HCM CITY — More than 50 per cent of leather and footwear companies in HCM City have no current orders, and some have had to suspend operations. Most of these enterprises sell low-priced footwear, said an official from the Viet Nam Leather and Footwear Association (Lefaso). The official, who declined to be named, said that many orders from the EU for footwear under the wholesale price of US$1.5 per pair are going to Chinese companies. One manager of an enterprise specialising in foam rubber sandals and straw mats for the EU market said he had to lower production costs to $0.95 per pair because of the more competitive Chinese prices. Footwear exports to the EU dropped by 7.5 per cent in the first four months of 2005, the footwear association said. Diep Thanh Kiet, director of the Nam Viet Footwear Shareholding Co said Chinese companies have been successful in attracting orders for low-, medium-, and high-priced footwear. Kiet said some companies with strong financial capacity have turned to medium-priced footwear, especially gym shoes. These companies are expected to receive orders through the third quarter of this year, he said. Kiet said only large-scale footwear enterprises will have enough orders for the entire year. The development of specific industrial parks and complexes for footwear factories in China has created favourable conditions for Chinese footwear manufacturers to better invest in advanced technologies, which has helped them improve quality and cut prices of their products, Kiet noted, citing his recent visit to Chinese footwear plants. Vietnamese footwear exports to the US market amounted to $153 million in the first four months of 2005, up by 43 per cent compared with the same period last year. Most orders were with foreign-invested footwear enterprises in Viet Nam. Kiet said a new alliance between footwear association members will help them lower costs for promotion campaigns and raw material prices. He added that the Government should map out better strategies for the development of the country’s leather and footwear sector. Building footwear factories in every province across the country could result in poor management and difficulties in providing labour resources and materials for production lines. According to Lefaso’s figures, Viet Nam’s footwear sector attained export turnover of $882 million in the first four months of the year, an increase of 3.5 per cent compared with the same period last year. But attaining the targeted export turnover of $3.1 billion for this year will be difficult, say footwear industry experts. — VNS
