Wednesday, 26 November 2014

US emerges as new top market for Vietnam footwear: data

The U.S. is likely to surpass the EU to become the largest import market of Vietnamese footwear products as many importers have shifted orders from factories in China to the Southeast Asian country, due to a less competitive Chinese business environment.
The EU market used to account for more than 50 percent of Vietnamese footwear shipments but the figure dipped to 35 percent last year, whereas the U.S. market rose to 33 percent, according to data from the Vietnam Customs.
Vietnam exported $8.3 billion worth of footwear products in 2013.
Matt Priest, president of the Footwear Distributors and Retailers of America, said Vietnamese footwear exports to the U.S. have expanded at a annual pace of 20-21 percent since 2001.
In the Jan-Oct period of this year, Vietnam shipped $2.67 billion worth of footwear to the U.S., a 22 percent increase compared to the same period last year.
Nguyen Chi Trung, director of a shoemaking firm in Ho Chi Minh City, said the company is nearing its target of exporting three million pairs of shoes this year.
“As many as 60-70 percent of the exports are to the U.S.,” Trung happily said, adding the figure was only 10 percent in 2013.
“I can say the U.S. is now our key export market.”
The company sells deluxe leather shoes to its American partners at $30 a pair, Trung said.
“After excluding all expenses, we receive $12-13 per pair, which is quite high compared to taking shoe outsouring orders for lower segments,” he added.
Scott Thomas, a representative from the U.S.-based Wolverine WorldWide, said there has been an impressive shift in the company’s footwear suppliers.
In 2007, 81.7 percent of the firm’s footwear supply was from China, and 10 percent from Vietnam.
Imports from China dropped to 75 percent last year, while Vietnam rose to 14.5 percent.
By 2020, the figure will be 35 percent from Vietnam and 33 percent from China, Thomas added.
“One of the main reasons for the shift of footwear orders from China to Vietnam is that the Chinese business environment has lost many of its advantages,” Diep Thanh Kiet, deputy chairman of the Vietnam Leather and Footwear Association (Lefaso), explained.
Exports of Vietnam-made footwear to the U.S. are expected to grow even stronger if the Trans-Pacific Partnership agreement is signed next year, according to industry insiders.
Once the trade pact takes effect, Vietnamese footwear will enjoy zero import duty in the U.S., compared to the current 50 percent.
Kiet, from the Lefaso, cautioned that the opportunity is huge, but is not easy to grab.
“Besides complying with strict safety regulations, Vietnamese shoemakers must also be able to fulfill large orders from U.S. importers,” Kiet said.
“To this end, the businesses must have strong production capacity, which can cost millions of U.S. dollars of investment, which not all local shoemakers are able to afford.”
Kiet added that Vietnamese shoemakers must not focus only on having large orders for low-segment products, meant to take advantage of the low labor costs in Vietnam.
The current shift from China to Vietnam will yield no value-added benefits for Vietnamese shoemakers if their eyes are merely on such orders, he said.
http://tuoitrenews.vn/business/24237/us-emerges-as-new-top-market-for-vietnam-footwear-data

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