In 2018, the domestic leather and footwear industry has many advantages, as many FTAs signed by Vietnam will take effect, opening up opportunities for enterprises to attract orders and expand export markets.
High competitive advantage
Vietnam is now the world's second largest exporter and third in terms of footwear production. Currently, Vietnam's largest footwear export market is US, accounting for 36%, followed by EU with about 30.6% total export turnover of this sector. Vietnam is deeply integrating into the global economy through many signed and implemented FTAs , including FTAs with major export markets such as EU, Japan, Russia and ASEAN. This will help Vietnamese manufacturers to access more markets with preferential tax rates and create incentives for foreign investors in export industries.
Footwear production line of Hung Thinh Company.
Vietnam now has more than 1,500 businesses with about 1 million workers working in tanneries and 500,000 workers in supporting industry. Most workers in footwear industry in our country have better skills than those in emerging markets such as Cambodia, Bangladesh, Ethiopia, Myanmar...
In Binh Duong, footwear products for export are gradually affirming its competitive advantage in the international market and are popular with customers. Since the beginning of the year, raw material prices of footwear industry have been stable, did not increase compared with the same period last year, contributing to the success of provincial leather and footwear industry. In the last six months, the province's footwear export turnover reached $278.4 million, up 16.4% y/y, accounting for 11.4% the province's total export turnover.
According to provincial Department of Trade and Industry, in 2018, when Vietnam-EU (EVFTA) FTA officially takes effect, Vietnam's footwear and handbag industry have a higher competitive advantage when being exported to these markets, because Vietnamese footwear products get tariff 0%, especially handbags and sport shoes (which account for a high share in EU exports). In addition, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) will also contribute positively to the growth of footwear and leather exports in 2018. Nguyen Ngoc Son, Vice President of Binh Duong Leather and Footwear Association, CEO of Ngoc Son Crocodile Investment and Trade Joint Stock Company, said that since the beginning of the year, the company's export and import activities have achieved stable growth; export orders have increased about 10% y/y. By this time, the company signed orders until 2018.
Enterprises must comply with regulations
In addition to opportunities offered by FTAs, the domestic footwear industry is still facing a number of challenges, including increased labor costs, automation capacity, trade protectionism in some markets... Pham Van Xo, Chairman of Binh Duong Import-Export Association, said that in 2018, footwear sector had many advantages when exporting to EU market. However, in order to enjoy preferential tariffs when exporting to this market, enterprises must actively meet the rules of product’s origin, rules of origin for parts of footwear products; must be proficient in technical barriers to trade, particularly regulations on the limitation of hazardous chemicals, consumer product safety, safeguard measures in terms of price that are applied in EU market. Truong Thuy Lien, Director of Lien Phat Company, said that Vietnamese footwear enterprises should comply with the standards of product quality, localization ratio as well as social responsibility commitments.
According to experts, footwear industry is always associated with fashion industry, so businesses have to shorten delivery time, catch up market trends. Even outsourcing businesses have to change, be more involved in creating value added products such as design, looking for raw materials to better support customers.
In order to create more favorable conditions for enterprises to manufacture and export, in the coming time, Binh Duong will continue to improve its business investment environment and promptly solve difficulties for investors. In addition, the province continues to hold dialogues, meetings with business leaders, business associations, industries to timely solve difficulties in production, business, trade promotion , introduction of investment opportunities ...
Reported by Phuong Le – Translated by Ngoc Huynh
