US firms move footwear factories to Vietnam ahead of TPP

The free trade agreement being negotiated between the US and 11 other pacific nations will bring a lot of business to Vietnam’s footwear industry, experts said during a conference in Ho Chi Minh City on Monday.

Opportunities to expand Vietnam’s footwear industry will be huge, especially after the passage of the Trans-Pacific Partnership Agreement (TPP), experts said during the meeting held by the Vietnam Leather, Footwear and Handbag Association (Lefaso) and its US counterpart, Footwear Distributors and Retailers of America (FDRA).

Business representatives at the meeting said Vietnam has become their main production base in the region.

More firms are likely head here after the passage of the TPP, they said, because it will reduce tariffs on Vietnamese exports to the US to near zero.

Olive Ng of Ever Rite International said his company was founded in Taiwan in 1973, but then moved to China. After encountering problems with fluctuations in the Yuan, the firm moved to Indonesia.

In September of last year, Ever Rite came to Vietnam and now runs 57 assembly lines here. They have plans to add more in the near future, the representative said, as Vietnam's currency has remained stable.

Wages in Vietnam are equivalent of just 38 percent of those in China, even though laborers here exhibit the same productivity and higher skills -- in certain fields.

Scott Thomas of Wolverine Worldwide also said his company is shifting from China to Vietnam.
Thomas said 75 percent of the company’s input supplies come from China, but they will cut that to 33 percent by 2020 and leave the rest to Vietnam, which currently supplies 14.5 percent of the company’s business.

Footwear is Vietnam’s third most-lucrative export industry in terms of revenue and generated US$8.5 billion, last year.

Nearly 600 businesses employ more than 1.1 million workers in direct and supporting sectors to produce 800 million pairs of shoes a year.

Lefaso's Vice Chairman Diep Thanh Kiet said Vietnam’s industry will have to develop a better material base as well as business skills to capitalize on the opportunities presented by the TPP.
Kiet said the local industry doesn't yet produce basic materials like leather, polyvinyl chloride (PVC), polyurethane (PU) and cloth.
Vietnamese firms are also behind in marketing and product development skills, he said.

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