Asia's new "little dragon" economy reflects the body, the shoe industry supports the overall
Post date: 2018-09-10

There is a saying in domestic shoe industry: China makes shoe to see guangdong, guangdong makes shoe to see dongguan. And for every 10 pairs of shoes in the world, one pair comes from dongguan. But dongguan footwear exports are facing a competitive threat.

After the global financial crisis in 2008, due to the advantages of labor cost and raw material price, Vietnam gradually diverted the global textile and apparel orders undertaken by China, and even attracted the production capacity of some Chinese high-quality footwear and textile and apparel enterprises.
According to the latest statistics of world footwear yearbook, in 2016, Vietnam produced a total of 1.24 billion pairs of various footwear, among which, the export accounted for about 1.1 billion pairs and reached 7.8 billion us dollars. The export quantity and amount were the second in the world, only second to China, and greatly surpassed the third place Indonesia (2.6 billion us dollars).

It can be seen that the footwear production and export capacity of Vietnam is in a rising stage. Some analysts believe that due to the advantages of labor costs and preferential treatment in the international market, there is still a lot of room for improvement in the international market. In fact, for the dongguan shoes industry and even the national shoes industry, the rise of competitors means to bring the industry impact.
It also means that dongguan's shoe exports face increasing competition from Vietnam, and the advantages of the latter's labor costs will continue to be highlighted in the future.

However, in the Vietnamese media reports, the head of the Vietnam shoe and bag association straight industry crisis. Vietnam's footwear output and exports are in a dominant position in the global market, but its footwear materials rely mainly on imports, lack of independent brands and research and development capabilities, and low added value of its products, the official said.
The current plight of the Vietnamese shoe industry has also been the stage of dongguan footwear industry. However, dongguan footwear industry has accelerated the "short board" the speed, has or is overcoming some industry pain points.
In November 2016, taisong, the world's largest producer of shoe materials, set up a production base in dongguan. Taisong is not only a supplier of shoe materials, but also a problem solving expert in the shoe industry. Taisong can provide production, brand, technology and other solutions for the development of shoe enterprises in dongguan.
Thus it can be seen that in the shoe industry chain, dongguan has early planning, and the advantages are still being strengthened, not only focus on manufacturing links.
Foreign media say Asia's newest dragon economy is Vietnam, as the country has become one of the world's fastest growing economies. In the first half of 2018, Vietnam's GDP grew by 7.1 percent year-on-year, the highest since 2011 and the fastest since 2011. Output in manufacturing sectors such as Vietnam's leather and footwear rose 13.1 per cent year-on-year. Analysts at the country's national bank of Qatar said the manufacturing boom helped fuel exports, which increased nearly 20 percent year-on-year in the first half of 2018. In the first six months of this year, exports from Vietnam's leather, footwear and luggage industries totaled $9.45 billion, up 8.4 percent year on year. Total exports are expected to reach $19.5 billion by the end of the year. The bank attributed the success of manufacturing and exports to Vietnam's ability to attract huge foreign direct investment into industries such as clothing, shoes and electronics, the report said. Inflows of foreign direct investment into Vietnam also increased, with an estimated total of $13 billion in the first half of this year, an annual growth rate of 11 percent.
On the other hand, Vietnam's low labor costs have also attracted more and more shoe companies to invest in production in Vietnam. In may, sports brand giant adidas announced that it would speed up the transfer of brand shoe production from China to Vietnam. In 2015 and 2016, Vietnam ranked second in the world in terms of footwear exports, behind only China, according to UNCOMTRADE. In 2017, Vietnam exported about 10.2 billion pairs of various types of shoes, accounting for 7.4% of the global export market share. It ranked second among the world's top 10 footwear exporters, China (accounting for 67.3%), and its footwear exports ranked second in the world for three consecutive years. In an environment where southeast Asia's overall economic performance is flat, Vietnam's is a standout. Vietnam's economy recovered strongly in 2015, with gross domestic product growth of 6.68 percent, according to official data. In 2016, GDP grew by 6.2 percent. In 2017, Vietnam's GDP was about $220 billion, up 6.81 percent year-on-year. But the growing trade war between China and the United States is posing a huge challenge to Vietnam's leather and footwear industries.
Industry experts say the evolution of a trade war between China and the United States is still complex and unpredictable, and could prompt Chinese companies that export leather and footwear to the United States to invest in Vietnamese factories. This is both an opportunity and a challenge, as accepting large amounts of foreign investment can easily lead to more fierce competition in the industry's factories and labor force, as well as higher production costs. At the same time, Vietnam's small and medium-sized enterprises, which have relatively backward technologies, are put into a dilemma. The most direct manifestation is the increase of labor cost. All 15 members of Vietnam's national wage commission have agreed to submit the 2019 minimum wage adjustment plan to the government for review and approval. Under the plan, the minimum wage will increase by 5.3% in 2019.

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