With a sluggish market, footwear businesses are seeking ways to overcome difficulties.

Orders have decreased, and the market is difficult.

According to a representative from Thien Loc Shoe Joint Stock Company (Ho Chi Minh City), which manufactures athletic shoes for a well-known brand, the company previously produced 300,000 pairs of shoes per month, but now only produces 187,000 pairs per month. Production has decreased by 40% due to reduced orders from partners. The situation is predicted to worsen in June and July.

In the early months of the year, a number of footwear businesses had to cut jobs. Recently, in April, PouYuen Vietnam Co., Ltd. (Binh Tan District, Ho Chi Minh City) announced the termination of employment contracts for a large number of 5,744 workers. Prior to that, in February 2023, the company also terminated the contracts of 2,358 people. The laid-off workers were among those who had been on temporary leave or rotational layoffs since the end of last year due to a shoe brand withdrawing an order.

PouYuen is not the only company facing difficulties and having to cut jobs; this situation is also occurring with many businesses in the footwear industry due to reduced orders. Many smaller businesses are also having to cut costs and restructure, ranging from reducing working hours and days to laying off more direct laborers.

Thị trường trầm lắng, doanh nghiệp da giày tìm cách vượt khó

Facing difficulties in the export market, footwear businesses seek new directions.

In fact, during the first five months of 2023, leather and footwear exports continued to face many difficulties due to the unstable global economic situation. High inflation in European and American countries, coupled with decreased overall demand, led to a decline in orders. Data from the Vietnam Leather and Footwear Association (LEFASO) shows that in the first five months of the year, the total export turnover of the entire industry reached only about 10 billion USD, a decrease of 14.5% compared to the same period last year.

Mr. Nguyen Van Khanh, Vice Chairman of the Ho Chi Minh City Leather and Footwear Association, said that businesses in the leather and footwear industry are in dire straits due to a lack of export orders. Currently, export orders have decreased by 60-70%. According to Mr. Khanh, while in previous years, businesses would have orders until July or September at this time, now there are almost none. Some businesses are operating at a reduced capacity, and some have even closed down without announcing it.

"Previously, we predicted that orders would increase again by the end of Q2 2023. However, recently many major players in the footwear industry have withdrawn, so it's impossible to predict orders at this time," said Mr. Nguyen Van Khanh.

Businesses are seeking ways to adapt.

Amidst export difficulties, many footwear businesses are striving to find new directions. Ms. Vu Le Quyen, CEO of Binh Tien Consumer Goods Manufacturing Co., Ltd. (Biti's), said that to overcome challenges, the company is currently focusing on the youth segment and expanding distribution channels in the domestic market. In addition, the company is also striving for sustainable development by researching and recycling surplus materials, contributing to greening production. Biti's is also proactively seeking additional raw material suppliers and expanding its market to continue recovering production and business, and diversifying its product range.

For Nam Binh Minh Joint Stock Company, changing the product structure and market structure is also a solution the company is pursuing to overcome difficulties. Mr. Nguyen Quang Vu, Chairman of the Board of Directors of the company, said that in addition to focusing on products to meet the increasingly diverse needs in the mid-range segment, the company is planning to open a subsidiary specializing in manufacturing and supplying various types of molds and sole molds for the footwear industry.

Forecasting the market situation in the coming months, Ms. Phan Thi Thanh Xuan, Vice President of the Vietnam Leather and Footwear Association (Lefaso), said that major economies that are Vietnam's export partners, such as the US and EU, have reduced spending on ordinary and luxury products, leading to a decrease in order volume. Meanwhile, domestic industrial production sectors are mainly export-oriented and heavily dependent on the global market because domestic production far exceeds the demand of the domestic market.

Forecasting the export market situation in the coming months, Ms. Xuan stated: "Difficulties will continue until the end of the second quarter. The market may only gradually recover from the third quarter onwards."

However, this rebound in growth is only slightly better than in the first and second quarters of 2023, making it difficult to achieve the growth levels of previous years. Consequently, the footwear industry is unlikely to meet its initial targets for the year.

“We encourage businesses to diversify their products and markets. Business owners should travel more, participate in trade fairs to find orders and partners, not just in Europe, but shifting their focus to Asia, and even Africa. We shouldn't 'put all our eggs in one basket' to solve the current difficulties,” said Mr. Nguyen Van Khanh, Vice Chairman of the Ho Chi Minh City Leather and Footwear Association.

Comment (0)