Bright prospect for Vietnam’s leather and footwear industry
Vietnam – the second largest shoe exporter in the world –can benefit from the movement of orders from China.
Because of China’s policy of reducing investment incentives in the leather industry to focus on high-tech industries instead, orders for footwear and handbag are forecast to keep moving from China to Vietnam. Vietnam’s leather industry witnessed a growth in the first half of 2018, with 127.4 million pairs of footwear produced. This represents an increase of 5.1% compared to the same period of last year. The export revenue is predicted to reach US$19.5 billion in 2018, a 10% year-on-year increase. Furthermore, the ratification of forthcoming FTAs between Vietnam and other developed countries, i.e. EVFTA and CPTPP is expected to attract significant investment to Vietnam and boost export form Vietnam to the EU and CPTPP participants.
Foreign suppliers of shoe making machinery and materials find Vietnam attractive as a potential market to expand their business. There were 26 Italian firms at the 20th International Shoes and Leather exhibition held in HCMC from July 11 to 13 showcasing their technology and products. Mr. Bellagamba, Far East Area Manager of Comelz – one of these Italian enterprises, believed that Vietnam’s leather industry is growing fast and still has room for more growth. Besides Italian firms, Korean firms are planning to increase investment into Vietnam as well. The Korean footwear Association in Vietnam, which currently has 90 members, aims to increase the number of its members to 120 this year. In addition, the Association has organized activities to enable Korean businesses to exchange experience in order to increase their competitiveness in Vietnam.
BDG insights
Despite the great potential for development, Vietnam’s leather industry is now facing numerous difficulties related to rising labor costs and low productivity. In order to deal with these problems, it is essential for enterprises to adopt advanced technology, organize training programs for employees to improve their productivity and ability to operate high-tech machinery.
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