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Overview of Vietnam's footwear industry 2022

Overview of Vietnam's footwear industry 2022

Saturday 22, 10 2022
Currently, Vietnam is ranked second in the world in terms of leather and footwear exports, just behind China.

Specifically, each year Vietnam exports more than 1 billion pairs of shoes of all kinds to hundreds of countries around the world. In which, footwear exports to Europe accounted for the largest proportion of total export turnover.

By the end of 2021, there were about 2,200 footwear manufacturing enterprises, which are mainly located around Ho Chi Minh City.

Production and exports increase

Vietnam Leather, Footwear and Handbag Association (LEFASO) said that in July 2022, leather and footwear production only increased slightly by 3.2% compared to the previous month but increased by 25.5% over the same period in 2021. Generally in the first 7 months. the industry's production increased by 15.1% over the same period last year. The employment index in July 2022 also increased by 1.1% over the same period last month and increased sharply by 21.6% over the same period last year.

Vietnamcredit - Vietnam Leather

Exports in the first half of the year increased by 14.2% over the same period, reaching USD 13.81 billion, of which footwear exports reached USD 11.79 billion, up 13.3%; suitcase - bag - briefcase exports reached USD 2.02 billion, up 20%. Among the export markets of Vietnam's leather and footwear, North America experienced the strongest growth with 24.5%, Europe 15.7% and South America 10.8%. Export turnover decreased in the Asian market block with negative 6%.

According to statistics of the General Department of Customs, in August alone, the export turnover of footwear of all kinds reached USD 2.293 billion, up 0.9% over the previous month. In the first 8 months, the export of all kinds of footwear reached USD 16.368 billion, up 29.7% over the same period last year.

Thus, on average, footwear exports reached over USD 2 billion per month. With this base, the leather and footwear industry can fully achieve the export target of USD 22-23 billion in 2022.

The US is still the largest footwear import market of Vietnam, reaching USD 6,029.7 million, Belgium is the second largest market with USD 866.6 million, while China drops to the third position with USD 863.2 million.

VietnamCredit - footwear import

According to LEFASO, Vietnam's footwear exports to markets with free trade agreements continued to see a positive recovery. In which, exports to the EU-Vietnam Free Trade Agreement member markets increased by 18.2%, and the UK market through the Vietnam - UK Free Trade Agreement increased by 10.9%.

In contrast, the market bloc of the Free Trade Agreement between Vietnam and the Eurasian Economic Union is still affected by the conflict between Russia and Ukraine, so the export growth decreased greatly to negative 57.7.

Big challenge at the end of the year

Ms. Phan Thi Thanh Xuan, Vice President and Secretary General of LEFASO, assessed that in the first 6 months of the year, despite having achieved good export results, businesses still face great difficulties when the supply of raw materials was short and interrupted.

Besides, the lack of labor force also significantly affected the production and business results of the industry.

In addition, according to the representative of LEFASO, in the last 6 months of the year, the industry also faced many other risks such as the large amount of inventory or decreasing number of new orders.

Although Vietnam’s leather and footwear products are at the average level of the world in terms of both quality and price, in order to compete in the market, according to Ms. Xuan, in the coming time, the industry needs to improve its production capacity of high-end items. To do so, high-value raw materials need to be imported from other countries.

Vietnamcredit - leather and footwear products

In addition, Ms. Xuan said that we have not yet taken advantage of the opportunity to import materials from markets that have FTAs with Vietnam.

On the other hand, leather and footwear businesses have not taken advantage of the opportunity to import new technologies and equipment in the context of sustainable production, using green and clean technology.

In particular, in the near future, Germany will issue a law on the oleabligation to appraise businesses in the supply chain, which will be applied from January 1, 2023. This law will have a very strong impact on the production chain of the leather and footwear industry when exporting to the EU market.

Source: LEFASO, General Department of Customs

Compiled by VietnamCredit

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