Analysis Of Vietnam Shoe Industry Development

According to China's authoritative financial media, the cost of manufacturing in China has risen steadily.

The pattern is being tilted from China to Southeast Asia. Since the 2008 financial crisis, Southeast Asian footwear industry has taken nearly 30% of China's foreign trade processing orders.

The industry is worried that if the pfer of overseas orders to speed up, will trigger more than 20 million people in China's footwear industry is facing impact.

Southeast Asian countries, especially Indonesia and Vietnam, are driven by the reform of current situation and dividend policy. In recent years, the footwear industry has developed rapidly.

 

1, Vietnam shoe industry development present situation

According to the official leather and luggage Association of Vietnam, according to incomplete statistics, as of the end of 2014, Vietnam now has 812 enterprises involved in shoemaking, bags and other business areas.

Shoemaking enterprises: 516

Luggage Enterprises: 263

Enterprises: 33

From the perspective of regional distribution, Vietnam's footwear production is mainly distributed in three major cities in Vietnam: Hu Zhiming, Hanoi and Haiphong.

Hu Zhiming there

Mainly in the high-end leather shoes, the capital of Hanoi is the production of vulcanized shoes in the majority, as for Haiphong City, the distribution of some of the larger footwear processing plants.

Ye Chengjie, vice president of Vietnam leather and luggage Association (Lefaso), said that as the world's fourth largest supplier of footwear, the footwear industry has become Vietnam's third largest export industry, after coal and rubber. In 2014, foreign exchange earnings from footwear exports exceeded $12 billion, an increase of 18% over the same period last year.

The main export markets of Vietnam footwear products are the United States and the European Union. The main export products are high-grade leather shoes and sports shoes.

Statistics released by the customs and Excise Department of Vietnam showed that in 2014, Vietnam's footwear export market reached 40 countries and regions, the largest market for the United States, exports amounted to US $3 billion 330 million, an increase of 26.7% over the same period last year, accounting for 32.2% of Vietnam's total footwear export share.

In addition, Vietnam's exports to Belgium, Germany, Japan and other countries increased by more than 20%.

It is worth noting that Vietnam exported $505 million to China's footwear last year, an increase of 42.2% over the same period last year, and the total export volume ranked sixth.

Since the start of the China ASEAN Free Trade Area in 2010, all the shoes exported from ASEAN to China have all achieved zero tariffs. Chinese shoe companies not only export their orders to Vietnam, but also gradually become the "Southeast Asian shoe industry".

At the end of 2014, the Ministry of industry and trade of Vietnam formulated the "overall development plan for Vietnam's footwear industry in 2025", which was formulated in 2020, specifically for the development of footwear industry. It proposed that the footwear industry should become the pillar export industry of the national economy by 2020. By the year 2020, the number of shoes produced in the year will be 17 billion pairs and 300 million bags and about 1000000 jobs will be created.

Vietnam's Ministry of industry and Trade said that by 2020 Vietnam's export revenue could reach US $24 billion 500 million.

2, Vietnam's footwear industry development advantages

(1) low labor cost

Footwear processing is a traditional labor-intensive industry. The cost of manpower is relatively large in the cost of shoe enterprises. If we can control the cost of manpower, this will greatly enhance the competitiveness of enterprises in the market.

China can become the "world factory" today, and the advantage of low labor cost plays an important role.

Then, with the deepening of reform and opening up and the fading of demographic dividend, wages of Chinese shoemaking industry increased by nearly 3.5 times compared with that of ten years ago.

Some people have compared the monthly salary of workers in the eastern coastal areas of China to about 500-600 dollars, while Vietnam only has about 250 dollars.

The cheap labor advantage is helping to open up the "world factory" to Vietnam with ninety million people.

(2) international environment: GSP preferential tariff rate

In recent years, with the rapid development of China's footwear industry and the continuous growth of footwear export trade, China's footwear industry has encountered large-scale anti-dumping in the European and American markets, and the international trade barriers have been further expanded. Footwear in the international market will often encounter trade barriers such as anti-dumping and trade quota restrictions. Vietnam has enjoyed a number of preferential policies in exporting to the United States, the European Union and ASEAN. It is one of the countries that are less affected by international trade restrictions and anti-dumping, especially exported to the United States and the European Union. Vietnam has been enjoying GSP preferential tariff rates for a long time, which has become an important reason for Vietnam to attract a large number of investors.

