More than 50% of leather and footwear companies have no current orders and some have suspended operations according to news agency reports coming out of Ho Chi Minh City. Most of the enterprises sell low-priced footwear, an official from the Vietnam Leather and Footwear Association (Lefaso) was reported as saying.

The unnamed official said that many orders from the EU for footwear under the wholesale price of US$1.5 per pair were being undercut by Chinese producers. Footwear exports to the EU dropped by 7.5% in the first four months of 2005, according to the footwear association.

Diep Thanh Kiet, director of the Nam Viet Footwear Shareholding Co, said Chinese companies had been successful in attracting orders for low, medium, and high-priced footwear. Kiet said some companies with strong financial capacity had turned to medium-priced footwear, especially gym shoes. He said only large-scale footwear enterprises would have enough orders for the entire year.

The development of specific industrial parks and complexes for footwear factories in China had created favourable conditions for Chinese footwear manufacturers to invest in advanced technologies, which had helped them improve quality and cut prices of their products, Kiet noted.

Vietnamese footwear exports to the US market amounted to $153 million in the first four months of 2005, up by 43% compared with the same period last year. Most orders were with foreign-invested footwear enterprises in Vietnam.

Kiet said a new alliance between footwear association members would help them lower costs for promotion campaigns and raw material prices. He called on the government to map out better strategies for the development of the country’s leather and footwear sector, the official Vietnam news agency reported.

Building footwear factories in every province across the country could result in poor management and difficulties in providing labour resources and materials for production lines.

According to Lefaso’s figures, Vietnam’s footwear sector attained export turnover of $882 million in the first four months of the year, an increase of 3.5% compared with the same period last year. But attaining the targeted export turnover of $3.1 billion for the current year would be difficult, according to footwear industry experts.

Vietnam claims to be the 8th largest shoe producer in the world and 4th largest exporter of footwear after China, Hong Kong and Italy.