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Footwear industry is going through tough time

(CTT-Đong Nai) – The world’s demand dropping, major brands stocks left in storages in large quantities, and with fewer orders from customers, Vietnam’s footwear industry are facing multiple challenges, and the 27 billion VNĐ exporting target seems impossible to achieve.  
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Production activity at a local footwear manufacturer

​​​Declining export due to reliance on international market

As Foreign Direct Investment (FDI) manufacturers continuously downsized their workforce, our domestic companies have to push on, and find ways to adapt to the market's fluctuating demands.
According to the General Statistics Office, in the first 5 months of 2023, Vietnam's footwear exportation reached 8,2 billion USD. This is 1 of the 7 products that has earn more than 5 billion USD in export, but it is still 13,3% lower than this time in 2022. As for Dong Nai, the first 5 months earn around 1,7 billion USD in export, only 79,7% compare to last year.

A declining in export reflects reality: the world's demand is decreasing because consumers are tightening their spending due to inflation, and economic conflicts lead to a decrease in income. Even the world's famous brands like Adidas, Nike, … cannot empty their stocks; this causes them to stop giving out new orders to manufacturers around the world, not just ones in Vietnam.
Enterprises need assistance
A decline in export causes many large FDI companies and manufacturers to downsize their workforce. Since early February, PouYuen Limited Company (Ho Chi Minh city) has to repeatedly downsized their workforce. Even though companies have tried to reschedule, they cannot provide enough works for a majority of their workers, and they cannot tell when a new order would arrive, so they have to shut down some production lines. In April, PouYuen Vietnam again let go a large number of workers. The decline of PouYuen Vietnam is heart breaking for our footwear exportation in 2023; since they are a leading FDI manufacturer in footwear industry, generating around 1 billion USD in revenue annually.
Not just only PouYuen is having a tough time, in Dong Nai alone, many major clothing and footwear FDI manufacturers like Taekwang Vina, Changshin, Pouchen… also have to reschedule their productions, even let go a certain number of workers due to the lack of orders. Large scales FDI companies are facing problems, so too are the domestic ones as consumers buying power drops.
According to companies and manufacturers, during times when there are almost no new orders like at the moment, there should be a focus on mid and long term solutions, while short term ones should prioritize helping companies staying afloat, as the world is going through a similar problem. Moreover, the interest rate, logistic expense, especially the terminal handling fee, VAT refund fee, and housing tax… should be lowered during this time.​

Author: Phan Anh

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