Footwear and handbag businesses have prioritized exporting their products over selling them domestically as profits are higher overseas and government incentives make it a more attractive proposition.
According to the Vietnam Leather, Footwear and Handbag Association (Lefaso), the people of Vietnam purchase more than 180 million pairs of shoes annually while domestic production only meets roughly 40% of that demand.
|Footwear and handbag businesses have prioritized exporting their products over selling them domestically as profits are higher overseas and government incentives make it a more attractive proposition.
Lefaso has more than 500 member companies involved in producing leather shoes, bags and providing tanned leather materials and production machinery and equipment. But only few are capable of supplying products on the domestic market.
Phan Thi Thanh Xuan, Lefaso General Secretary, explained that this is because the footwear and handbag sector has faced a significant number of difficulties in recent times, due in no small part to the fact that most materials for production were imported. Thus, large-scale producers can reduce costs if they make export products. Meanwhile for the domestic market suffers as businesses can only produce at a small scale because they just need to produce a limited number of products. The wide availability of counterfeit and fake, low-quality products is also detrimental to the industry
That’s why major businesses often focus on manufacturing goods for export while the domestic market is for smaller scale enterprises, said Ms Xuan.
Nguyen Tri Kien, director of Minh Tien Garment Company, said it is much more difficult to develop the domestic market than export markets as it requires better customer services and efforts promote their images and brands and manage well delivery and production chains.
Nguyen Van Khiem, General Director of Thuong Dinh Footwear Company, echoed Mr Kien’s view, saying that despite having great potential for the domestic market, businesses still find it hard to conquer customers if their brands are little known. Furthermore, they have to face tough competitions with imported products as well as fake and counterfeit goods.
In spite of numerous difficulties, footwear businesses believe it is high time to dominate the domestic market in a way that has thus far not been possible.
To gain a firm foothold on the domestic market, Mr Kien underscored the need to tackle the problem of fake and counterfeit products and ensure material sources for production and brand names, improve the quality of products and devise long-term strategies for customer services to build up loyal customers and ensure they get repeat business’. They should also branch out and increase their potential customer base by creating a chain of shops and set up e-commerce options as online sales become commonplace, he added.
Solustri Jordanp, an Italian expert, said that the key to success in the footwear industry is to cultivate a brand identity through recognizable products and reputable quality of products.
Ms Xuan also proposed that it is incumbent on the state to devise proper policies to enhance the market transparency and control. Businesses should be assisted in building quality standards and stepping up communications on identifying fake and counterfeit products.