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Vietnam’s footwear industry actively seizes opportunities from TPP - Part 1 PDF Print
Wednesday, 02 December 2015 08:54

VIETRADE - Vietnam’s footwear industry accounts for 8% - 10% of the total annual export turnover; being the 3rd important product after textiles, mobile and components. Exports of footwear products were worth US$8.764 billion in 2012, US$8.4 billion in 2013, and US$10.3 billion in 2014. In 2015, it is highly likely that the sector will reach its target, reaching approximately US$ 13.5 – 14 billion total export turnover and 65%-70% localization rate. This is because a great number of footwear exporting enterprises have signed their contracts till the end of Q III, or even Q IV-2015 while exporting prices to most of the markets such as the United States, Japan, Australia, and South America are stable, or even rise as a result of increased minimum wage in Vietnam.


Vietnam is ranked in the top 4 countries having biggest footwear productions worldwide, being the 3rd country (after China and Italia) in terms of value, accounting for about 10% of total market; standing in 2nd position after China in terms of market share in the  3 biggest exporting markets including: the United States, European Union, and Japan.


Export turnover of Vietnam’s footwear industry in October 2015 was worth US$ 959 million, increasing by 18.72% and 11.44% compared to that of the previous month and the same month last year respectively. In general, exports of footwear in the first 10 months of 2015 was worth more than US$ 9.7 billion, increasing by 16.99% compared to the same period last year.


Vietnamese footwear is exported to 45 markets worldwide, of which the United States is always the biggest importer. In the first 10 months of 2015, exports to the US was US$ 3.3 billion, up 24.82% compared to the same period last year, accounting for 34.4% of total exports of the industry. Exclusively in October 2015, exports of footwear industry decreased by 2.15% compared to that of September 2015, but increased by 14.13% compared to the same period last year, standing at US$ 310 million. 


Chinese market is the 2nd biggest market in terms of export turnover, generating US$ 611 billion, up 43.37% compared to that of the same period last year, contributing 6.3% of total exports. Exclusively in October 2015 export value increased by 87.98% and 29.43% compared to that of last month and the same period last year respectively, being more than US$ 70 million. The UK is in the next place with value of US$ 572 million, accounting for 5.9% of total exports, up 22.55% compared to that of the same period last year. Exclusively in October 2015 export value increased by 30.17% and 25.67% compared to that of last month and the same month last year respectively, reaching US$ 64 million.


Notably, exports to Slovakia market grows sharply, increasing by 336% compared to that of last month while decreasing by 22.36% compared to that of the same month last year, despite its modest export value of US$8 million in October 2015.


Exports of footwear in the first 10 months of 2015 to almost all markets have positive growth in terms of value compared to the same period last year; of which there are some high-growth markets including France (+69.93%); China (+43.37%); Denmark (+39.21%); Singapore (+38.83%); Philippine (+38.04%);


Vietnamese footwear export revenue in 2011–2015



According to Footwear Distributors and Retailers of America (FDRA), since 2001, export of footwear of Vietnam to the United States has increased by 20-21% each year. Currently, Vietnam makes up 10% (ranking 2nd) of total import of footwear of the United States while China, Indonesia, Italia, India accounts for 80%, 4%, 0.8%, 0.7% respectively. It is forecasted that Vietnam’s footwear market share in the United States will increase 12% in 2018.


According to FDRA, Vietnam’s potential competitiveness of footwear industry is promising thanks to a stable economy, monetary system, politics and society, abundant, cheap, and high-skilled manpower that is in golden demographic stage with 42.1% of employees under 25 years old, 48 working hours/ week (while it is 40 in China), and becoming the destination embracing the restructuring waves of footwear industry in the region. Vietnam is chosen by Japan to be its manufacturing factory that increased from 27% (in 2010) to 30% (in 2013) of its total annual footwear production. Nike, the biggest sport shoes manufacturer of the United States, also has 42% of its total production in Vietnam, compared to 30% and 25% in China and Indonesia respectively.


According to the assessment, if FTA is signed with EU, export tax on footwear from Vietnam to EU will be reduced from 12.4% to 0%. Tax reduction is even more dramatic when TPP is signed, decreasing from 14.3% to 0% applied to most of the exporting footwear from Vietnam to the United States except 17 – 19 types of sensitive shoes that have to take longer time before enjoying  tax reduction and strict management of origin such as protection shoes and boots. In ASEAN group, there are 4 countries including Thailand, Vietnam, Indonesia, and Malaysia that having the most developed and similar footwear industries. However, compared to other countries, Vietnam seems to have more competitive advantages such as high-skilled and cheap labor..., therefore, market expansion is very promising.


Participating in TPP, Vietnam has more opportunities to modernize its machine and devices as well as to attract more investors into leather sector, facilitating the shoe industry in accessing the advanced and long - established shoe production technology, tightening connection between enterprises along the supply chain, promoting enterprises in entering its counterparts’ markets, and further integrate in global value chain with its advantages in “golden” labor, “clean” investing environment, reduced tax and adverse elements to investment and services, fraudless commerce, and good protection for patent of large brands. (to be continued)

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