The global tanning industry is characterized by small and medium – sized family businesses, mainly concentrating in South Korea, Taiwan, China and Indonesia. However, many enterprises are now facing the lack of materials and have to import large amounts of leather materials.
In the past years, the growth rate of global leather consumption is contributed mainly by cow leather, but the increase was not significant, while consuming sheep and goat leather has dropped 2%/year over time. In contrast with the decline in consumption in North America and Europe, the demand for rawhide in developing countries tends to rise sharply. In the Far East, which is the largest exporter of cowhide, improvements of income and tanning capacity have boosted the demand for footwear products. Meanwhile, Latin America is expected to become the biggest importer of cow and buffalo hides in the coming time.
The global footwear production reached 23 billion pairs in 2015, decreasing 5.3% compared to 2014. Contributing the most in this output is China, India and Vietnam, which are three footwear factories of the world with the total production output occupying 70% of the global quantity.
Global footwear consumption was estimated to reach 19.9 billion pairs in 2015, equivalent to the average rate of 3 pairs/person/year, increasing 2.5% over the same period. This result was mostly contributed by high demand in Asia. Intra-Europe footwear trade accounts for one-third of global export volume in the world.
The tanning sector of Vietnam is still facing issues in terms of materials, environment, technology and human resources. In 2015, domestic production reached 67.5 milliom m², but it only met 40% of leather demand for exported products. In 2014, leather import reached US$1,171.1m, increasing 41.9% compared to 2013. The largest exporters to Vietnam include South Korea, China, Taiwan, Thailand, Italy and India.
Footwear production is a key industry of Vietnam. Production is still under export processing form with the material supplied from abroad and designed assigned by foreign customers. Therefore, even though the footwear export value is high the added value for each item is low. The localization ratio in the leather and footwear sector is merely 50%, which is not enough for satisfying fully the rules of origin in trade agreements that Vietnam has signed. Footwear import value of Vietnam equivalent to 4.2% of domestic consumption.
With the advantage of cheap labour coupled with policies to attract investment, leather-footwear production of Vietnam has grown sharply in recent years. Being beneficial from the yuan devaluation of China, foreign investment has continued to increase recently after many famous shoe brands switched their orders from China to Vietnam to avoid invesment risks.
The majority of typical enterprises in the leather and footwear industry of Vietnam is foreign invested ones. Domestic businesses account for very small shares, mainly producing for local demand and processing for orders from abroad. Thai Binh Shoes is the only Vietnamese brand having the revenue of over VND2,000bn, becoming the partner for many famous footwear brands from the US and Europe.
The “Vietnam Leather and Footwear Industry Report Q2/2017” elaborated by Vietnam Industry Research and Consultancy Jsc. (VIRAC) draws an all-around picture about the leather and footwear sector in Vietnam, brings to readers a clear insight about the historical and current developingg trends of the industry by categories: materials, production – consumptiom, export – import, price movement and distribution system. Specifically, the report analyzes the economic situation in general and the leather and footwear industry in particular through the latest data updated to Q3/2016, beside the forecasts about the output, scale and expanding trend of the sector in the future. The report also mentions about related products such as leather shoes, bags, suitcase, hat, gloves, etc. It also give detail information about large businesses in the industry such as Pou Yuen, Chang Sin or Thai Binh Shoes through analyzing their financial statements, technology status and market shares in order to position and identify the level of competitiveness among firms in the market.
– Pou Yuen Vietnam Company Limited (Ho Chi Minh City)
– TaeKwang Vina Industrial Joint Stock Company (Dong Nai)
– Chang Shin Vietnam Company Limited (Dong Nai)
– Pou Chen Vietnam (Dong Nai)
– Thai Binh Shoes Production and Investment Joint Stock Company (Binh Duong)
– Hwa Seung Vina Company Limited (Dong Nai)
– Vietnam Dona Standard Footwear Company Limited (Dong Nai)
– Vietnam Dona Orient Company Limited
– Dong Nai Viet Vinh Shoes Company Limited (Dong Nai)