Skechers, a heavyweight rival to two global footwear brands – Nike and Adidas, sold more than 200 million products last year and now seeks to shift investment from China to Vietnam.
The firm was advised by the Vietnam Leather, Footwear and Handbag Association (LEFASO) to set up the first facility in northern Hai Duong province with an investment slated for between US$700 million and US$1 billion.
The project offers hope to Vietnam’s footwear industry as the sector saw falls in not only foreign but also domestic investment last year.
Benefits of free trade agreements between Vietnam and other nations have added heat to the footwear industry, leading to a record growth rate of 28% in the flow of investment into the sector in 2015, said Phan Thi Thanh Xuan, LEFASO general secretary.
However, after the United State withdrew from the Trans-Pacific Partnership (TPP) and the United Kingdom chose to leave the EU, the investment declined in 2017. It was clearly reflected by the contraction in imports of shoe-making machinery, equipment and materials, she explained.
Imports of footwear machinery and equipment in 2017 decreased to US$146 million, compared to US$170 million a year during the 2015 – 2016 period. Leather imports also fell to US$1.5 billion last year from US$1.6 billion in 2016, she added.
Xuan noted that the EU-Vietnam Free Trade Agreement is expected to be signed this year, adding that once the trade deal enters into force, it will eliminate import duties on Vietnam’s trainers and handbags.
The tariff elimination will not only direct more flows of foreign orders to Vietnam but also draw greater investment from international footwear manufacturers, such as Skechers, into the country, she said.
Vietnam is now in the world’s Top 5 shoemakers with 70% of the total export revenue contributed by foreign-invested enterprises.