Boot’s on the other foot

Economic vulnerabilities have driven scores of footwear firms into dire straits.
Leather shoe firm An Thinh had to outsource part of its orders to VitcoShoes – in Ho Chi Minh City – to be able to fulfill export contracts on time since it faced a dearth of workers.
Scores of footwear firms are struggling with a host of difficulties.

According to Ho Chi Minh City Leather and Footwear Association general secretary Nguyen Van Khanh, Vietnam’s export footwear firms faced high lending rates, worker shortages, insufficient local materials and escalating input costs.
“Businesses complain they are in a critical situation as export orders are piling up but they are cautious in signing contracts due to lack of workers,” Khanh said

Low pay of around VND2-3 million ($97-$145) per month was ascribed the core reason why the footwear sector faces chronic labour shortages. Besides, the sector incurs a high rate of labour turnover of around 30 per cent per year partly due to its seasonal features.
Director of Duy Hung Footwear Company, in Binh Duong province’s Song Than 1 Industrial Zone, Ha Duy Hung attributed escalating materials costs against slightly increased product prices to firms’ difficulties in hiking labourer wages.

“Our company offers workers around VND3 million per month, however, the labourers are frequently in and out,” Hung said.
Reality shows that the price of imported materials hiked 20-30 per cent a year, however export orders’ rate rose slightly only though footwear firms asked for price hikes three times with a slight increase of 2-3 per cent each time.

“Foreign clients said they could not accept price hike proposals from Vietnamese firms since their local market does not face inflation threat and the customers are unwilling to pay more. They even said they will place orders with other countries if local firms charge them higher,” Khanh said. – VIR

Tags: Vietnam Footwear, Vietnam Footwear Exports

Posted by VBN on Jun 30 2011. Filed under Garment Textile. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry