The leather and footwear sector exceeded 1 billion USD in bag exportslast year, leading the Ministry of Industry and Trade (MoIT) toofficially prompt the industry to keep developing the product.
Vietnam earned more than 1.3 billion USD by exporting variouskinds of bags in 2011, up 33 percent against 2010, according to theVietnam Leather and Footwear Association (Lefaso).
LefasoChairman Nguyen Duc Thuan said the handbag sector has great prospectsfor development now when many large global companies have shifted theirproduction from China to Vietnam . Local demand has also increasedas Vietnamese consumers move away from cheap and poor quality Chineseproducts.
"The task assigned to the leather and footwearindustry by MoIT will open a great opportunity for companies to takeadvantage of the situation, raise domestic market share and bolsterexports," Thuan said.
By predicting these trends, manycompanies have secured high-value orders, including the Thai DuongGarment and Bag Company in HCM City , which has signed a largecontract to export about 240,000 bags per month.
The company has invested more than 8 billion USD to expand its bag production lines.
Company represent atives said they have received larger orders but theydo not have the production capacity to fulfil them, leading clients toplace orders elsewhere. However, orders are still expected to increaseby 20 percent over the previous year which should help the firm "stayhealthy" despite the economic crisis.
Some footwear companies said that out-sourcing contracts for bag production are easier than footwear sub-contracts.
Thai Binh Footwear Joint Stock Co has decided to invest in bagproduction despite more than 20 years experience in the shoe sector. Toensure success, the firm has coordinated with Coach, a famous USleather company, to tap into the new field.
To reach itsagreement with Coach, Thai Binh Co had to invest in a new facility inSong Than Industrial Zone in Binh Duong province with the capacity for3,000 workers. It also equipped the facility with professional bagproduction lines and trained workers. With these advances, it hasproduced and exported 20,000 bags to the US in just five months andis expected to make five million products in 2012.
Companyleaders said that the partnership has helped them not only boost ordersbut also improve production capacity, gain experience and technicalskills among other benefits. Other companies are pursuing the same path.
Prominent local enterprises such as Sakos, Ladoda, MITI, Mr.Vui and BlackPaw have taken a foothold in the domestic market.
To meet rising demand, the companies have planned to raise productioncapacity and improve product quality in order to take advantage of everyopportunity.
However, Thuan said that not allopportunities could be capitalised because the firms need to satisfyessential requirements such as management capacity, financial resources,equipment, facilities and skilled labour in order to secure contractswith big brands.
The greatest weakness in the handbagsector is the significant dependence on raw material and accessoryimports. The domestic market can only meet about 20 percent of thedemand for leather along with some basic accessories such as labels,laces, buttons and zips. Sophisticated accessories must be imported, hesaid.
At present, many producers still have to outsourceorders from foreign firms so they can only use existing designs. But inthe long-term, industry analysts said that the producers should managethe design process themselves in an aim to better serve the domesticmarket as well as build up strong brands for made-in-Vietnam handbags./.
Vietnam earned more than 1.3 billion USD by exporting variouskinds of bags in 2011, up 33 percent against 2010, according to theVietnam Leather and Footwear Association (Lefaso).
LefasoChairman Nguyen Duc Thuan said the handbag sector has great prospectsfor development now when many large global companies have shifted theirproduction from China to Vietnam . Local demand has also increasedas Vietnamese consumers move away from cheap and poor quality Chineseproducts.
"The task assigned to the leather and footwearindustry by MoIT will open a great opportunity for companies to takeadvantage of the situation, raise domestic market share and bolsterexports," Thuan said.
By predicting these trends, manycompanies have secured high-value orders, including the Thai DuongGarment and Bag Company in HCM City , which has signed a largecontract to export about 240,000 bags per month.
The company has invested more than 8 billion USD to expand its bag production lines.
Company represent atives said they have received larger orders but theydo not have the production capacity to fulfil them, leading clients toplace orders elsewhere. However, orders are still expected to increaseby 20 percent over the previous year which should help the firm "stayhealthy" despite the economic crisis.
Some footwear companies said that out-sourcing contracts for bag production are easier than footwear sub-contracts.
Thai Binh Footwear Joint Stock Co has decided to invest in bagproduction despite more than 20 years experience in the shoe sector. Toensure success, the firm has coordinated with Coach, a famous USleather company, to tap into the new field.
To reach itsagreement with Coach, Thai Binh Co had to invest in a new facility inSong Than Industrial Zone in Binh Duong province with the capacity for3,000 workers. It also equipped the facility with professional bagproduction lines and trained workers. With these advances, it hasproduced and exported 20,000 bags to the US in just five months andis expected to make five million products in 2012.
Companyleaders said that the partnership has helped them not only boost ordersbut also improve production capacity, gain experience and technicalskills among other benefits. Other companies are pursuing the same path.
Prominent local enterprises such as Sakos, Ladoda, MITI, Mr.Vui and BlackPaw have taken a foothold in the domestic market.
To meet rising demand, the companies have planned to raise productioncapacity and improve product quality in order to take advantage of everyopportunity.
However, Thuan said that not allopportunities could be capitalised because the firms need to satisfyessential requirements such as management capacity, financial resources,equipment, facilities and skilled labour in order to secure contractswith big brands.
The greatest weakness in the handbagsector is the significant dependence on raw material and accessoryimports. The domestic market can only meet about 20 percent of thedemand for leather along with some basic accessories such as labels,laces, buttons and zips. Sophisticated accessories must be imported, hesaid.
At present, many producers still have to outsourceorders from foreign firms so they can only use existing designs. But inthe long-term, industry analysts said that the producers should managethe design process themselves in an aim to better serve the domesticmarket as well as build up strong brands for made-in-Vietnam handbags./.
