The inaugural World Footwear Congress focused on: footwear economics and trade; corporate responsibility; sustainable production; attractive shoe sales; innovation as a basic drive. In a global context, the footwear economics and trade session was probably the most important and its presentations ranged from obtaining better statistical information more quickly – to avoid the mistakes of the past – through to environmental safety issues in Japan.
Niall Campbell, director of the British Footwear Association, ran through the myriad number of obstacles to international footwear trade such as tariffs, quotas and other import duties which he termed ‘formal, legal, direct barriers’ through customs rules, labelling requirements, standards, restrictions on containers etc, which were ‘official indirect obstacles’ to legal systems, retailers requirements, distribution structures, health issues etc, which were ‘social, cultural and environmental barriers’. Taking all these obstacles together, the end result was, he said, a general economic loss in which consumers suffered choice and corruption took place.
However, Peter Mangione, president of the Footwear Distributors and Retailers of America, said that for the first time several factors have come together to create a conducive atmosphere in which to eliminate or lower shoe duties in the Doha Round. ‘First,’ he said, ‘an industry consensus has emerged in the US on the desirability of eliminating, at the earliest opportunity, all duties on footwear imports (some rubber items excepted).
‘Secondly, China, the world’s largest footwear producer, can for the first time participate in the shoe tariff cutting negotiations as a WTO member. China has already agreed to lower its import duties on leather footwear from 10-24% by 2005.’
But Mangione made the point also that shoe duties currently in place in other major shoe importing markets such as the EU, Japan, Australia and Canada (as well as Korea and Taiwan) are so low as to have no commercial significance. The highest are only 20% and many are 8-10% and/or cover products which are no longer made to any degree in those regions.
‘Most duties on footwear around the world are too low to direct commercial transactions and can be eliminated without altering competitive relationships’, he said. ‘It is also clear that other factors dampen trade flows far more than duties. These include diffuse distribution systems dominated by independent retailers, local fashion demands, weak marketing expertise in foreign markets, limited disposable income in developing countries and weak local currencies.’
For countries worried that China’s membership of WTO would enable it to swamp export markets with its products, Mangione said the prospect of serious problems was remote.
‘China’s WTO accession protocol makes it clear that any country experiencing a surge in imports from China may impose a ‘China specific safeguard’ – ie quotas or duties – for up to three years at any time through to 2014 as well as treating China as a non-market economy for anti-dumping purposes through to 2017.
This essentially opens the door to anti-dumping orders against any product from China during that period.’
Regarding implementation of duty cuts through the WTO Doha Round, Mangione thought that the shoe sector negotiations in which major supply and importer nations will agree, on a reciprocal basis, to eliminate/reduce footwear duties in an accelerated tariff liberalisation, could see maximum duty eliminations effective as early as January 1, 2006.
The ‘social, cultural and environmental’ barriers to trade were the ones which most concerned the Japanese speaker in the session.
Dr M Nakamura, of the Japan Leather and Leathergoods Industries Association, wanted to know the basis on which the EU Eco Label criteria for formaldehyde in footwear had been set because according to Japanese law, the criteria should apply only to textile products.
He also asked the questions: ‘Are the criteria for hexavalent chromium and pesticides set because of the problems caused by shoe materials containing them?’ and ‘How many dermatitis and cancer cases caused by hexavalent chromium containing shoes have there been?’
Switching to the recycling of leather waste in Japan, Dr Nakamura said that with the lower availability of landfill, incineration was the only way to dispose of most of the waste. Unfortunately, incineration at 700°C produced dioxins and hexavalent chromium whereas at 1,500°C this problem is prevented and the solid byproduct of the process is used as a substitute for bricks.
Experiments with burning used leather shoes at 450°C produced dioxins and hexavalent chromium at under specified values and a byproduct which could be recycled as an ingredient in paper, wall materials and shoe insoles.
Maria Pilar Oliveira Cominero, of AENOR, the Spanish Association for Normalisation and Certification, said that the foremost aim of voluntary standardisation was to facilitate the exchange of goods and services through the elimination of technical barriers to trade. Standardisation provided reference documents to everyone along the supply and manufacturing chain.
Clearly, this is no simple task in the footwear industry. European standardisation in the footwear sector was initiated in 1993 by establishing European Technical Committee CEN/TC 309, which is now working on some 60 standards, 39 of which have already been published as European standards and 18 as international standards.
In the innovations session of the congress, there were a number of interesting presentations ranging from a review of the EUROShoE project which aims to bring mass customisation – the manufacture of customised products at near industrial efficiency – to the footwear industry to presenting new fashion collections every six weeks, so-called flash collections.
Spring-summer and autumn-winter collections may still be the main reference points for the footwear sector but mid-season presentations every three months are now common and some sectors of the industry are moving on to collections every six weeks. Angelo Penazzato said that in today’s fashion market, a shoe has a very short commercial lifespan, often less than three months. Yet research and development by all sectors in the production chain could take as much as three or four times as long. He likened the life of a shoe to a sprinter who had only a few seconds to make the most of months and months of preparation.
However, making the shoe that the consumer wants is just part of the problem. Getting it to its retail outlet and coping with reorders efficiently on a global basis are just as important. An interesting proposal to create more flexibility in the supply chain to help make deliveries quicker and better was presented by Massimo Donda. It is called the Shoe Exchange Network.
The proposal is that retailers/wholesalers and producers share warehouses so that stocks can be exchanged to meet demand, wherever it comes from, more effectively. The warehoused articles of a single retailer are divided into three ranges, according to their turnover:
Green range: these are the most requested articles (20%).
Yellow range: these are the average-requested articles (60%).
Red range: these are the articles which do not move quickly and are likely to be left-overs (20%).
Massimo Donda said the Shoe Exchange Network does not change retailer-producer relationships. On the contrary, it adds another retailer-retailer relationship with the supervision and collaboration of the producer.
There are advantages for all involved. The consumer has availability not only at the beginning of the season but all year round of a more complete stock of sizes and colours. The retailer can provide the consumer with a better service while maintaining reduced warehouse stocks and having fewer goods left as markdowns.
Producers/wholesalers/purchasing groups can enjoy an increase in turnover and sales volumes plus access to sales statistics for market analysis. For both producers and retailers there is the visibility of sales trends.
