Over the recent past, Vietnam has been emerging as a giant in the shoe manufacturing arena. The country produces more than 1 billion pairs of shoes annually, posing stiff competition to traditional markets, China and India. In 2017, Vietnam became the second largest exporter of footwear claiming a 7.1% share of the worldwide export market.
The growth in manufacturing has been attributed to a number of factors. Key among them is the availability of labor. With the labor costs in countries such as China increasing, the Vietnam footwear manufacturing market has attracted various multinational manufacturing companies such as Nike and Adidas. The two brands currently produce more shoes in Vietnam than in China according to Quartz.
Raw materials are also readily available in Vietnam. Leather and rubber are easily accessible and at a much cheaper cost in Vietnam. This makes it more lucrative as compared to other nations that must import the raw materials
East West reports that the government has also played a vital role in the growth of the footwear manufacturing market. By offering outstanding tax incentives, it has continued to encourage foreign direct investments in the country. It has also invested heavily in the infrastructural development, with focus on improving the road, rail and ports.
Despite the remarkable growth that it has experienced, the footwear manufacturing market faces some potential threats. The majority of the largest shoe brands are multinational corporations, and these companies maintain most of the profits they generate. This disadvantages the local economy by diminishing the growth of the local industries.
The Future Outlook: Now and Beyond
The growth of the Vietnam footwear manufacturing market is expected to continue. The high tariffs imposed on Chinese products by the West, particularly the US, have seen many companies shift their bases to Vietnam to remain in business.
“The Vietnamese government is also investing heavily in the public education sector, which will increase the number of skilled workers in the labor force,” stated Roger Lin, Regional Sales Director for HS Footwear Co., a top international shoe manufacturer with facilities in Vietnam.
The government is also encouraging local industries to invest more in technology and more efficient operating systems and structures that will enable them to compete more favorably with multinational companies. The Vietnam Briefing quotes that the local manufacturers are being encouraged to research the local markets and invest in marketing strategies that will spur their penetration into the local markets.
With the right strategies, the Vietnam footwear manufacturing market is poised to grow exponentially in the future surpassing the export turnover targets of $50 billion by the year 2035.