Market Shift Gives Surprising Boost to Footwear Exports

Many people thought that Viet Nam’s export revenue would suffer after the European Commission imposed a 10 percent anti-dumping duty on shoes from Viet Nam. That is not what is happening.
Exports still surging

Que Bang Footwear Co. makes shoes for export

Viet Nam earned US$2.97 billion from exporting shoes in the past ten months, nearly hitting the target for the entire year. Exports to the EU keep on rising, and the sales of leather-capped shoes to America are increasing dramatically; in fact they are thrice the level of a year ago.
The Vietnamese companies that export leather-capped shoes were very worried when the EC started its anti-dumping investigations.
Yet official figures show just how much the export of leather-capped sport shoes has grown. More than 5.2 million pairs of Vietnamese sport shoes were shipped abroad from March to October, earning US$96.58 million. That’s three times the quantity of the corresponding period of 2005, and 2.8 times the revenue.
In the Americas, the biggest importers of Viet Nam-made shoes are the United States, Brazil and Panama. The U.S. imported about 840,000 pairs from Viet Nam, with leather-capped shoes priced at US$18 a pair accounting for 46.2 percent of the total.
Brazil is the big growth story in this respect. Last year the South American nation purchased a few dozen pairs of leather-capped shoes from Viet Nam, whereas this year the quantity has already surpassed 238,000 pairs, earning roughly US$4.6 million. Exports to the Brazilian market fetch higher prices than to any other country in the Americas.
Number three is Panama, where 146,626 pairs of shoes worth US$2.54 million have been shipped from Viet Nam this year.
Other countries in the Americas are also buying more shoes from Vietnam. Taken as a whole, exports to Canada, Mexico, Chile and Venezuela have grown by 26.8 percent year-on-year, triple the rate in 2005 compared to 2004.
A brisk shift in export markets
As soon as the European Commission announced it was starting an anti-dumping investigation, Vietnamese shoe manufacturers began looking elsewhere for buyers.
Nguyen Bao Tho, director of the Saigon Leather and Footwear Import-Export Company, makes the plain observation that the prices of leather-capped shoes are higher than for any other form of exported footwear.
The EU might have been the biggest export market for Vietnamese shoes but as soon as the EC threatened to impose anti-dumping tariffs, many of the producers showed remarkable agility in switching their focus and getting orders from the Americas and Japan.
They had never shipped leather-capped sport shoes to the Americas, but that soon changed and the quantity increase was more than enough to offset the declining sales to the EU.
Mr. Tho says that changing export market was the right thing to do, and the steady stream of orders proves his case, and provides steady employment for the factory workers.
The EU market, however, has gotten used to shoes from Viet Nam and so the European importers still want to buy them. What matters is how Vietnamese enterprises negotiate their prices so that both sides benefit and there is no bad impact on the workers’ pay.
Cooperation for sustainable development
Nguyen Duc Thuan, vice president of the Viet Nam Leather and Footwear Association, says it’s time to restructure the footwear industry. Companies should upgrade their plants, buy the latest manufacturing technology and change their operational ways to suit the changed conditions after Viet Nam joins the World Trade Organization.
Previously Viet Nam’s footwear industry simply handled orders outsourced from abroad and had to abide by the clients’ specifications concerning materials, the production process, quality control and management.
Often a Vietnamese enterprise’s sole contribution was to contribute land for a joint venture’s factory. As the business environment became easier, most of the joint ventures switched to being 100 percent foreign-owned, and the local enterprises saw their business stagnate.
If the industry’s growth is to be sustained, Mr. Thuan says, then the Vietnamese factories need to work closely together and keep each other informed of market news, prices and promotions so that they can win and make the most of large orders.
In addition, the people who work in the industry need more training, especially in design, brand building and general marketing.
Just as important is setting up material supply centers to allow a gradual transition away from the passive approach of simply processing received materials to the active approach of independent manufacturing and the export of home-grown brands.

By Van Minh Hoa – Translated by Yen Chuong

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