Get to know Uzbekistan’s fast-growing footwear industry

It's almost impossible to ignore the figures. If in 2017 the country produced only around 10 million pairs of shoes, this year it is set to produce 246 million pairs. At the same time, exports of leather and footwear products have increased from 85 million US dollars in 2017 to 460 million US dollars in 2022 and are on track to reach the 600 million US dollars threshold by the end of the year. The data comes from the Association of Leather and Footwear Producers of Uzbekistan (Uzcharmsanoat), whose main tasks are to create favourable conditions for business development, protect the rights and interests of entrepreneurs, and provide support in investment and export activities. And our conversation with Boboev Fakhriddin, the Association's Chairman, helps us understand what lies behind this success story in Central Asia.

Incentives

“The basis for such rapid growth is the localization of import-substituting products, convenient infrastructure, training of professional personnel, sufficient raw material base in Central Asia, as well as full support of the industry from our state”, stated Fakhriddin 

“Enterprises in the leather and footwear industry enjoy a whole package of benefits and preferences, customs and tax breaks: namely exemption from customs duties on the import of equipment, parts and components, raw materials, materials and accessories not produced in Uzbekistan, a zero rate for a list of 227 goods, exemption from a number of types of taxes until 2026”.

In addition, the Government is endorsing the creation of “small industrial zones are being created in 16 regions of the country, specializing in the leather, footwear, and fur industries with the proper infrastructure”.

International Trade

The target is crystal clear: expanding the geography and volumes of exports of products from domestic manufacturers. “Of course, today the CIS countries* are the main importers of Uzbek products, but I would like to note the growing interest in “Made in Uzbekistan” in other regions of the world. Over the past 5 years, the range of exported leather and footwear products has increased from 18 to 78, and the geography of exports has increased from 8 countries to 45”, reaching countries such as Germany, Italy, Portugal, France, Belgium, Egypt, Korea, and recently, the US, UAE, Japan, Cameroon and Colombia.

To boost the trajectory – he continues – there has been a commitment to improving the quality and competitiveness of finished products by obtaining international certifications such as LWG, SLF and the like. The Uzcharmsanoat association, which has “become a member of the world’s largest international certification organizations, the Leather Working Group and the Sustainable Leather Foundation” is precisely assisting the companies in the industry with these processes.

Enterprises in the leather and footwear industry “also enjoy the benefits of Uzbekistan’s status as a beneficiary country of the EU Generalized System of Preferences GSP+.”, which certainly helps attract foreign investment.

Foreign Investment

“Attracting foreign, private investment, creating the necessary investment climate and guarantees for foreign investors is the most important condition for ensuring structural transformations of our economy and modernisation of production, export growth and ensuring import substitution”, argued the association’s Chairman, emphasising that foreign investors bring not only their capital and experience but also their client base and sales market. Currently, about 100 foreign investors from all around the world are implementing investment projects and export contracts in Uzbekistan.

Another key element of the association’s strategy is to attract Western brands through outsourcing. “Working with Europe or America, we will bring new touches, experience, technologies, and knowledge to our national industry based on the values and principles of these regions”, including aspects such as the respect for environment and labour protection and strategic management.

On the one hand, this “sets a new benchmark for the domestic footwear industry”, driving companies to “further work on product quality” and “accelerate the implementation of world standards in production”. And, on the other hand, outsourcing “sonorous” Western brands will improve the reputation of the country’s industry abroad.

Future

When asked how Uzbekistan’s footwear industry will evolve in the future, the answer is simple: “just as fast as it is now. In recent years, a colossal leap forward has been made. Therefore, today the main task is to maintain and increase the dynamics of the industry’s development, to increase both quantitative and qualitative indicators”. The aim is “to transform Uzbekistan into a production hub for the leather, footwear and fur industries throughout Central Asia”.

UzChamExpo-2024
 
The Association of Leather and Footwear Producers of Uzbekistan organizes the UzCharmExpo twice a year. The next two editions will take place, next year, in May (21^st-23^th) and October (15^th-17^th).