These shoe factories have orders lined up until the end of October! But are facing difficulties

Orders from footwear exporters are gradually returning, and in April 2024, leather and footwear will continue to be one of the larger export sectors.

Orders for many shoe factories have been lined up until October

At Vietnam's Gia Dinh Group Joint Stock Company, orders from businesses have increased by more than 30 percent to ensure that workers will be able to work until September-October 2024. Like Gia Dinh Group JSC, many other leather and footwear enterprises have been busy increasing production, recruiting more workers, and working in shifts to fulfill all orders.

TKG Taekwang Vina JSC, located in Bien Hoa Industrial Zone No. 2 (Binh Duong), needed to recruit 1,000 workers to meet the demand as orders increased again. After more than a year of difficulties. The latest statistics from the General Statistics Office of Vietnam (GSO) show that in April 2024, the export value of leather footwear is expected to reach US$1.956 billion. Cumulatively in the first four months of this year, footwear exports totaled 6.542 billion USD, up 5.7% over the same period in 2023.

Ms. Phan Thi Thanh Xu, Secretary General of Vietnam Leather, Footwear and Handbag Association, shared that: at present, the localization rate of exported leather, Vietnamese footwear products has increased from 45% to 55% and continues to increase. In addition to export growth, this is a major success for the leather and footwear industry. While being pleased with the order Vietnam's footwear industry is facing more difficulties.

Recently, Ms. Phan Thi Thanh Xu, Secretary General of Vietnam Leather, Footwear and Handbag Association, said that the leather and footwear industry is facing many major challenges in the export field. For example, in the EU market, a series of requirements on eco-products, extended producer responsibility, supply chain traceability, carbon emission reduction of manufactured goods ...... have been and will be implemented in the near future and require compliance by the EU market of countries exporting to the EU. This is a great challenge for footwear manufacturers, including Vietnam. As the footwear industry is considered to be a high emitter of emissions from the production process, the EU is Vietnam's export market of 6 billion euros per year. Therefore, in the coming time, Vietnam's leather and footwear industry will need to make changes to adapt to this regulation. Not to mention is that while footwear is Vietnam's main export industry, the reality that exists is that the sector is too focused on processing, leaving the raw materials to foreign supply chains, mainly China ...... about 60-70 percent of small and medium-sized enterprises (SMEs).

Mr. Trinh Anh Tuan, Director General of the Trade Protection Department of the Ministry of Industry and Trade, said: The United States has recently enacted a policy that allows for the implementation of cross-border subsidy investigations. The policy targets the processing industry and many input materials. Therefore, if Vietnam buys raw materials from a third country and that country subsidizes the production of the raw materials, then when Vietnam buys and uses the product for production and export, it will be taxed. Vietnam's footwear industry Initiating supply chain upgrades, in order to meet EU standards, suppliers themselves must meet the standards, so most must still be imported from abroad.

But Ms. Ngan sees this as an opportunity for companies to upgrade. This is because it is a global trend that forces companies to change and innovate to create new products that are safe for the environment and save more raw materials; at the same time, it is also an incentive for companies to create new products that meet market demand. From another perspective, Mr. Nguyen Thanh Tam, Director of Operations and Government Relations, Adidas South Asia, said that in Vietnam, more than 50% of the carbon emissions of the Adidas supply chain come from the grid system. At the same time, there are limitations to clean energy in Vietnam. Current investors are eager to find clean energy to minimize carbon emissions from production processes. If the state creates conditions for investors to buy clean energy, it would be a huge benefit, not only protecting the environment, but also creating a huge competitive advantage for Vietnam compared to other countries in the region.

Experts suggest that competition has shifted from individual businesses to the entire supply chain, requiring buyers and suppliers to work together to comply with laws and regulations on customer expectations, and that competition is about value, not lowest cost.