Leather and footwear export orders are decreasing

Export of leather and footwear industry sets a target of about US $ 25 billion in the whole year of 2022. Photo: ST

"Measure" orders

According to the Vietnam Leather, Footwear and Handbag Association, the industry's exports in the first half of the year recorded an increase of 14.2% over the same period last year, reaching $13.81 billion. In which, footwear exports reached US$11.79 billion, up 13.3%. Export of suitcases - bags - briefcases reached US$2.02 billion, up 20%.

Among the export markets of Vietnam's leather and footwear industry, North America had the strongest growth with 24.5%, Europe 15.7% and South America 10.8%. The US is the largest footwear import market of Vietnam in the first half of the year, followed by Belgium and China.

Vietnam's footwear exports to markets with free trade agreements (FTAs) continued to have a positive recovery. In which, exports to member markets of the Vietnam - EU FTA (EVFTA) increased by 18.2%; the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) increased by 10.5%; The UK market through the Vietnam - United Kingdom FTA (UKVFTA) increased by 10.9%.

Ms. Phan Thi Thanh Xuan, Vice President and General Secretary of the Vietnam Leather, Footwear and Handbag Association, assessed that the production and export activities of the leather and footwear industry in the first half of the year were generally quite good, and export orders were positive.

However, in the last months of the year, the leather and footwear industry will face many challenges. The latest updated data from the Ministry of Industry and Trade shows that footwear exports of all kinds by the end of July 2022 decreased by 2.7% over the same period last year. "Surveys from businesses and brands show that since the first quarter of 2023, the order situation will slow down," said Ms. Xuan.

Mr. Nguyen Quang Vu, Chairman of Binh Duong Leather and Footwear Association added, in the last months of the year, orders are gradually decreasing. Currently, in three months of August, September, and October, the number of orders has decreased by 30% compared to previous years.

Mr. Nguyen Huu Phuoc, Director of Nguyen Nguyen Phuoc Footwear Manufacturing and Trading Co., Ltd. said that the market situation in the first half of the year is quite positive, but in the second half of the year the market will be slow.

In September, October will be the low point for orders. “In the past, businesses could receive orders from the first and second quarters in advance. However, with the current market fluctuations, businesses can only receive orders 2-3 months in advance. Currently, Nguyen Nguyen Phuoc Company as well as many other enterprises in the leather and footwear industry are having to "eat" export orders," he said.

It is difficult to import high quality raw materials

Some economic experts said that the current inflation situation in major markets such as Europe and the US is increasing; The conflict between Russia and Ukraine has not ended, causing consumers to tighten their spending. This will reduce shopping demand, making the export situation in general, including leather and footwear exports in the second half of the year difficult.

According to Ms. Phan Thi Thanh Xuan, in the export market, Vietnam's leather and footwear products are being evaluated at an average level in terms of both quality and price. In order to compete, the industry needs to produce higher-value products, which requires importing high-quality, high-value raw materials from other countries.

“Vietnam's leather and footwear industry, although it has boosted exports to the markets of countries that have FTAs ​​with Vietnam, has not made good use of import opportunities, especially with the EU. This market has a good source of high-value raw materials that are suitable for manufacturing products in the higher segment. In addition, Vietnam has not taken advantage of the opportunity to be able to import new technologies and equipment in the context of sustainable production, using green and clean technology," said Ms. Phan Thi Thanh Xuan.

Vice President and General Secretary of the Vietnam Leather, Footwear and Handbag Association suggested that the Vietnamese Trade Office system in foreign countries help businesses find partners to export raw materials in the market having an FTA to take advantage of tax incentives; provide timely market information for enterprises.

At the same time, we continue to promote the capacity and information about the advantages of Vietnam's leather and footwear industry, especially the advantages of participating in FTAs ​​so that customers can put their trust in the industry.

Paying special attention to the issue of the German market, there is a law on the obligation to appraise enterprises in the supply chain, applied from January 1, 2023, according to Ms. Phan Thi Thanh Xuan, this law will have a great impact effect on the production chain of the leather and footwear industry when exporting to the EU market.

Meanwhile, domestic leather and footwear enterprises have only received information that they will apply soon, but the specific implementation of the plan and what procedures must be met is unclear. Enterprises need to be provided with timely information to prepare business plans.