Lefaso chief anticipates footwear production transfer, market expansion

Vietnam is now listed among top five footwear producers in the world. Yet Vietnamese enterprises must still import the majority of materials needed for production. Nguyen Duc Thuan, Chair of the Vietnam Leather and Footwear Association, spoke with Dau tu reporters about what companies need to step up production and boost exports.

Dau tu: Some estimate that 60 percent of materials needed to make shoes have to be imported. Will the situation improve?

Nguyen Duc Thuan: Materials for shoe soles and packaging can be 80-90 percent sourced domestically, but Vietnam still must import tanned leather and high quality leatherette to make shoe caps, materials to make some soles and decoration materials. We have been trying to restrict imports, but the volume will not likely decrease in the short term.

Dau tu: As far as I know, footwear enterprises have been trying to develop supporting industries that provide materials to manufacturers. However, many areas have refused these projects, especially tanning leather?

Thuan: Yes, it is true. We came to many areas to convince them to allow us to implement such projects, but they refused because they fear environment pollution. Now in Vietnam, there are only 20 Vietnamese and five foreign enterprises operating in the field of leather tanning. Since their capacity is limited, we still have to import materials.

Dau tu: Some argue now is the right time to encourage footwear firms to move factories from big cities to other provinces and urban areas. What do you think about that?

Thuan: I totally agree, because this will ease difficulties in labor and other social issues. I think that areas with labor and transport advantages will be the ones specializing in making shoe caps, because that phase of production needs 65 percent of the total labor for the footwear industry.

We will preserve enterprises in key economic areas in the north, south and central regions. However, we will use part of their facilities for design centres, brand building, shopping malls and material trading centres, while we maintain some phases of the production chain.

Dau tu: In order to obtain the high growth rate of 10-15 percent as currently seen, which markets will be targeted by Vietnamese enterprises in addition to the two loyal markets, the EU and the US?

Thuan: Besides those two markets, which bring 80 percent of the total export revenue, we are gradually penetrating the Japanese market. At the same time, we are trying to promote exports to ASEAN, South America and China. We know for sure that the 10-15 percent growth rate will be maintained from now to 2025.

Dau tu: How about the domestic market?

Thuan: Currently, domestic enterprises are providing 65 million pairs of shoes to the home market every year, meeting 50 percent of demand. Most footwear products imported to Vietnam have gone through the cross-border channel, while well-known brands account for just 10 percent. In 2011-2025, we will strive to obtain 80 percent of the added value in the industry, covering different phases in the production line, from market surveys, designing, production and distribution.- Dau tu

Tags: Lefaso, Vietnam footwear sector