Pursuing a development strategy aimed at promoting both quantitative andqualitative growth, the Vietnamese leather and footwear sectorcontinues to maintain the position as one of the top leather footwearexporters in the world. Report by the Vietnam Economic News.
TheTrans-Pacific Partnership Agreement (TPP) and free trade agreements(FTAs) are expected to open bright prospects for the sector in the nearfuture.
Increases in quantity and quality
2013 was a yearfull of hardships, but tremendous results were achieved by theVietnamese leather and footwear sector. Businesses in the sectorachieved an impressive export growth rate of 30 percent in October 2013after decreases in four consecutive months. The yearly export valuereached over 10.30 billion USD (footwear: over 8.36 billion USD, up 15.2percent compared with 2012; handbags, suitcases, headwear andumbrellas: nearly 1.94 billion USD, up 27.6 percent).
The UScontinued to be a major export market for Vietnamese leather andfootwear products. In the first 11 months of 2013, exports to the USaccounted for over 30 percent of the total export value of the sector,reaching 2.3 billion USD, up 16.9 percent compared with the same periodof 2012. The UK market ranked second with 496 million USD, up 8.9percent, and was followed by Belgium with 456.1 million USD, up 26.8percent; Germany 388.9 million USD, up 11.8 percent; and Japan 394.7 USDmillion, up 16.8 percent.
2013 also marked satisfactory resultsof the sector in boosting exports to new markets. In the first 11months, exports to Argentina increased by 59.2 percent, to Chile 22.3percent, Turkey 41.5 percent, Israel 38 percent, Slovakia 27.5 percent,and Spain 23.9 percent.
In 2013, Vietnam continued to maintainits position as the fourth largest leather and footwear exporter in theworld. Notably, the added value of the sector ranged from 45-55 percent,the result of great efforts to improve the quality of products.
VietnamLeather, Footwear and Handbag Association Vice President Diep ThanhKiet said the growing localisation rate was the most important factorhelping increase the added value in the leather and footwear sector.
Currently,the sector has to import 45 percent of materials required forproduction, meaning that the remaining 55 percent can be produceddomestically. The local content rate of some domestic products hasreached 70 percent.
Sports shoes are the top export products ofthe sector and their local content rate has reached about 50 percent.Domestic businesses are able to produce most kinds of shoe forms, solesand heels. However, the sector still has to import 65 percent ofmaterials required to make leather products.
New opportunities
TheTPP is expected to bring the Vietnamese leather and footwear sectorgolden opportunities. If Vietnam joins the TPP, the sector will be ableto boost exports to a huge market with 12 member countries.
Moreimportantly, after the agreement is signed, the tax rate applied onVietnamese leather and footwear products will be zero percent instead ofthe current rate of about 14 percent, enhancing their competitiveness.
Leatherand footwear businesses are keeping a close watch on EU-Vietnam FreeTrade Agreement (EVFTA) negotiations. This agreement will pave the wayfor Vietnamese leather and footwear products to enter the EU market thatboasts a population of some 500 million. The tax rate applied onVietnamese leather and footwear exports to the EU will be lowered from12.4 percent to zero percent.
From January 1, 2014, under theGeneralized System of Preferences (GSP), the tax rate applied onVietnamese leather and footwear exports to the EU will be reduced from13-14 percent to 3-4 percent. Domestic businesses have to be ready tocatch new opportunities to increase exports and promote theirsustainable growth.
To meet the TPP’s rules of origin, the LienPhat Company recently invested in building a leather tanning plant with acapacity of 1 million square feet in Dong Nai province to take theinitiative in ensuring sufficient material supplies for domesticproduction and minimise expenses. The plant is scheduled to come intooperation in 2014.
The Gia Dinh Shoes Company has made a gradualshift from importing materials to producing them domestically.Currently, the local content rate of the company’s products is about 70percent.
Along with improving input material production, leatherand footwear businesses have paid attention to increasing theirproductivity. Thanks to the application of new technologies and energyconservation methods, especially the lean manufacturing system,productivity in the sector has increased by 30 percent.
Regardingthe development prospects of the Vietnamese leather and footwearsector, RNCOS, a specialist market research company, said that Vietnamhad become one of the world’s leading footwear manufacturers andexporters. Most international footwear manufacturers have built theirproduction facilities in Vietnam.
