Foreign direct investment (FDI) firms, rather than the domestic ones, are able to fully tap the production shift of large brands, according to industry insiders.
Footwear shipments in the first quarter tops 4.74 billion USD. (Photo: VNA)
Hanoi (VNA) – Foreign direct investment (FDI) firms, rather than thedomestic ones, are able to fully tap the production shift of large brands,according to industry insiders.
Statistics from the Ministry of Industry and Trade show that footwear shipmentsin the first quarter surged 13.5 percent year-on-year to 4.74 billion USD.
Vice President of the Vietnam Leather, Footwear and Handbag Association PhanThi Thanh Xuan said however, that the sector’s growth did not reflect thesector’s health situation as 80 percent of the export turnover was contributedby foreign players. She added only a small number of domestic firms are capableof manufacturing for large brands like Nike and Adidas, with stable orders.
Small companies, which do not have advanced production technologies, have beenfraught with difficulties.
Chairman of Hanoi Rubber Joint Stock Company Pham Hong Viet said that most localfootwear firms have suffered order shortage, increasing material prices, andrising transportation costs, which eat into their profit.
Nevertheless, Xuan believed in a bounce back of the footwear sector in thesecond quarter, as stable orders from major brands show signs of a recovery inconsumption demand.
Experts agree that domestic firms need to capitalise on the preferentialtreatments brought by new-generation free trade deals such as the EU – VietnamFree Trade Agreement (EVFTA) and the Comprehensive and Progressive Agreementfor Trans-Pacific Partnership (CPTPP).
The main hurdle for local firms is the rule on origin of the materials.
“Opportunities from FTAs are huge. However, if local firms fail to meetrequirements in materials, sustainable development, technologies and humanresources, they will be out of the playground”, Xuan stressed./.
Domestic leather and footwear firms have no choice but to convert their production activities as difficulties are expected to linger through this year due to the impact of the COVID-19 pandemic, experts have said.
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Footwear shipments in the first quarter tops 4.74 billion USD. (Photo: VNA) 
