generating 1.5 million jobs. It is an important sector that has made significant contributions to the country’s overall economic development.
In the near future, the sector is expected to enjoy a wealth of opportunities arising in the context of comprehensive international economic integration. New generation free trade agreements (FTAs) such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU-Vietnam Free Trade Agreement (EVFTA) are set to offer huge opportunities to a number of the nation’s industries, including the leather and footwear sector.
LEFASO predicted that during the course of the year, the country’s leather product and footwear production will grow up to between 10- 11 per cent with exports making up 9 per cent of the country’s overall export turnover. This year, the localisation rate of leather and footwear products reached up to 60 per cent.
To facilitate firms' market expansion, LEFASO plans to help enterprises to attend trade fairs abroad under national trade promotional programs, improve the efficiency of solutions for the development of human resources in order to meet the requirements for development set by new generation FTAs such as the CPTPP and the EVFTA.
The association underlined the importance of training in order to improve the management capacity of production among domestic firms.
With greater opportunities in new markets incoming, LEFASO has called on businesses throughout the sector to pay closer attention to branding issue in order to make further inroads in international markets.