Footwear sector gaining ground
Despite the impact of global economic downturn, the footwear sector has grown strongly over the past five years with the export volumes of shoes rising 163 percent and bags 205 percent.
The Vietnam Leather and Footwear Association (Lefaso) reports that of the sector’s total exports by the end of 2011, 47.5 percent went to the EU market, 28.2 percent to the US, 3.2 percent to Japan and 21.1 percent to other markets.
The sector is expected to become one of the nation’s key exporters.
Potential markets
Experts say Vietnam’s signing several free trade agreements, such as the FTA and Trans-Pacific Partnership (TPP) will open up more opportunities for the footwear sector. Currently, Vietnam is placed behind Indonesia, Bangladesh, and India in the list of key footwear producers.
The high quality of Vietnamese footwear is proven through well-known international trademarks such as Nike, Reebok, Adidas, Bata and Fila.
In recent years, the local footwear industry has successfully concerned the domestic market with its annual sales reaching 60-65 million pairs of shoes to meet half of the local consumer demand. It has a plan to gain more ground as some brand names, such as Timberland, Nike, Adidas and Nine West, have opened retail shops in Vietnam.
Improving productivity
For the benefit of long-term development, An Lac, Thai Vinh, Thuong Dinh, and several other companies are investing in production and transport facilities with a focus on improving distribution and post-sales services.
All businesses in the footwear sector are committed to using more domestic materials in production and creating new designs to catch the eye of consumers.
The sector has estimated its annual growth rate at 9.4 percent in the 2011-2015 period, 8.8 percent in the 2016-2020 period and 8.2 percent in the 2021-2025 period, but the use of domestic materials in production will rise to 60-65 percent and the total value of exports will reach US$11 billion by 2017.
Mobilising capital
To meet the set target, businesses are required to invest as much as VND28,340 billion in the next five years, of which 44 percent will come from domestic sources and 56 percent from overseas.
The sector will develop an additional 3,000 production lines in rural areas and build fashion research centres in big cities. It will complete a profile of domestic and international shoe sizes, improve the skills of designers and build a footwear database. Key products will include sports and canvas shoes.
Lefaso President Nguyen Duc Thuan, says international groups such as Nike and Adidas have proposed establishing human resource training centres to increase labour productivity on a par with other countries in the region.
Frankly speaking, the sector is not yet highly competitive. Labour cost in Vietnam is the same as in Indonesia and India, 40-50 percent higher than in Bangladesh but 25-30 percent lower than in China. Labour productivity in Vietnam is also 20-30 percent lower than in China.