Local cobblers fail to shine in global market

VOV.VN - The Ministry of Industry and Trade (MoIT) has said local shoemakers in Vietnam are failing to adapt to the competitive world and meet with the strict quality demands of European customers.

local cobblers fail to shine in global market hinh 0

Inexpensive eye-catching fashionable footwear from China and other Asian countries is flooding the European marketplace, said Pham Anh Tuan, deputy director of the MoIT Light Industry Department, at a recent conference in Hanoi.

As a result, Chinese and other foreign made shoes have been outshining those locally produced, making it extremely difficult for local cobblers to get any traction in the markets of any of the EU 28 member states.

Currently the foreign sector accounts for 79% of the Vietnam footwear industry with the domestic sector accounting for the balance of 21%, said Mr Tuan. He noted there are roughly 600 local companies in the segment, employing an estimated one million workers.

Roughly three-fourths of the domestic sector does outsourcing work for foreign companies using designs and materials supplied to them, he continued, adding that only about one-fourth of the industry uses their own designs and purchased materials.

Most of the latter companies purchase their leather and textiles from China, the Republic of Korea or Taiwan. Although there is some limited domestic textile production that takes place within Vietnam, only about one-fourth of it is considered export quality.

Vietnam needs to develop the tanning segment of the economy, said Mr Tuan. However, the industry emits a lot of pollutants into the environment. The disposal of industrial wastes requires expensive modern waste systems that are well beyond the financial capacity of the domestic sector.

In addition, the laws related to pollution lack clarity. As a result, foreigners are reluctant to commit foreign direct investment in the tanning segment to upgrade waste treatment infrastructure and technology.

Foreigners, principally China, also dominate the domestic retail footwear market, controlling a 60% market share, said Mr Tuan. He said the best estimates put the total number of pairs of shoes sold in Vietnam annually on average at 150 million.

Although Chinese shoes are trendy, they are not durable, he said, adding that Vietnamese customers buy them because they are less expensive than those locally made.

Local manufacturers dominate only the low-cost segment, mainly sandals. They have a competitive edge over imports with mainly poor and rural people whose number one concern lies with the cost, said Mr Tuan.

We’ve been urging local shoemakers to get organized and increase sales in the EU member states, but they have just had to many difficulties keeping up with the competition in innovativeness, quality and price, he underscored.

Pursuant to the Vietnam-EU Free Trade Agreement (FTA) signed late last year, the industry segment could see benefits from preferential tariff reductions but those won’t happen until at least 2018.

Even then, due to complex rules of origin ‘yarn-forward rules’ stating that every piece of a shoe will have to come from EU signatory states to qualify for the tariff exemption, there may be little to no benefit.

Meanwhile other countries such as the Philippines, Pakistan and Bangladesh currently are more price competitive than local shoemakers in the EU as they benefit from preferential trade arrangements.

In particular, they currently have lower tariffs on their exports under the European Union’s Generalized System of Preference Plus (EU-GSP+) scheme that benefits developing countries.

The shoe market in Europe has been improving, noted Mr Tuan. It’s just very frustrating for local cobblers who haven’t figured out how to effectively compete in it.

VOV

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