Footwear and leather sector hard to reach target

After over one year of launching, on May 31 in HCM City, the Ministry of Industry and Trade (MoIT) held a seminar to seek contribution opinions from enterprises and relevant departments for general scheme on Vietnam’s footwear and leather sector development till 2020 and orientation till 2025.

Accounting for 40 percent of industrial production value and 10 percent of the country’s export turnover, Vietnam’s footwear and leather field is creating jobs for about one million workers.

Ending 2009, Vietnam’s export turnover of footwear and leather reached over $4 billion, down nearly 16 percent year-on-year.

Thanks to the recovery of the world economy, this year, the country targets an export turnover of $5.3 billion, up some 30 percent from previous year.

However, in the general scheme, MoIT targets too high figures at $10.4 billion in 2015, $16.5 billion in 2020 and $24 billion by 2025.

Therefore, in next 15 years, footwear and leather export turnover would increase four times with average growth of some 26 percent/year.

According to specialists, the target is too ambitious, not realistic and unfeasible.

Nguyen Huu Thuan, chair of the Vietnam Leather and Footwear Association (Lefaso), said that Vietnam is losing competitive advantages on price against rivals such as India, Thailand and China because the country has to import up to 70 percent of materials and spend higher costs for workers.

Meanwhile, in next three years, the world export market is expected to increase by 3-5 percent. At the same time, the changing consumer tendency will be also a challenge for enterprises.

Currently, Vietnamese enterprises are mainly outsourcing for foreign partners and suffer from lack of design capacity and high technical staff.

Vietnam now has over 500 enterprises operating in leather and footwear field, of which 70 percent is producing under the processing method for well-known fashion brands in the world such as Nike and Converse. But, technique, technology and design mostly 100 percent depend on foreign partners.

In next 15 years, Vietnam’s leather and footwear sector will be still mainly outsourcing. However, enterprises should focus on building brand and direct distribution channels to consumers.

At a seminar, many delegates said that leather and footwear sector should divide the task of enterprises into export firms and firms to serve the domestic market.

Accordingly, exporters should only focus on export and production activities while the others should give their whole mind to brand building, design innovation and market serving.

Presently, Vietnamese consumers are using about 130 million pairs including 70 percent of foreign goods worth nearly $1 billion.

This year, leather and footwear sector targets to hold 50 percent of the domestic market shares instead of the current level of 30 percent.

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Tags: Vietnam Footwear, Vietnam Footwear Exports, Vietnam Footwear Industry, Vietnam leather industry