Phan Thị Thanh Xuân, Vice President and General Secretary of the Việt Nam Leather, Footwear and Handbag Association (Lefaso)

The footwear industry is forced to provide clear directions and actions to comply with new market regulations and participate in sustainable supply chains.

In an interview with a Tin tức (News) reporter, Phan Thị Thanh Xuân, Vice President and General Secretary of the Việt Nam Leather, Footwear and Handbag Association (Lefaso), said that sustainable development posed a big challenge for footwear businesses and Vietnamese enterprises generally.

What results has the leather and footwear industry achieved last year?

Last year was full of difficulties and challenges for the leather and footwear industry. The industry's total production is mainly for export, but due to the difficult world economic situation and inflation, especially in the two main markets, the US and the EU, consumption declined, leading to reduced orders, high inventory and job cuts.

It is expected that the full year's export turnover of the whole industry will reach nearly US$24 billion, down about 15 per cent compared to the same period the previous year.

Although it did not meet expectations, the association assessed this result as positive in light of the difficult reality the industry faced.

Can you forecast the advantages and disadvantages for the leather and footwear industry in 2024?

Difficulties and challenges are forecast to continue this year for the leather and footwear industry.

Along with that, trade policies in major export markets of the leather and footwear industry are changing rapidly.

Sustainable development has not been a new topic up to this point. In order to survive and participate in the supply chain, manufacturing enterprises must comply with these requirements. Besides, challenges come from increasing input costs. That is great pressure on businesses.

However, the leather and footwear industry still has advantages for development. The footwear industry also is taking advantage of opportunities from free trade agreements that Việt Nam has signed. Việt Nam has open policies to support the development of the industry, as well as possessing an abundant labour source with good skills. In particular, Việt Nam's leather and footwear industry has affirmed its brand and reputation in markets, including many large and demanding markets, such as the US and the EU.

Although Việt Nam has 15 signed FTAs, it is clear that if it cannot meet the requirements of partners, businesses cannot exploit the advantages brought by FTAs. Currently, how has the leather and footwear industry responded to sustainable development and green export?

Businesses must produce according to a sustainable development model according to customer requirements, as well as the willingness of businesses to improve their productivity and internal capacity. However, this has become a mandatory requirement from countries, as a series of new policies are being, and will be issued in the near future.

For example, the EU market has introduced a series of new policies on ecological products, or expanded responsibility for manufacturers, supply chain traceability, recycling and special requirements for minimising carbon emissions.

A series of policies will be issued in the near future and require all countries exporting to the EU market to comply. Clearly, this is a big challenge for manufacturers, including Việt Nam. If we want to participate in the supply chain, there is no other way than to comply with customer regulations.

To comply with these regulations, Vietnamese businesses must significantly upgrade to strengthen their internal capabilities. The upgrading starts with technology and management, and focuses on training to improve skills for workers.

Besides, input costs are increasing, while output costs are rising slowly, which is putting pressure on businesses.

In this context, the first thing is that businesses must promptly grasp is information. Once information is available, it will be possible to develop specific plans to respond.

Enterprises also have to change their management style, must apply digital transformation to have continuous data flow back to the factory so leaders can be updated and make timely decisions to meet customers’ requirements.

In my opinion, businesses in the industry need to focus on building a compliance division to constantly update information so businesses can adjust and meet customer requirements.

But it must be emphasised that sustainable development is a long-term task, not only for 5 or 10 years, and the leather and footwear industry needs to quickly build a comprehensive solution.

What role will the association play to promote flexible adaptation of the footwear business community?

As an association, we are responsible for supporting the business community in the production and export process through seminars and training activities. Businesses need to connect and build networks to learn and share with each other.

Together with that, the association also wants to support businesses to enhance and improve their current production and business models. We need to focus on changing and training to improve workers' skills and use more modern machinery.

In addition, leather and footwear businesses also hope that the Ministry of Industry and Trade and the Vietnamese trade offices abroad will continue to enhance information sharing about market needs and tastes so businesses can truly introduce what the market needs, not simply what we have. Businesses also need the co-operation of State agencies on policies to encourage innovation; and focus on investing in high quality human resources. — VNS