MattPriest, chairman of the US footwear distributors and Retailers Association (FootwearDistributorsandRetailersofAmerica), said that the value of Vietnam's exports to the United States has increased at an annual rate of 20%-21% since 2001.

Insiders said that after the signing of the p Pacific Partnership Agreement (TPP) in 2015, Vietnam's footwear exports to the United States will grow more rapidly.

(3) geographical advantages

Vietnam is one of the best natural conditions to develop the economy in the world. Compared with other Southeast Asian countries, Vietnam is a long strip country with rich mineral resources and a coastline of 3260 kilometers, which provides natural geographical advantages for its development in foreign trade and economy. Secondly, Vietnam has nearly 1/3 of the land in the plain, and it has two deltas, the Red River Delta and the Mekong Delta.

(4) policy guidance for government setting up

In order to speed up the pace of reform and opening up, the Ministry of industry and trade of Vietnam issued the guidance plan for industrial development in 2020 and the 2030 outlook in July 2014 to promote domestic demand and enhance the competitiveness of Vietnamese industries in the global market.

This plan, approved by the Vietnamese Prime Minister, will include textiles, clothing and footwear into one of the next pillar industries in Vietnam.

By the end of 2014, Vietnam's Ministry of industry and trade had formulated the "overall development plan for Vietnam's footwear industry in 2020" by the year 2025, especially on the development of footwear industry. From the policy support, investment promotion, domestic sales, government public relations and other aspects, it was proposed that the footwear industry should become the pillar export industry of the national economy by 2020.

3, Vietnam's shoe industry is developing short board.

(1) import of raw materials depends on imports.

Vietnam's footwear industry started relatively late. Although its reform and opening up began in 1986, the development of footwear industry has always been bland and extremely scarce. Until the end of the last century, it was still dominated by fragmented orders in the form of processing. The whole footwear industry lacked the core advantages, and shoes and other related industries still need to be improved.

By the end of 2014, the proportion of localization of Vietnam's footwear industry was only 55%, while 45% of raw materials needed to import.

According to Vietnam's domestic media, Vietnam now imports most of its raw materials for shoemaking every year, and local businesses can only produce low quality canvas, soles and shoe lines.

Most of the shoe machine production equipment and shoes, leather and so on are still import oriented. Among them, only one shoe making material and one leather import account for more than 70%, and to a certain extent, it will pose a great challenge to the fast developing shoe industry in Vietnam.

How to solve the problem of raw materials, meet the needs of integration and increase the proportion of localization, is the subject that Vietnam's shoe industry must deal with.

(2) insufficient technological innovation

From the present point of view, as the world's fourth largest exporter of footwear, the advantage of Vietnam's footwear industry is lower labor costs. But in the long term development, it is not enough to display the strength of the labor force alone.

The low labor cost is only relative to that. With the development of society, factors like price, consumption, inflation, currency and so on will be diluted.

Now Vietnam's footwear industry lacks technological R & D capability to design and build its own brand and production line.

Although labor costs are low, most workers have limited technology and low productivity.

In the next 5 years, if the footwear industry does not invest more in designing and researching new products, production capacity and distribution, the development of Vietnam's footwear industry will be in a bottleneck.

(3) investment environment

Influenced by political factors, Vietnam frequently attacked violence against foreign investors and enterprises. To a certain extent, it increased the risk of industrial investment.

Such unstable events in the political environment will greatly affect and impede the enthusiasm of foreign businessmen to invest in Vietnam. Coupled with the long term inflation problems left behind by the rapid reform and the strained labour relations in many years, they will be the challenges that Vietnam's shoe industry has to face.

Li Peng, secretary-general of the Asian Footwear Association, pointed out that compared with Southeast Asia, China's investment environment and workers' quality have gained the upper hand. Although some factories in China have been shut down, they are mainly caused by their own internal management problems, rather than external factors such as politics.