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value against 2011, in the corresponding period in 2011 the
growth rates were 8.4% and 23.1% respectively against
2010. This suggests the value of individual exports is
declining. 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.
Some regions seem to be harder hit than others.
According to the CLIA, exports from Dongguang fell 10.6%
in January and February from the same period last year,
having fallen 15.9% during the first 10 months of last year.
In July, adidas cancelled contracts with some of its suppliers
in China, and announced it is to close its only factory in
Suzhou city later this year. However, that does not mean it
is reducing its footprint in the country - quite the opposite.
“We plan to open between 500 and 600 stores in the
country by the end of the year,” said Colin Currie, managing
director of adidas Group China.
Adapt and develop
But footwear manufacturers are fighting back. Huidong
produced 300 million pairs of shoes last year for brands that
can sell them for several hundred dollars per pair in the
market, but profit for shoemakers dropped to $0.3 per pair
this year, the lowest level since 2002, according to the CLIA.
So to increase competitiveness, factories there have set up
a footwear alliance, and opened a materials market and a
research centre. They were reported as saying that while
they can do nothing to change the overseas market, they
are aiming to increase sales in the domestic market, as they
understand Chinese fashion and demand.
Xie Rongfang, Wenzhou Shoe Industry Association
executive vice-president, agrees. He announced that
Wenzhou city is to launch an international research and
development centre for footwear to promote high-tech
techniques. He said more sophisticated production line
equipment will reduce the need for workers, thus solving
the labour shortages problem, and that it is vital updated
machinery is used to keep local companies competitive.
Similarly, Liu Qiongying, owner of women’s shoe brand
Aiminer, said exports this year have been at the same level as
last year, despite difficult global economic conditions, because
of the company’s heavy investment in research. She said it put
70% of its profit into upgrading the machinery and it is now
targeting massive domestic expansion.
So it seems that although the rate of growth of exports
overall has slowed, and for leather shoes even declined,
this does not signal trouble for the Chinese footwear
industry. Yes, consumers are willing to pay more for
imported shoes and the demand for luxury goods is
growing unabated. But the organic growth in the domestic
market is more than enough to keep good shoemakers in
business. So much so that the tanneries we visited in China
are doubling their capacities in anticipation. It seems it is a
win-win situation for footwear manufacturers across the
globe.
43
CHINA’S DOMESTIC FOOTWEAR MARKET IS GOOD NEWS FOR ALL
SEPTEMBER/OCTOBER 2012 | www.footwearbiz.com