Vietnam footwear exports slip on Covid-19 impacts

Vietnam’s footwear exports plunged 44.2 percent year-on-year to about $700 million in September, according to the Vietnam Leather, Footwear and Handbag Association (Lefaso).

Meanwhile, handbag exports also decreased by 48 percent.

However, the industry still recorded positive growth overall thanks to increased momentum in the first half of the year.

In the first nine months of 2021, footwear exports crossed $13.3 billion, up nearly 10 percent over the same period in 2020, while handbags exports slipped 3.7 percent year-on-year to around $2.24 billion.

The U.S. remained a major export market for Vietnamese footwear and handbags, accounting for 41 and 44 percent of the total, respectively. EU ranked second at nearly 23 and 22 percent of footwear and handbag exports.

Lefaso said prolonged social distancing has forced 80 percent of leather and footwear factories in HCMC, Dong Nai, Binh Duong, An Giang, and Kien Giang, accounting for 70 percent of the industry’s import and export turnover, to stop production.

Businesses in the northern and central regions reduced production by 30-50 percent due to labor shortages, supply chain disruptions and other factors.

The lack of containers, high cost of logistics and international shipping (5-10 times), expensive fuel and the rising price of imported raw materials have majorly impacted the industry.

The association also said that conditions for receiving Covid-19 relief were too tough and relevant administrative procedures too complicated, making it difficult for businesses to access the promised support.

Although the situation has improved since the end of September, production under the “new normal” has a long way to go, it said.

Lefaso recommended that leather and footwear businesses reduce costs, take advantage of supportive policies and create favorable conditions, in line with safety protocols prescribed by the Ministry of Health to attract workers back to work.

Businesses also need to make good use of incentives under free trade agreements, especially CPTPP and EVFTA, to boost exports in the last months of 2021, the association said.