Small internet-based footwear firms springing up in Dongguan
The internet trend has failed to reverse the decline of the Chinese footwear industry, dragged down by soaring labor costs and chronic labor shortages. Recently released customs statistics show footwear exports dropped 4.7% year-on-year to 1.76 million tons in the first five months.
Since the outbreak of the global financial tsunami in 2008, footwear firms in Southeast Asia have taken over 30% of orders previously allotted to Chinese manufacturers, heavily impacting Dongguan's footwear industry, which used to account for one tenth of the world's footwear output. Many local footwear manufacturers, with employment topping several thousand to 10,000 workers, have transplanted, closed or scaled down their factories, said the report.
The impact, however, has been greatly mitigated by the emergence of numerous small footwear firms in Dongguan, said the report. These new firms are populating China's e-commerce sites and targeting domestic consumers. "Micro footwear firms targeting e-commerce have been developing rapidly in the city in recent years," said Li Peng, secretary-general of the Asian Footwear Association.
"We developed new models, in emulation of foreign fashion, for customers to receive orders they make online on mostly Taobao or Wechat, which can be delivered in three to seven days. The profit margin reaches upwards of 20%, a far cry from 2%-3% for exports, for which we often have to wait three months before the collection of payment," said Guo Dong, who runs a footwear manufacturer in the city.
Li Ping said that small internet-based footwear firms can eliminate inventories, greatly saving costs.