Footwear businesses face 5 major challenges.

Meeting green and sustainable development standards is mandatory, but footwear businesses face many challenges in complying.

5 major challenges

According to Ms. Phan Thi Thanh Xuan, Vice President and General Secretary of the Vietnam Leather and Footwear Association, Vietnam ranks third in the global leather and footwear supply chain in terms of production with 1.4 billion pairs per year, after China and India; and second in exports with 1.3 billion pairs per year, only after China. In 2024, the leather and footwear industry is expected to reach approximately $26 billion, a growth of about 10% compared to 2023.

Because of its high position in the supply chain, the footwear industry is early affected by green standards and sustainable development standards of importers.

According to Ms. Xuan, meeting sustainable development standards presents five major challenges for footwear businesses. Firstly, major export markets such as the US, EU, and Japan are imposing very high demands on sustainable development, including green transition and the application of clean and renewable energy. EU regulations also require very high levels of compliance.

Footwear businesses face numerous challenges in meeting green standards and achieving sustainable development. Photo: Thien Huong

Another challenge relates to costs, where the cost of complying with green standards is already a huge resource, almost overwhelming for small and medium-sized enterprises. This is compounded by increasingly high input costs for labor, raw materials, and logistics. “ The dependence on foreign shipping companies in the logistics system makes businesses passive and unable to control prices. Meanwhile, export prices have hardly increased, and are even being forced down, ” Ms. Xuan emphasized.

Domestically, the labor force is becoming increasingly scarce, especially in urban areas where recruitment is virtually impossible. Businesses are forced to move to remote areas to utilize the available workforce.

The shortage of raw materials is also a significant challenge, as domestic supply only meets 50% of demand. This is not a new problem, but one that still lacks an effective solution for footwear businesses in terms of sustainable and stable development.

Finally, there is the challenge of applying science and technology and research and development in the footwear industry. With limited capacity, businesses have not been able to proactively develop technology for production and still depend on external sources. Businesses hope to receive support to increase their capacity in research and development and technology application to improve productivity and reduce labor costs.

Need assistance

In response to these challenges, Ms. Xuan also outlined three major solutions. Among them, the increasing demand for green and sustainable development standards from importers has created a significant cost burden for businesses. Compliance here refers not only to administrative costs but also to the costs of scientific and technological innovation. Businesses hope that state management agencies will collaborate with research organizations to harmonize the standards of international organizations, importers, and Vietnamese policies so that businesses can meet the requirements correctly and effectively, and importantly, utilize support policies efficiently. A unified green standards system is needed to address both labor and environmental concerns.

This also includes solutions to enhance the internal capacity of businesses. After establishing unified standards, agencies and organizations should provide training, consulting, and coaching to help businesses apply these standards, enabling them to obtain certification and qualify for orders. Furthermore, resources for scientific and technological innovation are also crucial, and the Government and the State Bank should establish a fund to support green business development, offering preferential loan interest rates and appropriate access conditions.

Finally, there is the issue of information. Through conferences, seminars, and forums, government agencies update information, provide guidance, and disseminate standards to help businesses access them promptly and prepare plans for compliance and response.

Based on his business experience, Mr. Nguyen Thanh Tuan, Director of VASA Footwear Company, recognizes that sustainable development is an irresistible trend in the global market. Currently, most customers require manufacturers to meet green development criteria. To meet customer demands, footwear businesses, especially small and medium-sized enterprises, urgently need support from government agencies in developing clean, green raw materials with clear origins; capital; and international standard training.

Besides support from government agencies, many experts believe that the proactive and positive attitude of businesses is the most important condition for meeting sustainability standards. This is because policies are only a supporting tool; the government cannot do it for businesses.

Experts also point out that European businesses and partners often establish very complete and detailed processes. Meanwhile, many Vietnamese businesses are not yet accustomed to thinking that production processes must be designed in a systematic and detailed manner, from the beginning to the end. Many businesses even skip certain stages to reduce production costs and labor costs.

On the other hand, compared to European countries that have developed high-tech industries with modern equipment for many years, the production level, technology, and equipment of Vietnamese businesses are still quite far behind. To adapt and keep pace with the requirements of partners, businesses must change both technology and production processes, and invest heavily in additional equipment at considerable cost...

Source: https://congthuong.vn/phat-trien-ben-vung-doanh-nghiep-da-giay-doi-mat-5-thach-thuc-lon-364233.html