Shoe Enterprises Should Prepare For Full Score Before Investing In Vietnamese Footwear Industry

Now Vietnam's footwear industry lacks technological R & D capability to design and build its own brand and production line.

Although labor costs are low, most workers have limited technology and low productivity.

In the next 5 years, if the footwear industry does not invest more in designing and researching new products, production capacity and distribution, the development of Vietnam's footwear industry will be in a bottleneck.

First is the low labor cost.

Footwear processing is a traditional labor-intensive industry. The cost of manpower is relatively large in the cost of shoe enterprises. If we can control the cost of manpower, this will greatly enhance the competitiveness of enterprises in the market.

China can become the "world factory" today, and the advantage of low labor cost plays an important role.

Then, with the deepening of reform and opening up and the fading of demographic dividend, wages of Chinese shoemaking industry increased by nearly 3.5 times compared with that of ten years ago.

Some people have compared the monthly salary of workers in the eastern coastal areas of China to about 500-600 dollars, while Vietnam only has about 250 dollars.

The cheap labor advantage is helping to open up the "world factory" to Vietnam, which has a population of ninety million.

The second is the preferential tax rate for GSP in the international environment.

In recent years, with the rapid development of China's footwear industry and the continuous growth of footwear export trade, China's footwear industry has encountered large-scale anti-dumping in the European and American markets, and the international trade barriers have been further expanded. Footwear in the international market will often encounter trade barriers such as anti-dumping and trade quota restrictions. Vietnam has enjoyed a number of preferential policies in exporting to the United States, the European Union and ASEAN. It is one of the countries that are less affected by international trade restrictions and anti-dumping, especially exported to the United States and the European Union. Vietnam has been enjoying the preferential tariff rate of footwear GSP for a long time, which has become an important reason for Vietnam to attract a large number of investors.

MattPriest, chairman of the US footwear distributors and Retailers Association, has said that the value of Vietnam's exports to the United States has increased at an annual rate of 20%-21% since 2001.

With the signing of the p Pacific Partnership Agreement (TPP) in 2015, Vietnam's footwear exports to the United States increased even more rapidly.

Third, geographical advantages.

Vietnam is one of the best natural conditions to develop the economy in the world. Compared with other Southeast Asian countries, Vietnam is a long strip country with rich mineral resources and a coastline of 3260 kilometers, which provides natural geographical advantages for its development in foreign trade and economy. Secondly, Vietnam has nearly 1/3 of the land in the plain, and it has two deltas, the Red River Delta and the Mekong Delta.

Fourth, the government set the stage to guide the policy.

In order to speed up the pace of reform and opening up, the Ministry of industry and trade of Vietnam issued the guidance plan for industrial development in 2020 and the 2030 outlook in July 2014, aiming to promote Vietnam's domestic development.

And enhance the competitiveness of Vietnamese industries in the global market.

This plan, approved by the Vietnamese Prime Minister, will include textiles, clothing and footwear into one of the next pillar industries in Vietnam.

By the end of 2014, Vietnam's Ministry of industry and trade had formulated the "overall development plan for Vietnam's footwear industry in 2020" by the year 2025, especially on the development of footwear industry. From the policy support, investment promotion, domestic sales, government public relations and other aspects, it was proposed that the footwear industry should become the pillar export industry of the national economy by 2020.

There are three short boards at the same time, and this is exactly the development opportunity of Jinjiang shoe industry chain.

The first big short board is Vietnam's raw materials, which depend on imports, according to Ke Yu.

Vietnam's footwear industry started relatively late. Although its reform and opening up began in 1986, the development of footwear industry has always been bland and extremely scarce. Until the end of the last century, it was still dominated by fragmented orders in the form of processing. The whole footwear industry lacked the core advantages, and shoes and other related industries still need to be improved.

By the end of 2014, the proportion of localization of Vietnam's footwear industry was only 55%, while 45% of raw materials needed to import.

According to Vietnam's domestic media, Vietnam now imports most of its raw materials for shoemaking every year, and local businesses can only produce low quality canvas, soles and shoe lines.

Most of

Production equipment and shoes, leather and so on are still import oriented. Among them, only one shoe making material and one leather import account for more than 70%, and to a certain extent, it will pose a great challenge to the fast developing shoe industry in Vietnam.

How to solve the problem of raw materials, meet the needs of integration and increase the proportion of localization, is the subject that Vietnam's shoe industry must deal with.

"At present, China accounts for a large proportion of Vietnam's shoe and clothing raw materials imports, and this is an excellent opportunity for Jinjiang shoe materials to go out."

Second, lack of technological innovation.

From the present point of view, as the world's fourth largest exporter of footwear, the advantage of Vietnam's footwear industry is lower labor costs. But in the long term development, it is not enough to display the strength of the labor force alone.

The low labor cost is only relative to that. With the development of society, factors like price, consumption, inflation, currency and so on will be diluted.

Third, investment environment.

Under the influence of political factors, Vietnam has frequently attacked the violence against foreign investors and enterprises, to a certain extent, increased the risk of industrial investment.

Such unstable events in the political environment will greatly affect and impede the enthusiasm of foreign businessmen to invest in Vietnam. Coupled with the long term inflation problems left behind by the rapid reform and the strained labour relations in many years, they will be the challenges that Vietnam's shoe industry has to face.

In view of the fact that Vietnam is not standardized in the local shoe accessories market and the supporting industry chain is not mature, many manufacturers and traders in Fujian and Zhejiang are hoping that Vietnam has a professional shoe market. Under the convening of Ke Yu, several leaders of the Fujian chamber of Commerce in Vietnam jointly established Vietnam Fujian International Investment Co., Ltd., and began planning the Vietnam shoe clothing (China) logistics park plan.

According to Ke Yu, according to the design plan, there will be a showroom and office building with display and office as well as a professional workshop for supporting the storage and production of shoes and accessories. The whole design effect will be displayed in the Expo April 18 to 21 in Jinjiang. When it comes to landing, it will depend on the local government's approval of the park procedures.

The establishment of China's shoes and clothing industrial park will help enterprises in Quanzhou's shoes and apparel industry chain go out and take the "one belt and one road" ride to better serve the international market.