Vietnamese Enterprises Encroach On China'S Footwear Market: Shoe Companies Are Running Out Of Cost Advantage.

China's shoe industry is running out of cost advantage and Vietnamese enterprises are eating away from the market.

Near the Spring Festival, the Pearl River Delta

It is still on vacation.

"After the festival, we don't know how many shoe factories can start work as usual. Many of the Taiwan businessmen have gone to Vietnam and Indonesia to build factories.

Now it's hard to find a friend in Houjie, Dongguan.

We are also considering whether to set up a company in Vietnam this year. "

An Asian footwear association responsible person recently accepted the "First Financial Daily" reporter said in an interview.

According to statistics of the General Administration of Customs of China, in January 2015, China

The volume and amount of exports declined sharply. Footwear exports amounted to $5 billion 699 million in the same month, and exports fell by 10.9% compared with the same period last year, while exports dropped by 13.5% over the same period.

In 2014, China's footwear exports amounted to 56 billion 250 million US dollars, an increase of 10.8% over the same period last year, with a 4.5% increase in volume.

Even though the recent devaluation of RMB is good for export, it is still unable to retain the pace of Taiwan and Hong Kong shoe industry relocation.

A number of shoe executives accepted the first financial daily interview. Since the exchange rate system reform in 2005, the appreciation rate of RMB has exceeded 20%. Although the recent devaluation of the RMB has been beneficial to reducing export costs, the callback has been limited to the footwear industry because of the sharp appreciation of the past years. The key is that the cost advantage of the footwear industry in mainland China is basically exhausted. The rising cost of labor and the shortage of labor force have become the biggest constraint on the development of traditional footwear enterprises, and the increasing number of overseas buyers demanding the relocation of factories to Southeast Asia is increasing.

Statistics released by the customs and Excise Department of Vietnam showed that in 2014, Vietnam's footwear export market reached 40 countries and regions, the largest market for the United States, exports amounted to US $3 billion 330 million, an increase of 26.7% over the same period last year, accounting for 32.2% of Vietnam's total footwear export share.

In addition, Vietnam's exports to Belgium, Germany, Japan and other countries increased by more than 20%.

It is worth noting that Vietnam exported $505 million to China's footwear last year, an increase of 42.2% over the same period last year, and the total export volume ranked sixth.

Since the start of the China ASEAN Free Trade Area in 2010, all the shoes exported from ASEAN to China have all achieved zero tariffs. Chinese shoe companies not only export their orders to Vietnam, but also gradually become the "Southeast Asian shoe industry".

The shoe industry association said that many foreign shoe factories in the Pearl River Delta have reduced or even closed the original shoe factories.

A pair of leather shoes requires us $20 for orders in the PRD, while only $18 in Vietnam. Customers will definitely ask for placing orders in Vietnam.

Southeast Asian countries have an advantage over labor costs, tariffs, and even some Southeast Asian shoes and clothing products in Guangzhou wholesale market prices, lower than the price in the PRD factory.

The most important thing in the world

One of the bases in Dongguan, such as the Southern Metropolis Daily, launched fifth reports on the survival of enterprises in Dongguan, focusing on the dilemma of Dongguan shoe companies.

Of the 150 companies surveyed, more than 60% companies said that the number of orders declined in 2014.

The profit of the enterprises with a decline in orders is 69.34%, and 32% of the enterprises are losing money.

Nearly 90% of the shoe companies' labor costs are rising, and nearly half of the respondents' employment costs rise from 10% to 30%.

In addition, 49.33% of the enterprises surveyed indicated that orders in 2015 will continue to decline compared with 2014.

Up to 90% shoe companies are not optimistic about the future and worry that the economic situation will deteriorate further.

Go bankrupt.

Most shoe companies try to pfer orders to low-cost Southeast Asian production, enter the high-end luxury shoe market or try private customization, but 23.21% of the surveyed shoe companies say they will choose to close their doors.

A number of small and medium-sized shoe factories in Houjie, Dongguan Houhong shoe factory and Dongguan Dong Keng shoe factory have been closed last year, and large shoe companies have gradually reduced their staff size in recent years, according to a survey by the first financial daily.

9904.TW, the world's largest sports shoe maker, is located in the factory of Gao Gao town, Dongguan, Taiwan, with a peak of about 100 thousand people in 00551.HK.

However, Bao Cheng, who once shared the demographic dividend of the mainland, is now suffering from the loss of cost advantage. In 2012 alone, 51 shoe production lines were cut down.

At present, Yuyuan Industrial Employees in Dongguan have reduced by tens of thousands.

And Yuyuan industry in Zhongshan, Guangdong, Bao Yuan factory is now from the original more than 50 thousand people weighed down to thousands of people scale.

At the same time, the production line of Yuyuan industry in Vietnam and Indonesia is increasing year by year.

At present, the largest footwear manufacturer oasis shoe industry Co., Ltd. in Houjie, Dongguan, has reached about 30 thousand workers at its peak. Now it has been compressed to 10 thousand people and has set up factories in Vietnam.

Huajian group, one of the biggest manufacturers of Chinese women's shoes, has 8000 people and 6000 people in two factories in Dongguan. The two factories are now merging into a 5000~6000 factory, which is slightly different from other shoe companies outside China. Huajian group runs to Ethiopia, Africa, where there are thousands of workers.

Not only in Dongguan, but also in other parts of the Pearl River Delta region, as well as in Zhejiang Wenzhou and Fujian Jinjiang, and other shoe making bases are in the throes of industrial pformation and upgrading. Enterprises are being pferred or shut down from time to time.

In the sports shoes manufacturing industry, its position is only once more than that of Baocheng group. The production layout of the main sports shoes such as Nike (NIKE) and NB (New NB) is also changing obviously. Originally, two factories in Shenzhen have combined 30 thousand ~4 workers, and now they are reduced to thousands of people. The production line is gradually shifting to Huizhou Boluo in the northeast of the Pearl River Delta and Heyuan in Northeast Guangdong.

However, the development of the shoe industry in Southeast Asia is faster, and the factory workers in Vietnam now reach 50 thousand ~6 million.

Because of its extreme cost sensitivity, the world shoe industry has never stopped its location pfer.

From the 60s of last century, it first moved from North America to China and South America, and moved from Europe to Japan, then pferred to Korea and Taiwan, China. In the late 80s and early 90s of last century, it moved to the southeast coast of the mainland. At the same time, some Taiwan enterprises pferred part of their production lines to Southeast Asian countries.

Honorary president and founding letter of Guangzhou Taiwan Businessmen Association

Wu Zhenchang, chairman of the Company Limited, recently accepted the first financial daily interview that the Pearl River Delta had only 50~100 dollars higher than the cost of labor in Vietnam and Indonesia. But since the implementation of the new labor law in 2008, the cost gap has gradually widened. It is estimated that by the end of 2015, about half of Taiwan businessmen will shift their factories from mainland to Southeast Asia.

"The shoe industry has always put manufacturing links in low-cost places, often not with the main consumer market" coexistence room ".

Because of the rapid loss of cost advantage, even China's potentially large domestic market can not change the trend of shoemaking industry relocation. "

Wu Zhenchang said.