Footwear Industry in Vietnam
Opportunities – Challenges
and Actions
1
Contents
• Overview current status– World Footwear market– Vietnam Status– Footwear Industry Status
• Opportunities and Challenges– Opportunities and Challenges– Key trends of Vietnam Fashion Industry
• Actions• Development scenarios
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OVERVIEW CURRENT STATUS
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Distribution of Footwear Production by Continent
87 %4 %
2 %
2 %
4
IncreasedDecreased
By Quantity
Previous year
Source: World Footwear
Trend of World Footwear Production (2010-2017)
World Footwear Production (2010-2017)
5Source: World Footwear
Top 10 Footwear Producers
6Source: World Footwear
Top 10 Footwear Exporters
7Source: World Footwear
Trend of Footwear Export in ten years 2007-2017
8Source: World Footwear
Distribution of Footwear Consumption by Continent
7 %7 %
9
IncreasedDecreased
By Quantity
Previous year
Source: World Footwear
Top 10 Footwear Consumers
10Source: World Footwear
Top 10 Footwear Importers
11Source: World Footwear
Overview of Vietnam economy 2018
Indicator Unit 2018 2017 2018/2017
GDP growth Bil. USD 241 223 +7,08%
Foreign investment Bil. USD 35,46 35.8 - 1%
Ranking by business sphere Ranking 69/190 68/190 -1
Ranking by competitiveness Ranking 77/140 74/135 -3
Inflation % + 3,59% + 3.53% +0,85%
Export value Bil. USD 239 214 +11,68%
GDP per capita USD/person 2.540 2.385 6,5%
Source: General Statistics Office12
The Free Trade Agreements with Vietnam
Signed and Executed
(11)
Under negotiation
and/or signing (5)
1- Asean (AFTA)
2- Asean + China
3- Asean + Korea
4- Asean + Japan
5- Asean + Australia & New Zealand
6- Asean + India
7- Japan
8- Chile
9- Economic Communities Eurasian (Russia, Kazakhstan,
Belarus, Armani, Kirghizstan) ratified on 29/5/2015
10-Korea – ratified on 20/12/2015
11- CPTPP – effective from 14/1/2019
12- EU – finalized on 2/12/2015 – waiting for signing
13- RCEP (16 countries)
14- Asean + Hong kong
15- Israel
16- EFTA (Switzerland, Norway, Ireland, Licktenstein) 13
Export Markets of Vietnam Footwear Industry 2018
N.A. ASIA LATIN AM. OTHERS
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Structure of export footwear
15Source: World Footwear
Structure of export by Enterprises
0
20
40
60
80
100
120
2013 2014 2015 2016 2017 2018
Local Ent.
FDI Ent.
25% 25,7% 21.4% 19.2%
75% 74.3% 78.6% 80.8%75%
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19.5%
80.5%
10.4 12.8 14.9 16.2 18.0 19.5
21,2%
78.8%
CHALLENGES – OPPORTUNITIES
17
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Opportunities of Vietnam Footwear Industry
Inside the country:
➢ 2018 – 2019, macroeconomic stability; Institutional reforms and administrative procedures help improve the investment-business environment and reduce costs of business.
➢ The government continue to maintains a policy towards export.
➢ Gold population structure, young, abundant and skillful human resources.
➢ Infrastructure develops, facilitating movement to labor resources
Out of the country:
➢ Vietnam has succeeded in multilateral relations policy, opening up many great opportunities for export.
➢ The US-China economic war, many US brands shift orders to Vietnam, especially tourism products, bags and backpacks.
➢ CPTPP and EV FTA will be big opportunities.
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Challenges of the IndustryInside the country:
➢ The level of technology application in management and production is still inferior to the regional enterprises and FDI enterprises.
➢ Productivity is just 60-70% compared to the FDI.
➢ Most of local enterprises are not strong enough to join the global supply chain.
➢ Labor costs are increasing.
Out of the country:
➢ Trade protection policies from US, EU... are causing difficulties for many export countries.
➢ Ability to satisfy to the orders shift to Vietnam.
➢ Ability to capture opportunities from CPTPP and EV FTA.
1- Moving to the areas where there are abundant and low-cost labor sources (Southwestern and Northwestern regions).
2- Supporting industry has a rapid growth rate.
3- Manufacturing complex products with high prices.
The key trends ofFashion industry in Vietnam.
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✓ The average of global export price increased 3% from 8,84 to 9,18 USD/pair.
✓ Average export price from Vietnam increased 17% from 15,04 to 17,71 USD/pair.
✓ The average export price from VN is 1.9 times higher than average price of the world.
Manufacturing products with high export value
23.02
19.86
16.26
11.29
7.80
6.45
17.71
Source: World Footwear Yearbook 2018
Unit: USD/pair
9,18
0 5 10 15 20 25
Vietnam
World average
Asia
South America
Africa
North America
Oceania
Europe
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Export of footwear and handbagfrom 2013 to 2018 – Forecast year 2019
0
5
10
15
20
25
2014 2015 2016 2017 2018 2019(est)
Bags
Footwear
Unit: Billion USD
14.6
3.3
13.0
3.2
12.0
2.9
10.3
2.5 17.4
4.2
21.6
12.814.9 16.2
18.0
22
16.0
3.5
19.5
2018: Footwear increase 8,5% - All kind of bags increase 15% -Whole industry increase 11%
ACTIONS
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Three Groups of ActionFrom Enterprises➢ Improve productivity➢ Enhance the technology of management and manufacturing➢ Change the business way
From Industry/Association➢ Assess the impact of Industrial Revolution 4.0
and recommend policies➢ Training and consult to the members and ents.➢ Consult the development strategy of industry➢ Consult wage policy to the Government
From Government➢ Policy to apply science – technology➢ Promote the ratification of EVFTA➢ Extend the conditions to access the US market➢ Upgrading foreign investment policy 24
Key actions from Industry/Association
When What Where
2019 Integrating Shoes and Bags Development Center Lefaso Center
2019 – 2020 Establish Testing Center for Shoe & Bag Industry Binh Duong
2019Assess the impact of Industrial Revolution 4.0 and recommend policy with the Government
Hanoi
2019Research the application the result of Industrial Revolution 4.0 in Italy and some Asian countries
Italia - China –Taiwan…
2019 Consult the national wage policy of 2020 Hanoi
2019Survey and build industry development strategy for the period of 2020 – 2030
Hanoi
2019Trade fairs and marketing oriented to the market of CPTPP and EU
CPTPP & EU
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Key actions from Government
When What Where Who chair
July 13th,18"Vision and strategy for breakthrough development of the 4th industrial revolution“
Hanoi PM
Sep 11th-13th, 18 World Economic Forum related to ASEAN. Hanoi PM
October, 2018Visit EU - The EU Committee agreed to present the FTA to the European Council.
Brussels PM
Nov 12th,18 VN Parliament ratified CPTPP. Hanoi Parliament
Dec 19th, 18Solutions to promote the development of Vietnamese supporting industry.
Hanoi PM
Feb 14th, 19Consult and orient to complete the institution and policy on foreign investment in new stage.
Binh Duong
Vice PM
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DEVELOPMENT SCENARIOS
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Development Scenarios
Scenario 1: NORMAL
• Conditions
– Current status
– There is no any crisis
• Rate of growth
– 11%.
– Export from $ 21.5 to $ 22 billion
Scenario 2: HIGH
• Conditions
– EVFTA will be ratified in 2019
– Better conditions to access USA
• Rate of growth
– 15% or more.
– Export reach over $ 22 billion
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Thank you for your attention
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