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Vietnam’s footwear makers at last take aim on the home market
Nervous after last year’s big drop in export demand, footwear producers think that they need to sell shoes on the domestic market too. However, it won’t be easy.
Ironically, though Vietnam is now one of the major suppliers of both dress and sports shoes to the world market, with many companies skilled at making high-fashion shoes to the exact specifications of foreign retailers, its factories ‘own’ only about 20 percent of the home market.
Duy Hung Footwear Company in Binh Duong province exports five million pairs of shoes every year. Now it is eyeing the domestic market. In late 2009, the company signed some contracts to supply sports shoes to schools. It is planning to sell dress shoes trademarked Duy Hung at supermarkets.
Domestic market is big, but full of foreigners
Ha Duy Hung, a Duy Hung Director, said that winning a strong position in the domestic footware market is now the long term strategy of his company. However, he said, it is not easy to implement the strategy.
The HCM City Leather and Footwear Association judges that Vietnamese-made leather footware is losing competitiveness in the world market, especially because these shoes must bear EU anti-dumping duties and have lost GSP (Generalized system of preferences) status.
Nguyen Van Khanh, Secretary General of the HCM City Leather Footwear Association said that to date, exports to the EU have accounted for 75 percent of total leather footware exports. However, the EU importers now are shifting their attention to Indonesia and Cambodia, where shoe companies can produce more cheaply.
Many Vietnamese footware makers are giving up on shoes with leather uppers, aiming to make other kinds of shoes for the EU market. Still others are now eyeing the domestic market.
However, in the home market, some 130 million pairs of footwear every year, domestic producers now must compete fiercely with imports, especially from China and Taiwan. Foreign-made shoes hold a 70 to 80 percent market share, according to the Vietnam Retailers’ Association.
In Binh Duong province, the Director of a footwear company said that he can earn more per pair of shoes in the domestic market than in producing for export. He explained that while foreign importers always order several thousand pairs of a footwear design at one time, domestic distributors just place small orders, which requires producers to diversify designs and establish more flexible manufacturing systems.
Vietnamese firms unskilled in design and distribution
At a recent workshop organized by the Trade Promotion Agency (Ministry of Industry and Trade), most participants agreed that export companies had focused on making goods to the specifications of foreign customers. They had not invested much in developing their own capability to design attractive products. Few, indeed, have any designers or market analysts on their staffs.
A member of the Footwear Association said that the prevalent approach is to copy the designs of shoes already on the market. Experts point out that with such a strategy, footwear enterprises will not be able to cement a firm position in the market.
Secretary-General Khanh observed that there are only a few wholesalers or retailers HCM City’s big Binh Tay and An Dong Markets who emphasize made-in-Vietnam footware. Upscale retail shops on Pasteur and Ly Chinh Thang streets similarly sell few domestically-made products. Meanwhile, small enterprises do not have capital to open retail premises or emphasize marketing and distribution.
Khanh said that the Leather and Footwear Association has decided to join forces with Vinatex Mart to sell fashion shoes at the retail chain’s fifty-six stores nationwide.
Vietnamnet, TBKTSG
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