Vietnam’s footwear output ispredicted to increase by about 8 percent in the 2013-2017 period,promising the progress of the Vietnamese leather and footwear sector in anear future.-VNA
TheTrans-Pacific Partnership Agreement (TPP) and free trade agreements(FTAs) are expected to open bright prospects for the sector in the nearfuture.
Increases in quantity and quality
2013 was a yearfull of hardships, but tremendous results were achieved by theVietnamese leather and footwear sector. Businesses in the sectorachieved an impressive export growth rate of 30 percent in October 2013after decreases in four consecutive months. The yearly export valuereached over 10.30 billion USD (footwear: over 8.36 billion USD, up 15.2percent compared with 2012; handbags, suitcases, headwear andumbrellas: nearly 1.94 billion USD, up 27.6 percent).
The UScontinued to be a major export market for Vietnamese leather andfootwear products. In the first 11 months of 2013, exports to the USaccounted for over 30 percent of the total export value of the sector,reaching 2.3 billion USD, up 16.9 percent compared with the same periodof 2012. The UK market ranked second with 496 million USD, up 8.9percent, and was followed by Belgium with 456.1 million USD, up 26.8percent; Germany 388.9 million USD, up 11.8 percent; and Japan 394.7 USDmillion, up 16.8 percent.
2013 also marked satisfactory resultsof the sector in boosting exports to new markets. In the first 11months, exports to Argentina increased by 59.2 percent, to Chile 22.3percent, Turkey 41.5 percent, Israel 38 percent, Slovakia 27.5 percent,and Spain 23.9 percent.
In 2013, Vietnam continued to maintainits position as the fourth largest leather and footwear exporter in theworld. Notably, the added value of the sector ranged from 45-55 percent,the result of great efforts to improve the quality of products.
VietnamLeather, Footwear and Handbag Association Vice President Diep ThanhKiet said the growing localisation rate was the most important factorhelping increase the added value in the leather and footwear sector.
Currently,the sector has to import 45 percent of materials required forproduction, meaning that the remaining 55 percent can be produceddomestically. The local content rate of some domestic products hasreached 70 percent.
Sports shoes are the top export products ofthe sector and their local content rate has reached about 50 percent.Domestic businesses are able to produce most kinds of shoe forms, solesand heels. However, the sector still has to import 65 percent ofmaterials required to make leather products.
New opportunities
TheTPP is expected to bring the Vietnamese leather and footwear sectorgolden opportunities. If Vietnam joins the TPP, the sector will be ableto boost exports to a huge market with 12 member countries.
Moreimportantly, after the agreement is signed, the tax rate applied onVietnamese leather and footwear products will be zero percent instead ofthe current rate of about 14 percent, enhancing their competitiveness.
Leatherand footwear businesses are keeping a close watch on EU-Vietnam FreeTrade Agreement (EVFTA) negotiations. This agreement will pave the wayfor Vietnamese leather and footwear products to enter the EU market thatboasts a population of some 500 million. The tax rate applied onVietnamese leather and footwear exports to the EU will be lowered from12.4 percent to zero percent.
From January 1, 2014, under theGeneralized System of Preferences (GSP), the tax rate applied onVietnamese leather and footwear exports to the EU will be reduced from13-14 percent to 3-4 percent. Domestic businesses have to be ready tocatch new opportunities to increase exports and promote theirsustainable growth.
To meet the TPP’s rules of origin, the LienPhat Company recently invested in building a leather tanning plant with acapacity of 1 million square feet in Dong Nai province to take theinitiative in ensuring sufficient material supplies for domesticproduction and minimise expenses. The plant is scheduled to come intooperation in 2014.
The Gia Dinh Shoes Company has made a gradualshift from importing materials to producing them domestically.Currently, the local content rate of the company’s products is about 70percent.
Along with improving input material production, leatherand footwear businesses have paid attention to increasing theirproductivity. Thanks to the application of new technologies and energyconservation methods, especially the lean manufacturing system,productivity in the sector has increased by 30 percent.
Regardingthe development prospects of the Vietnamese leather and footwearsector, RNCOS, a specialist market research company, said that Vietnamhad become one of the world’s leading footwear manufacturers andexporters. Most international footwear manufacturers have built theirproduction facilities in Vietnam.
Vietnam’s footwear output ispredicted to increase by about 8 percent in the 2013-2017 period,promising the progress of the Vietnamese leather and footwear sector in anear future.-VNA
