No respite from leather imports

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Workers check shoes quality at a factory in Ho Chi Minh City

Heavy reliance on imported leather has made the domestic footwear industry less competitive at home and in overseas markets, but the situation is unlikely to change any time soon, industry insiders say.

They say that imports increase footwear production costs and hinder direct exports that would reduce outsourcing work, but Vietnam is yet to find workable solutions given the limited supply of raw material for leather production and the lack of investor interest.

Local media recently reported that footwear producer Lien Anh in the southern province of Binh Duong province suffered a loss of some US$100,000 on an export contract because it imported poor quality leather.

Deputy general director of the firm, Truong Thi Thuy Lien, said it was very difficult to control the quality of imported raw material, but her company had no choice but to continue importing for production because the quality of homemade raw leather was not good enough to make good quality footwear. 

She said locally made raw leather was typically small pieces of ox hide with many scars.

Moreover, the supply of poor quality homemade material is also not enough to meet the demand of local footwear producers, said Diep Thanh Kiet, deputy chairman of the Vietnam Leather, Footwear and Handbag Association (Lefaso) Kiet said the local supply of leather could only meet 20-30 percent of footwear producers' demand.

Thus, Vietnam's heavy reliance on imported leather is set to continue.

The country spent $2.73 billion on importing leather and some other materials for footwear and garment production, mainly from China, South Korea, Taiwan and Thailand in the first 9 months of this year, according to Lefaso.

The reliance on imported leather has allowed Chinese, Singaporean and Thai products with competitive prices and good designs to dominate the Vietnamese market that about 150 million pairs of shoes, sandals and slippers each year.

Footwear firms in Ho Chi Minh City have reported that sales are down by some 20 percent since the beginning of this year, according to the city's footwear association.

Nguyen Van Khanh, general director of the HCMC Leather Association, said it is difficult to develop leather production in Vietnam because the investment required is huge, and investors would have to be prepared to take losses for the first one or two years.

Prospective investors would also be dissuaded by the fact that they would find it difficult to sell their product in a market where cheap products from China are a formidable competitive challenge.

HCMC's plan to develop a leather production zone has never taken off for this reason, he said.

The city now houses some 100 footwear producers, but just 10 leather producers with capacity of 10 tons per day, according to the association.

Meanwhile, Vietnam exported footwear worth $7.4 billion in the first 11 months of this year, up 14.2 percent over the same period last year, according to the General Statistics Office.

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