Increasing the localisation ratio of leather and footwear products isa priority requirement for the industry in international integration asmaterials account for 68-75 percent of footwear production costs, theVietnam Business Forum Magazine (VBF) said.
According to themagazine, the localisation ratio is now only 40-45 percent, while keymaterials like leather, artificial leather and canvas are mostlyimported.
As of early 2014, the country had 129 materialproducers, including tanners. The industrial production value of theleather and footwear material sector expanded 16.5 percent a year in the2006-2011 period. The proportion of material value to overall leatherand footwear production value was only 20.3 percent in 2011. This growthwas lower than the rate recorded by supporting industries of otherindustries like garment-textile, electronics and mechanics, and was notcommensurate with the development potential of supporting industries inVietnam.
The Vietnam Leather, Footwear and Handbag Association(Lefaso) admitted that the added value of leather, footwear and handbagsof Vietnam is still low. In 2013, Vietnam’s leather footwear andhandbag export turnover reached 10.3 billion USD, of which materialsaccount for 70 percent, or 7 billion USD. Particularly, importsaccounted for 60 percent, or 4.2 billion USD, and domestic sourcescontributed 40 percent, or 2.8 billion USD.
In addition,Vietnam’s leather and footwear industry is mainly doing outsourcing forforeign companies which assign materials and product designs. A fewinput materials are just beginning to be manufactured in Vietnam, likeleatherette, non-woven fabrics, technical fabrics, soles, accessories,adhesives and chemicals. Vietnam is now supplying below 20 percent ofthese materials.
Moreover, according to Lefaso, if materialoutput is not invested for expansion after 2013, Vietnam will have toimport 75 percent of leather in 2015 and 87 percent in 2025; 96 percentof leatherette in 2015 and 99 percent in 2025; 92 percent of woven andnon-woven fabrics in 2015 and 94 percent in 2025.
Currently,Vietnam’s leather, footwear and handbag supporting industries aretreated equally with other supporting industries, including incentivesfor trade promotion, investment credit support, export credit support,export contract execution guarantee. However, to reduce dependency andhave input sources, this industry needs more specific support.
Inthe long run, Vietnam needs to develop and implement consistentmechanisms, policies and measures to attract investment capital fromlarge-scale multinational corporations engaged in leather and footwearproduction. In addition, financial support, equipment and technologyadvice are also needed for domestic support enterprises to meet therequirements of FDI firms and increase localisation rates.
In2014, Vietnam's leather and footwear industry targets to earn 12 billionUSD from exports, up 16.5 percent over 2013, including 9.5 billion USDfrom footwear, up 13 percent, and 2.5 billion USD from handbags, up 31percent. To achieve this goal, Vietnam should also take advantage offree trade agreements (FTAs) and the Trans-Pacific Partnership (TPP)agreement. These are considered to be a driving force and a goldenopportunity for the leather and footwear industry to develop bothquantity and quality./.
According to themagazine, the localisation ratio is now only 40-45 percent, while keymaterials like leather, artificial leather and canvas are mostlyimported.
As of early 2014, the country had 129 materialproducers, including tanners. The industrial production value of theleather and footwear material sector expanded 16.5 percent a year in the2006-2011 period. The proportion of material value to overall leatherand footwear production value was only 20.3 percent in 2011. This growthwas lower than the rate recorded by supporting industries of otherindustries like garment-textile, electronics and mechanics, and was notcommensurate with the development potential of supporting industries inVietnam.
The Vietnam Leather, Footwear and Handbag Association(Lefaso) admitted that the added value of leather, footwear and handbagsof Vietnam is still low. In 2013, Vietnam’s leather footwear andhandbag export turnover reached 10.3 billion USD, of which materialsaccount for 70 percent, or 7 billion USD. Particularly, importsaccounted for 60 percent, or 4.2 billion USD, and domestic sourcescontributed 40 percent, or 2.8 billion USD.
In addition,Vietnam’s leather and footwear industry is mainly doing outsourcing forforeign companies which assign materials and product designs. A fewinput materials are just beginning to be manufactured in Vietnam, likeleatherette, non-woven fabrics, technical fabrics, soles, accessories,adhesives and chemicals. Vietnam is now supplying below 20 percent ofthese materials.
Moreover, according to Lefaso, if materialoutput is not invested for expansion after 2013, Vietnam will have toimport 75 percent of leather in 2015 and 87 percent in 2025; 96 percentof leatherette in 2015 and 99 percent in 2025; 92 percent of woven andnon-woven fabrics in 2015 and 94 percent in 2025.
Currently,Vietnam’s leather, footwear and handbag supporting industries aretreated equally with other supporting industries, including incentivesfor trade promotion, investment credit support, export credit support,export contract execution guarantee. However, to reduce dependency andhave input sources, this industry needs more specific support.
Inthe long run, Vietnam needs to develop and implement consistentmechanisms, policies and measures to attract investment capital fromlarge-scale multinational corporations engaged in leather and footwearproduction. In addition, financial support, equipment and technologyadvice are also needed for domestic support enterprises to meet therequirements of FDI firms and increase localisation rates.
In2014, Vietnam's leather and footwear industry targets to earn 12 billionUSD from exports, up 16.5 percent over 2013, including 9.5 billion USDfrom footwear, up 13 percent, and 2.5 billion USD from handbags, up 31percent. To achieve this goal, Vietnam should also take advantage offree trade agreements (FTAs) and the Trans-Pacific Partnership (TPP)agreement. These are considered to be a driving force and a goldenopportunity for the leather and footwear industry to develop bothquantity and quality./.
