Shoes are produced at Thuong Dinh Footwear Company in Ha Noi. Footwear export turnover reached US$3.76 billion in the first five months of this year, rising 17.8 per cent year-on-year. — VNA/VNS Photo Ngoc Ha

HA NOI (Biz Hub) — Footwear exports fetched US$3.76 billion in the first five months of this year, up 17.8 per cent year-on-year, according to the Ministry of Industry and Trade.

The period's encouraging growth rate signalled that the footwear industry was well on track to reach $12 billion export target set for this year, it said.

From January to May, US, Japan and UK remained major export markets for Vietnamese footwear, with $946 million, $192 million, $170 million, respectively, in revenue. Germany came in fourth with $150 million.

The Viet Nam Leather and Footwear Association (Lefaso) expects footwear exports to prosper due to the development of a competitive edge, the introduction of Generalised System of Preferences (GSP) taxes and the forthcoming signing of the Trans-Pacific Partnership (TPP) Agreement.

Lefaso encouraged domestic footwear producers to innovate their existing technologies to increase productivity as well as improve the quality of products.

Challenges ahead

It is undeniable that Vietnamese enterprises will enjoy numerous benefits brought by TPP. However, many footwear companies said they had encountered various difficulties while preparing for this agreement.

Tran Ngoc Anh, director of two footwear production companies of An Thinh and Do Ba, told the Dau Tu (Viet Nam Investment Review) newspaper that 60 to 65 per cent of his products were exported to the EU countries, while the remainder was shipped to other countries, which have yet to join the TPP.

"We wanted to penetrate into the US market to take opportunities of TPP effectively, but it was not an easy task due to regulatory obstacles," he told the newspaper.

For footwear companies, the preparation for TPP was not only their responsibility. Raw material suppliers also played a key role, as TPP required enterprises to source a certain ratio of raw materials locally, he explained.

The problem was to find enough raw material suppliers in the domestic market to take full advantage of TPP, he noted.

Not many domestic footwear producers could provide high-quality products with good designs as per the demands of TPP countries, Le Quang Doan, Director of Minh Dieu Co which specialised in footwear production told the newspaper.

Due to capital shortages local footwear producers just invested in improving product quality and design until they got an order from customers, Doan said.

General Secretary of HCM City Leather and Footwear Association, Nguyen Van Khanh, called on producers to make further investment in production expansion and technological innovation in an effort to catch up with all TPP opportunities.

According to trade experts, more efforts from the firms in advertising products via trade promotion and international fairs and exhibitions as well as the State incentives in taxes, credit and production spaces was also needed. — VNS