Vietnam is the third largest footwear manufacturer in Asia (after China and India), and the fourth in the world. Leather and footwear export volume of Vietnam is also second only to China. Every year, Vietnam exports more than 1 billion pairs of shoes of all kinds to hundreds of countries around the world. In particular, Vietnam’s footwear export to the European Union (EU) accounts for the largest proportion in the total export turnover.
In 2020, Vietnam's footwear exports reached 16.75 billion USD, down 8.6% and handbag exports reached 3.11 billion USD, down 17.1% compared to 2019.
The total export turnover of Vietnam’s leather and footwear products in 2020 decreased by 10% compared to 2019. The most rapid decrease was seen in exports to Latin America (-25.4%), followed by the EU (-15.4%), North America (-8.4%) and Asia (-5.8%), reflecting the negative impacts of the Covid-19 epidemic on different continents.
In the last months of 2020 and the first months of 2021, the number of export orders has increased:
- Exports of handbags: In March 2021, exports of handbag were estimated at 285 million USD, down 5.6% compared to March 2020. In general, the first quarter of 2021, Vietnam’s foot wear export value was 766 million USD, down 9.9% compared to the first quarter of 2020.
– Exports of footwear: In March 2021, footwear exports were estimated at 1,660 million USD, up 19.8% compared to March 2020. In general, in the first quarter of 2021, the figure was estimated at 4,738 million USD, up 13.5% compared to the first quarter of 2020.
- Total export turnover of the leather and footwear industry: In March 2021, the total export turnover of this industry was estimated at 1,945 million USD, up 14.6% compared to March 2020. For the first quarter of 2021, Vietnam’s footwear export turnover was 5,504 million USD, up 10% compared to the first quarter of 2020.
The Vietnam - EU free trade Agreement (EVFTA), which took effect on August 1, 2020, and the Vietnam - United Kingdom free trade (UKFTA) on the basis of commitments of Vietnam and the UK in the EVFTA, which took effect on January 1, 2021, has had positive impacts on Vietnam's exports to the EU in general and the UK in particular.
Export turnover of leather and footwear in the period 2010 - 2020
With a population of nearly 100 million people, Vietnam’s domestic footwear market has always been a potential. This is evidenced by the fact that in 2018, the number of leather shoes consumed in Vietnnam reached 190 million pairs, equivalent to 1.9 pairs/person/year. This figure is expected to continue to increase in the near futuure due to the increasing income and demand for footwear products of Vietnamese people.
The leather and footwear industry is said to be extremely prosperous when it has taken the initiative in 70% of raw materials for leather shoes in the medium segment, and 50% for products in the mid-range segment.
The shift of leather shoe factories and orders from China to Vietnam is also the reason why Vietnam will become the world's footwear factory in the near future.
In a recent survey on business condition in the footwear industry conducted by World Footwear, some experts in this field believed that the biggest difficulty of footwear manufacturing companies is the lack of supply.
In addition, while the domestic manufacturing industry is gradually recovering, there come difficulties for the export segment while the two main export markets of Vietnam’s leather footwear industry, the United States and Europe, have yet to control the epidemic situation. Specifically, the demand for footwear in the European market decreased by 27% and in the United States by 21%.
Besides, finance and labor are also an issue that needs to be taken care of. When the epidemic situation is difficult to control, businesses cannot do anything but let their employees take time off to save costs. However, when everything settles down, enterprises have difficulty in attracting employees to return to work.
There are currently about 2000 companies operating in Vietnam’s footwear industry, 85% of which are lacking in capital and advanced technology. On top of that, they are not proactive about the source of raw materials which have top be imported from European countries. The outbreak of the pandemic has caused businesses to face double difficulties in terms of input and output.
Participating in ASEAN in 1996, Vietnam has signed many free trade agreements, both bilateral and multilateral. In particular, the agreements related to the leather and footwear industry such as CPTPP and EVFTA have attracted foreign investors to the Vietnamese market.
Although the Convid-19 pandemic has caused 94% of leather shoe manufacturing businesses to suffer from a decrease in new orders, since the third quarter of 2020, Vietnam's leather and footwear industry has recovered with gradual increase in the number of orders.
When the pandemic is totally under control, the recovery of Vietnam's leather and footwear industry will be faster than that of other countries in the world.
Detailed information about the footwear industry of Vietnam is provided in the Vietnam's footwear industry report prepared by VietnamCredit.
Source: General Department of Customs
Compiled by VietnamCredit