EXPORTING FOOTWEAR & LEATHER FASHION ACCESSORIES TO amp;Leather_EN_0.pdf¢  a stimulus for branded businesses

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  • European Union's Neighbourhood Programme for Moldova

    EU EXPORT EXPLORER EXPORTING FOOTWEAR &

    LEATHER FASHION ACCESSORIES TO THE EU

    May, 2017

    This project is implemented by a GFA Consulting Group - led Consortium

    This project is funded by the European Union

    Partner of German BusinessPartner of German Business

    gGmbHgGmbHs e q u as e q u a

  • Chisinau

    The views expressed in this publication do not necessarily reflect the views of the European Union.

    EU EXPORT EXPLORER EXPORTING FOOTWEAR &

    LEATHER FASHION ACCESSORIES TO THE EU

    May, 2017

  • EU Export Explorer for Footwear & Leather Fashion Accessories, May 2017 Page 1 of 63

    TABLE OF CONTENTS

    1 INTRODUCTION ................................................................................................................. 2

    2 THE MOLDOVAN INDUSTRY ............................................................................................ 4

    2.1 Production ..................................................................................................................... 4

    2.2 Exports .......................................................................................................................... 5

    3 THE EU MARKET ............................................................................................................... 7

    3.1 Supply & Demand ......................................................................................................... 7

    3.2 Trends ......................................................................................................................... 37

    3.3 Segmentation .............................................................................................................. 41

    3.4 Competitiveness ......................................................................................................... 48

    3.5 Requirements ............................................................................................................. 50

    3.6 Trade Channels & Terms ........................................................................................... 55

    4 EXPORTING TO THE EU ................................................................................................. 61

    4.1 Preparation ................................................................................................................. 61

    4.2 Planning ...................................................................................................................... 62

    4.3 More information ......................................................................................................... 63

  • EU Export Explorer for Footwear & Leather Fashion Accessories, May 2017 Page 2 of 63

    1 INTRODUCTION

    This EU Export Explorer for Footwear & Leather Fashion Accessories focuses

    on opportunities, guidelines and requirements for Moldovan manufacturers exporting

    their products to the EU.

    Hyperlinks

    This document contains many practical and up-to-date references to additional

    information available on the Internet. Instead of listing all kinds of long and complex

    website addresses – often impossible to read, let alone replicate - those websites are

    directly accessible in the electronic text via hyperlinks that can be recognised by the

    fact that the text is italic, underlined and blue. If you click on such a string of text you

    will be automatically directed to a website with more information on that particular

    subject. So if you read this report on paper and you are interested in those additional

    online information sources, you are strongly recommended to get the electronic

    version of this document, which is freely available on the website of MIEPO

    (www.miepo.md). On the bottom of that webpage you will find “Sectors”, choose from

    there.

    All information sources (hyperlinks and footnotes) in the paragraphs below are

    available on the Internet in the English language, either directly or via an English

    language button on that website. Should you have a problem with that and if you are

    considering exports, then you are recommended to learn the English language, or at

    least to make sure that somebody in your company masters the English language:

    English is THE internationally accepted business language, and the majority of

    export information available on the Internet is in English only.

    The structure of this document

    Chapter 2 briefly describes the Moldovan industry for footwear & leather fashion

    accessories and its exports to the EU.

    Chapter 3 zooms in on the EU market for footwear & leather fashion accessories.

    Whenever needed there are per paragraph separate sections for footwear & leather

    fashion accessories in chapter 3. This applies to paragraphs about:

    - Product supply and demand (3.1), which analyses EU import, production and

    consumption;

    - Trends on the EU market (3.2);

    - Product segmentation and market segmentation (3.3).

    Readers only interested in one of the two products can in these paragraphs skip the

    section about the other product, without affecting the readability of the document.

  • EU Export Explorer for Footwear & Leather Fashion Accessories, May 2017 Page 3 of 63

    On the other hand, whenever possible chapter 3 deals with footwear and leather

    fashion accessories jointly. This applies to the paragraph about:

    - The required competitiveness for a Moldovan manufacturer exporting to the EU

    (3.4);

    - Legal requirements and buyer requirements in the EU for your product (3.5);

    - Trade channels and trading terms related to logistics and payments (3.6).

    Chapter 4 briefly describes how as a Moldovan manufacturer you could prepare and

    plan for exporting to the EU.

  • EU Export Explorer for Footwear & Leather Fashion Accessories, May 2017 Page 4 of 63

    2 THE MOLDOVAN INDUSTRY

    2.1 Production

    The manufacturing sub-sectors of textiles, apparel and footwear & leather

    accessories together make up the light industry of Moldova. The light industry has

    traditionally been export oriented, with 82 % of total production value for exports. Out

    of delivered production, 69% in leather products and footwear was exported. Around

    80% of the total production value of the light industry is made-to-order (i.e.

    manufactured based on instructions of the customer) 1. This corresponds with the

    abovementioned 82 % share of exports in total production value, as the rest (18 %) is

    with own brand to the local market. According to statistics of the International Trade

    Center (ITC) 84 % of footwear exports are re-exports, indicating that this proportion

    is made-to-order whereby the customer provides the materials.

    This large share of made-to-order in exports, whereby the customer usually supplies

    all materials, means that net margins are relatively low and investments moderate. In

    leather & footwear the role of foreign capital investments is not that significant as in

    textiles, and joint ventures are not that common. This is relevant, as the ownership

    background of a company has an impact on its strategy: fully foreign-owned

    companies, as well as joint ventures of which the parent companies carry out trade,

    tend to concentrate on production and on providing products to the parent company

    at low transfer prices. In such a business context - with all design, sourcing and

    marketing activities covered by the parent company - the strategy usually is to not

    upgrade production in Moldova in the value chain.

    For Moldovan companies with venture capital on the other hand it may be different

    however, as their aim may be to enhance the value of the company, for example by

    own-brand exports. Around 80% of the companies in footwear & leather fashion

    accessories are funded through local private financial sources. In particular some

    smaller firms operate already with own brands in the domestic market. But the low

    GDP per capita in Moldova keeps consumption at a moderate level and is not really

    a stimulus for branded businesses in the domestic market. It’s the larger companies

    that tend to carry out exports on a made-to-order basis, often depending on just a

    few foreign customers.2

    1 “Textile, Apparel, Footwear and Leather in Republic of Moldova”, MIEPO, edition 2015/2016

    2 “Recommendations for Creating a Roadmap for Competitive Development of Moldovan Fashion

    Manufacturing Industry”, Heikki Matilla et al, 2016

  • EU Export Explorer for Footwear & Leather Fashion Accessories, May 2017 Page 5 of 63

    2.2 Exports

    Footwear

    For footwear Romania (57%) and Italy (23.8%) are Moldova’s main export

    destinations and together account for over 80% of Moldovan footwear exports.

    Russia used to be a sizeable market as well, but its share has gone down from 20%

    in 2012 to 5.7% in 2016. In that year it was even surpassed by Belarus, which has