Leather and footwear exports: Orders increase, profits decrease

According to businesses, the impressive growth in export turnover of the leather and footwear industry in the first months of the year has great support from general tax incentives (GSP).

According to the Ministry of Industry and Trade, in the first 4 months of 2014, the export turnover of the leather and footwear industry reached over 2.8 billion USD, an increase of nearly 22% compared to the same period in 2013. In particular, the export turnover of handbags, suitcases, Umbrellas and hats reached 821 million USD, an increase of over 48%.

Statistics from the Ministry of Industry and Trade also show that the export situation to markets, especially traditional markets of the leather and footwear industry, is also very positive.

In the first 3 months of the year, the industry's export turnover to the US market increased by 23.6%, reaching over 674 million USD; the Japanese market increased by 40.1%, reaching over 142 million USD; the Belgian market increased by 37.2%, reaching over 144 million USD; German market increased by 28%, reaching over US$107 million; French market increased by 31.5%, reaching over 48.4 million USD…

Notably, export turnover to a number of small markets, niche markets of the leather and footwear industry has increased dramatically. Typically, the Chilean market increased by nearly 81%, reaching US$17.2 million; the Israeli market increased by over 120%, reaching 7.3 million USD; Greek market increased over 78%, reaching 5.1 million USD; Polish market increased by over 162%, reaching 5.5 million USD…

According to businesses, the impressive growth in export turnover of the leather and footwear industry in the first months of the year has great support from the general tariff preferences (GSP) that the European Union (EU) has granted. for Vietnam. Besides, the EU and US markets have prospered because the economic situation has begun to stabilize. In addition, with the advantages of political stability, labor, and product quality, Vietnam has been attracting many orders from other markets.

Up to now, most businesses have orders until the end of June and July, including many businesses that have orders until August and September 2014.

However, commenting on the growth of export turnover of the leather and footwear industry, Mr. Nguyen Van Khanh, General Secretary of Ho Chi Minh City Leather and Footwear Association, said that the export growth of the leather and footwear industry is in fact only good in form because it is simple. The processing price of the leather and footwear industry is very low because importers have almost calculated the "standard profit" for processing enterprises, which only accounts for about 7-8% (previously 10%) of the value of each pair of exported shoes. . Therefore, if businesses encounter low risks, they can still overcome them, but if they encounter large risks due to input costs increasing too high, businesses will not be able to overcome them.

According to Mr. Nguyen Van Khanh's analysis, in recent times, the prices of gasoline, oil, electricity and water have all been adjusted to increase, leading to an increase in the prices of a series of raw materials. As long as input costs increase by about 3-4%, footwear businesses will begin to "paralyze".

Sharing the same opinion as above, Mr. Nguyen Chi Trung, Director of Gia Dinh Shoe Company, said that the biggest difficulty of the leather and footwear industry is still that unit prices do not increase according to export orders, while production costs are increasingly increasing. increased, especially export transportation costs. Therefore, although there are many orders, businesses cannot do all the work, but their profits do not increase and even tend to decrease.

According to the Vietnam Leather, Footwear and Handbag Association, the opportunity for export growth of the leather and footwear industry in 2014 is very positive because in addition to favorable market factors, GSP universal tariff incentives, The Vietnam - EU free trade agreement and the Trans-Pacific Strategic Economic Partnership Agreement (TPP) will also create many opportunities for export businesses in the near future. At the same time, Vietnamese leather and footwear products will also have a competitive advantage in major export markets such as the US, Japan and TPP member markets.

To grasp opportunities and good signals from the market, according to the Vietnam Leather and Footwear Association, businesses in the industry need to increase investment in upgrading technology, modernizing production, and developing brands to increase quality. and quantity for export products.