Vietnam's footwear industry sees robust growth despite COVID-19 pandemic

Despite facing difficulties caused by the COVID-19 pandemic, Vietnam's footwear industry still achieved double-digit growth and some companies have received long-term orders.

Dang Van Ngoc, Director of Tan Phat Leather Shoes and Wallets Company Limited, said since the start of the COVID-19 pandemic, especially during the outbreak in Europe, customers in this market cancelled 80% of orders.

“The remaining customers ask for late payments or discounts, causing challenges for the company,” he said, adding that it maintained production in spite of suffering losses for a long time.

“But now, we have reconnected with our customers and reached agreements to share difficulties and profits in the context of the pandemic. Thus, we have sufficient orders to keep us busy for the remainder of the year,” Ngoc was quoted by Sai Gon Giai Phong (Liberated Sai Gon) newspaper as saying.

According to Nguyen Duc Thuan, Chairman of the Vietnam Leather, Footwear and Handbag Association (Lefaso), the number of orders that domestic companies have received are on the rise.

This is an opportunity for businesses to restore production and reconnect the supply chains, he said.

Thuan also said that production and trading activities of all enterprises in the industry have not fully recovered, but in general, many firms have overcome difficulties and taken advantage of market opportunities.

He cited Vinh Yen Shoes Joint Stock Company as an example.

Despite suffering low consumption triggered by COVID-19 as people in European nations and the US tend to reduce shopping while many supermarkets are closed to prevent the epidemic, the company has achieved positive achievements thanks to the adoption of flexible measures.

Its turnover reached VND320 billion (US$13.9 million) last year with two million pair of shoes. The figure is expected to rise to VND380 billion (US$16.5 million) this year.

Statistics from the General Department of Vietnam Customs showed the country's export turnover of footwear in the first five months of this year grew 25.5% year-on-year to nearly US$8.4 billion, accounting for 6.4% of the country’s total export earnings of goods.

The US remained the biggest importer with an export value of US$3.35 billion, followed by the EU and China with US$1.92 billion and US$830.9 million, respectively.

The Ministry of Industry and Trade (MoIT) attributed the impressive growth of the footwear industry to the fact that it has taken advantage of tax incentives offered by the European Union - Vietnam Free Trade Agreement (EVFTA).

Figures from the ministry revealed that in the first quarter of this year, the ratio of footwear products receiving certificates of origin for export to the EU reached nearly 99%.

It was necessary for footwear companies to focus on exploiting domestic materials for sustainable development and make full use of tax incentives as well as opportunities brought about by the EVFTA, according to the MoIT.

In fact, 60% of raw materials for the industry comes from mainland China, followed by the Republic of Korea and Taiwan (China).

In recent years, some big enterprises have striven to secure their own material supplies but small-sized businesses failed to do so due to limited resources.

Thuan said footwear companies want to receive financial support policies to develop supporting industries. A tax reduction for enterprises investing in supporting industries would help them manufacture products that are more competitive than those imported from China and other countries, he said.