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visit to a tannery in the Guansu province, which mainly supplies
footwear manufacturers, the owner estimated the figure at
seven pairs per urban woman. He said while it was
approximately correct that the rural population and men in
general consume far less – maybe one new pair per person per
year – women in cities were purchasing new pairs for every
season. Going by his figures, China will consume 3.5 billion
new pairs per year compared to the current estimates of 2
billion – enough to make the tanneries worry if they will have
enough leather.
The observation regarding the urban woman is significant.
The fact that proportionally fewer shoes are exported could well
mean that more shoes are staying within the country to service
the booming domestic market. During the first five months of
this year, the average price per pair for exported shoes was
$3.74, while the corresponding value of the shoes coming into
China was much higher at an average of $27.65 – more than
seven times more expensive, which also says something about
consumer demand for high-quality shoes.
As well as population growth, the amount of money
consumers are spending is increasing rapidly – with it, the
growth in the luxury goods market. Reports also suggest that
people’s attitudes to quality are changing;
the Financial Times
reported that consumers have been demanding particularly
high standards since the tainted milk crisis in 2008. This also
means they are less likely to be satisfied with counterfeit
designer articles. A survey of Chinese women by retailer Escada
found 31% were willing to accept fakes in 2008; this figure had
fallen to 12% by 2010.
Taste for the finer things
As the middle class grows, second- and third-tier cities are
welcoming designer stores and shopping malls. The traditional
wealth hot spots of Shanghai and Beijing will be joined by
Hangzhou, Wuhan and Chongqing by 2015, according to
research provider WealthInsight. In terms of extreme wealth,
high net worth individuals - those worth $1m or more – are
expected to swell in rank by almost 10 a day, increasing by
66% to reach 2.13 million by 2015.
Luxury brands have been quick to capitalise on consumer
demand for quality. PPR SA, the world’s third largest luxury
group by turnover and owner of Gucci, in July stated it
generated $1.4 billion in sales from the Asia-Pacific region,
excluding Japan, in the first half of 2012 – a 16.2% increase on
the same period last year. At LVMH, owner of Louis Vuitton and
Fendi, sales totalled
€
12.9 billion in the first half of this year,
26% better than last year, with countries in Asia contributing the
most, according to the group.
Chinese consumers often perceive Western makes to be
higher quality, and so do not mind paying extra. The president
of the Spanish footwear association, Rafael Calvo, said Spanish
shoes now sell for a better price in China than the US, having
gone up by 60% in recent years
(see article on page 12)
.
Espadrilles from south west France have seen a massive
resurgence due to demand from China. Marzat's Megam
Creation, a family business and one of a small number of
manufacturers to make the shoes in the traditional manner, was
once struggling against cheap Bangladeshi copies. But after
being spotted at a shoe fair by a Chinese businessman last
June, business is booming. Chinese consumers are happy to
pay for the ‘made in France' label, they said, with shoes selling
for about
€
80 in China compared with between
€
19 and
€
45
in France. Company turnover at the umbrella group has
increased from
€
35,000 to
€
600,000 in less than five years.
Italian shoemakers haven’t missed the trick. One example
of an industry fair, Shoes from Italy, was held in Beijing in July.
The organisers said Italian shoes are becoming increasingly
popular in China and such shows raise the profile and
potentially boost trade.
Factory closures
But has this focus on the West been detrimental to the
domestic footwear industry? Figures tell us that domestic
consumer demand is heading for dizzying volumes, but
many in the industry report trouble, with small factories
closing and, for some, conditions that are “worse than
2008”, according to the CLIA. Although exports for leather
shoes have fallen, exports for shoes in general are growing,
but at lower levels than in recent years. This, coupled with
high production costs and labour shortages, is driving some
footwear manufacturers to shoe hubs in Vietnam and India,
where energy costs are said to be lower and hide prices
more affordable.
Although exports are growing, they are growing at lower
levels than in recent years. Figures from the CLIA show that
while Chinese footwear manufacturers exported almost 3.2
billion pairs in the first four months of this year, bringing in
$11.7 billion and growing 2.4% in volume and 4.1% in
42
WORLD FOOTWEAR | SEPTEMBER/OCTOBER 2012
A Chinese footwear firm exhibiting at the GDS shoe fair
in Düsseldorf.