Basic HTML Version
12
SOURCING & SUPPLY CHAIN
WORLD FOOTWEAR | MAY/JUNE 2012
N
o less an authority than the China Leather Industry
Association (CLIA) has said that production costs
for footwear manufacturers in China at the
moment are three times higher than in Vietnam. In
comments the organisation made regarding the continued
move away from established footwear manufacturing areas
such as Guangdong Province, it said higher costs across China
were forcing overseas buyers to source production in Vietnam
and other parts of south-east Asia instead.
A large number of workers is certainly something Vietnam is
blessed with. Silk Road Associates, a Hong Kong-based
economic consultancy, said recently that it is fairer to compare
Vietnam to Chinese provinces rather than to the country as a
whole. And if Vietnam were a province of China, it would
compare to the most populous. Its estimated population of
91.5 million would put Vietnam in the top four, behind only the
provinces of Guangdong (104.3 million), Shandong (95.8
million) and Henan (94 million). However, if you look at the
comparative gross domestic product figures, Vietnam’s 2011
per capita total of $1,224 (Silk Road Associates’ figure) is
substantially lower than that of even the poorest province in
China, Guizhou, where the per capita GDP was $2,541 in 2011.
The biggest province of all, Guangdong, has a special place
in the recent history of the footwear manufacturing industry
because so many of China’s footwear manufacturers based
themselves there. In the very recent past, Guangdong
accounted for 44.5% of total Chinese shoe production. There
were around 6,000 shoemaking enterprises there in 2005,
turning out four billion pairs of shoes a year. Exports were
valued at over $7 billion a year. As
World Footwear
has reported
before, a substantial number of footwear businesses in
Guangdong began to move elsewhere at the start of this
decade. With average wage rates, even for unskilled workers,
increasing by up to 100% since 2010, it’s easy to see why
many manufacturers have moved from Guangdong to China’s
vast hinterland. Chinese central government policy has
encouraged this but it’s the all-too-real upward spiralling wage
levels that have made it happen, observers say.
Yet, the provincial capital, Guangzhou, China’s third-largest
Vietnam:
three times cheaper
may not be enough
The China Leather Industry Association
has calculated that it may be three
times cheaper for companies to
manufacture their shoes across the
border in Vietnam, but there is a danger
that infrastructure challenges there may
make any advantage short-lived.
Delays in port developments in
Vietnam detract from its attraction
as a manufacturing location.
CREDIT: SHUTTERSTOCK