Vietnam Shoe Exports Expect Increase in 2008

Photo Source: http://usinfo.state.gov

Vietnam Footwear has been reported as one of the top 7 earners of Vietnam since 2005. In 2006, Vietnam exported $3.59 billion worth of footwear, an increase of 20% over 2005.  However, the  statistics released by the Vietnam Leather and Footwear Association (Lefaso) on April 2006 showed that exports to the EU were down due to anti-dumping duties and accounted for just 50% of Vietnam’s total footwear exports, while the figure was 70% previously. However, the EU remains the biggest export market for Vietnamese shoemakers. Exports to the EU remain big as Vietnam-made shoes can enjoy preferences under the framework of the Generalised System of Preferences (GSP) when they are exported to the EU.
Before the anti-dumping tax rates on Vietnam-made shoes were announced, European partners delayed placing orders for fear of high tax rates which would make Vietnam-made shoes unmarketable in the EU market. However, the situation has improved a little since the EU announced the anti-dumping tax rate of 10% on Vietnam-made shoes. The 10% tax rate on Vietnam’s products, according to analysts, proves to be not the “worst scenario”, especially as China-made shoes were imposed 16.5%. The lower tax rate on Vietnam-made shoes would make Vietnam’s products more competitive than China’s in the EU market.
At the same time in 2007, exports to the US increased sharply last year with turnover at $802mil, up by 30% over 2005. The export products were mainly made by 100% foreign owned, joint ventures and several big producers, who did the outwork for big groups, namely Nike, Adidas, Reebok, etc. The products are sold through main distribution channels.  Sports shoes proved to be the biggest export item of Vietnam with 381million pairs exported 1n 2007 worth $2.63 billion, accounting for 73% of the total footwear export turnover. Vietnam, by end of 2007, had 750 footwear production lines which allow it to make 715mil pairs a year.

According to the Vietnam News Agency, the industry is still growing at a fast pace.  In 2008, Vietnam expects to earn US$4.5 billion from footwear exports.  The country has become one of the big shoe producers in the world, ranking third in Asia, after China and India.

In the Tuoi Tre Vietnamese language newspaper's interview with
Nguyen Duc Thuan, Deputy Chairman of the Leather and Footwear Association of Vietnam (Lefaso) in 2007, Mr. Nguyen Duc Thuan explained that two of the disadvantages of Vietnam’s footwear industry are its reliance on imported materials and undiversified models.
In order to improve the designing capability, local companies should focus on human resources in building a  cadre of marketing staff that is knowledgeable about the markets, not just improve the designs.  Regarding the material issue, the local shoemakers needed the government’s support. The Government should have suitable policies to encourage investment in making materials for the ootwear industry. The projects on building local material markets for the footwear industry have remained on paper and have not been transferred into reality.

On the EU anti-
anti-dumping tax rate of 10% being imposed on Vietnam-sourced shoes, Nguyen Duc Thuan said that Vietnam is now a WTO member and Vietnamese shoe manufacturers should learn about rules and laws of import countries and upgrade their accounting systems.
Despite the anti-dumping problems, Vietnam Footware industry is still continuing to progress.  The Vietnam News Agency reported that Vietnam was still expected to earn US$4.5 billion from footwear exports in 2008.  That is an increase of 15.4 % over 2007.

According to the Vietnam Leather and Footwear Association (Lefaso), the country’s leading export markets are the US, the European Union, Japan, Canada and Australia. However, the Association also sees great potential for new markets in Africa, Southern Asia and Eastern Europe where competition is less intense and regulations are less onerous.

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