Vietnam is emerging in the footwear industry as a global giant by absorbing the revenue from big shoe brands moving away from China and creating numerous factories that are highly efficient at producing products of good quality. Current footwear revenue in Vietnam is equivalent to 668 million dollars (USD), and the market is expected to continue growing at a staggering 5.1% increase per year.
Vietnam is becoming the forerunner of shoe manufacturing because companies have discovered it to be a hub for lost cost, high-quality work. With the burgeoning labor costs that have resulted from new Chinese regulations, the benefits of doing business with China have steadily been on the decline, and Vietnam has become the new destination for the footwear industry. Vietnam shoe manufacturers have been able to curtail costs and expand production while maintaining the quality of the products.
The upward trend of business is certainly expected to continue as Vietnam’s exports in footwear are on the rise. According to data released by the Vietnam Customs Office, Vietnam has already exported 11.8 billion dollars’ worth of footwear in 2018. Footwear is now one of Vietnam’s main export items and holds the rank at fourth place in export turnover.
With high-quality products available for the manufacturing process, Vietnam has garnered interest from high design footwear moguls around the world, including those in Italy. Leather quality in Vietnam is impeccable, and the craftsmanship is tailored to near perfection. Italian enterprises are known for their patent appearance in footwear, and they have also migrated their shoe manufacturing companies to Vietnam. Along with the Italian firms, Korean firms are also looking at increasing their investments in Vietnam as well.
Many trade agreements and legislation have been passed to make global export of footwear from Vietnam less expensive and more competitive. One of the biggest of these agreements is the EVFTA- the Vietnam-EU Free Trade Agreement. This piece of legislation was passed in 2018 and has drastically increased business from shoe manufacturing companies within the EU. With the passage of this bill, the tax rate is effectively zero percent between Vietnam and the European Union. The PGA or Producers Guild of America is also looking to implement a new tax agreement with Vietnam. This tax bill will improve tax tariffs between the two countries and is another indicator of the future prosperity to be seen in Vietnam’s footwear industry.
The acceleration of Vietnam’s export economy and its tangential increase in footwear manufacturing are very correlated. Vietnam is gaining ground to become a leader in the global shoe industry. Big brands such as Nike and Adidas have already moved their manufacturing factories from China to Vietnam, and plenty of other companies are following in their footsteps. In the coming years, the trend of increased business coming to Vietnam is inevitable. With this influx of trade, Vietnam has to make sure that its standards for low-cost production remain while also maintaining a well-paced system of production. Billions of dollars are on the line, and Vietnam has every resource to continue thriving in this industry.