Vietnam steps into big global shoes

13:15 | 10/11/2018 Trade

(VEN) - The export turnover of the Vietnamese leather and footwear sector is expected to reach a record US$20 billion this year due to strong foreign investment and various free trade agreements.

vietnam steps into big global shoes

According to the Vietnam Leather, Footwear and Handbag Association, Vietnam is one of the leading footwear producing and trading countries in the world and has major strategic partnerships with several famous footwear brands such as Nike, Adidas, North Face, Timberland and Columbia. The latest data shows that Vietnam continued to rank second among the top 10 largest footwear exporters, accounting for 7.4 percent of the global footwear supply, behind China. Vietnam has more than 700 manufacturers and 1.5 million workers in the footwear sector, of which around 200 companies are operated by foreign funds, which have contributed 70 percent of the country’s footwear export turnover. Furthermore, Vietnam is the fastest-growing country in the One Belt One Road area, with footwear exports of US$6.5 billion in 2011, US$13 billion in 2017, and about US$20 billion in 2018.

Along with continuous growth, footwear production has undergone changes. Specifically, the footwear sector in Ho Chi Minh City developed strongly in the past, but now has slowed down. Nguyen Binh An, secretary general of the Vietnam Cotton Association, said Ho Chi Minh City can no longer meet the requirements of the garment and footwear industries and businesses have moved their factories to other regions such as central and northern Vietnam.

Before the 2000-2005 period, domestic businesses accounted for 60 percent of total footwear exports, with FDI making up the rest. However, FDI companies currently account for 70 percent of the country’s footwear export turnover, and even 80 percent for foreign-invested firms with strong financial capacity that make good use of Vietnam’s labor force. Domestic businesses, in turn, have come under pressure due to low labor productivity and backward machinery and equipment.

To overcome technology weakness, Vietnamese businesses should strengthen participation in trade fairs, enhance trade promotion activities and promote cooperation with other countries in the region to seek advanced machinery, equipment and technology as well as find sources of raw materials for production.

According to experts, Vietnamese businesses need to improve labor productivity, diversify their products, apply new

technologies in production in order to save costs, and develop sources of raw materials.

Mai Ca & Hoang Ty