A sharp increase in footwear exports during the first four months is painting a picture of cautious optimism as the industry aims for an annual increase in sales of 20% to 12 billion USD for 2014, radio The Voice of Vietnam (VOV) has said.

The General Statistics Office (GSO) reported that from January to April 2014, footwear exports jumped 21.9% from a year earlier to 2.9 billion USD.

The average monthly growth in export sales in the first four months was over 20% thanks to rising consumption and improvements in standards of living in countries around the world, most notably in the EU.

Vietnamese footwear exports have been enjoying the benefits from many incentives from the Generalise System of Preferences (GSP) offered by the European Union (EU) as from January 2014.

Accordingly, the tariffs levied on made-in-Vietnam footwear exports dropped from nearly 7.7% to less than 4%, thus sharpening Vietnamese footwear’s competitiveness in the EU market.

A Puon Chen Vietnam company representative said exporters are poised to receive yet even more benefit as markets like the EU more fully recover spurring more sales.

In addition, the Trans-Pacific Partnership (TPP) agreement will also create numerous opportunities for footwear exporters in the near future. The Vietnamese footwear industry will be provided with more competitive advantages in such big markets as the US and Japan, as well as other TPP member economies.

At present, local footwear exporters are making use of importers’ shift to new locations to select new goods suppliers. Many importers have chosen Vietnam instead of China since the beginning of this year as labour cost in the Chinese market is going up.

To meet the increasing demand for footwear of both domestic and overseas markets, Vietnamese businesses are expanding their production scale and improving product quality. Many local exporters report they are backlogged on orders for the next six months.

Nevertheless, there remains a paradox in the footwear sector. More than 70% of footwear exports are attributable to direct foreign investment (FDI) businesses, which means that the lion’s share of the profits are going to these businesses, and for 100% Vietnamese owned businesses, added value is still much too low.

In recent years, some large Vietnamese enterprises have increased investment in upgrading technology, modernising production chain, and developing their own brand name for export.

This has improved the localisation rate in Vietnam’s footwear sector, with some market analysts predicting it to hit more than 50%.

However, many small-and-medium-sized enterprises (SMEs) still depend much on imported input materials and more needs to be done to expand the production chain, they caution.-VNA