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Lefaso: no disruption of footwear production in Vietnam
The impacts of the pandemic were felt in 2020, firstly with the disruption of material supply chains and then with the cancelation of orders from the US and EU, which result in a drop in exports of 20%. Now, according to the local footwear association the situation is under control
We started by asking the Vietnam Leather, Footwear and Handbag Association (Lefaso) how the situation in the country is regarding COVID-19: “The pandemic is well controlled in Vietnam, except for few cases coming from abroad but tightly quarantined in hospitals”.
The sectorial organisation ads that “there is no disruption of footwear production in Vietnam” and most of the disturbance felt took place last year: firstly, the industry was affected by disruption of material supply chains between February and April 2020 due to COVID-19 outbreak in China and Korea and later between April and June, due to the cancellation of orders from US and the European Union (EU).
According to Lefaso, total 2020 footwear exports reduced by 10% from 2019, and stand at the same level of 2018. Exports to the US covered 37.5% of total Vietnam's footwear export but was reduced by 6% compared to 2019. European Union (25.2% and -15.4%), Japan (5.1% and -9.7%), and China (12.6% and +16%) followed. And although the year ended with a decline in overall figures, it is important to note that the “number of export orders saw an increase in the 3rd and 4th quarters”, Lefaso concludes.
Footwear retail in Vietnam was also restrained due to lower consumption as many activities were limited (such as sports events, tourism and other social gatherings) as a way to prevent the diffusion of the disease.
In terms of the support granted by the Government Lefaso underlines the assistance to pay salaries to workers during the first half in 2020, as well as the financial support and incentive policies on reduction of taxes and banking rate. Also important for the Association is the celebration and entry in force of free trade agreements with other regions as that works as encouragement for local production and incentivizes exports.
The sectorial organisation ads that “there is no disruption of footwear production in Vietnam” and most of the disturbance felt took place last year: firstly, the industry was affected by disruption of material supply chains between February and April 2020 due to COVID-19 outbreak in China and Korea and later between April and June, due to the cancellation of orders from US and the European Union (EU).
According to Lefaso, total 2020 footwear exports reduced by 10% from 2019, and stand at the same level of 2018. Exports to the US covered 37.5% of total Vietnam's footwear export but was reduced by 6% compared to 2019. European Union (25.2% and -15.4%), Japan (5.1% and -9.7%), and China (12.6% and +16%) followed. And although the year ended with a decline in overall figures, it is important to note that the “number of export orders saw an increase in the 3rd and 4th quarters”, Lefaso concludes.
Footwear retail in Vietnam was also restrained due to lower consumption as many activities were limited (such as sports events, tourism and other social gatherings) as a way to prevent the diffusion of the disease.
Employment and Government support
Despite the reduction of working hours experienced in the industry during the first half of 2020, during the second half of the year, the employment situation has improved and Lefaso believes it should now be at the same level as in 2019.In terms of the support granted by the Government Lefaso underlines the assistance to pay salaries to workers during the first half in 2020, as well as the financial support and incentive policies on reduction of taxes and banking rate. Also important for the Association is the celebration and entry in force of free trade agreements with other regions as that works as encouragement for local production and incentivizes exports.
Footwear industry in Vietnam
The Vietnamese footwear industry is mostly concentrated in the southeast region (including Ho Chi Minh City), the Red River Delta and the Mekong River Delta. The industry continues to expand at a fast pace in terms of production, number of firms and workers. According to the World Footwear Yearbook (available here), in 2019 exports continued to increase, setting a new record. The footwear industry (domestic and foreign invested producers) in Vietnam is directed in about 95% for the export markets: in a country producing 1.42 billion pairs of shoes in 2019 and importing little less than 100 million pairs, consumption was only nearly 80 million pairs, with 1.40 billion pairs sold abroad.Is there room to further growth? Lefaso believes there is: “The industry is also favoured by moving production from China. We anticipate a recovery and increase of Vietnam's footwear export in 2021, with vaccination starting in the USA and EU”.
