VIETNAM LEATHER AND FOOTWEAR INDUSTRY REPORT ... ... 27 2. Overview of global leather and footwear Industry

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  • VIETNAM LEATHER AND FOOTWEAR INDUSTRY REPORT

    Q2/2018

  • Contents

    Executive summary 5

    1. Business environment 7

    1.1 Macroeconomic situation 7

    1.2 Legal framework 14

    2. Overview of Global Leather and Footwear Industry 18

    2.1 Value chain of Leather and Footwear Industry 18

    2.2 Production Methods 21

    2.3 Leather industry 23

    2.3.1 Production 24

    2.3.2 Consumption 25

    2.4 Footwear industry 26

    2.4.1 Production 27

    2.4.2 Consumption 28

    2

    3 Overview of Vietnam Leather- Footwear industry 29

    3.1 History of Establishment and Development 29

    3.2 Industry Scale and Features 32

    3.3 Leather industry 35

    3.3.1 Production – Consumption 36

    3.3.2 Export 37

    3.3.3 Import 38

    3.4 Footwear industry 39

    3.4.1 Production 40

    3.4.2 Consumption 42

    3.4.3 Export 48

    3.4.4 Import 53

    3.4.5 Footwear prices 54

  • Contents

    3

    3.5 Some other leather products 55

    3.6 Industry Planning 57

    3.7 Driving Forces 61

    4. Enterprise Analysis 64

  • 4

    MOIT Ministry of Industry and Trade

    MARD Ministry of Agriculture and Rural Development

    CBI Centre for the Promotion of Import from developing

    countries

    CICB Centre for the Brazilian Tanning Industry

    FAO Food and Agriculture Organization of the United

    Nations

    FED Federal Reserve System

    IMF International Monetary Fund

    Abbreviation

    Lefaso Vietnam Leather, Footwear and Handbag Association

    GDVC General Department of Vietnam Customs

    GSO General Statistics Office of Vietnam

    UN Comtrade United Nations Commodity Trade Statistics Database

    USITC United States International Trade Commission

    VIRAC Vietnam Industry Research and Consultant

    World Footwear

  • 5

    The global tanning industry is characterized by

    small and medium sized family businesses.

    The Far East continues to be the largest net

    importer of cow leather.

    Executive summary

    Latin America is expected to continue to be

    the most important net exporter of bovine

    leathers. European intra-regional trade is the largest

    component of the international footwear

    trade, accounting for almost one third of

    world exports.

    The most prominent issues of the Vietnamese

    tanning industry are raw materials,

    environmental issues, production technology

    and human resources.

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    Leather and footwear manufacturing is a key

    industry of Vietnam,

    Import value of footwear in the years 2010 -

    2015 of Vietnam was recorded at a low level of

    just under USD 100 million.

    Inventory tended to decrease in 2016 and

    2017.

    Executive summary

    .

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    1. Business environment

    1.1 Macroeconomic situation

    1.2 Legal framework

    Content

  • 8

    1. Business environment

    1.1 Macroeconomic situation

    • GDP in Q1/2018 was estimated to increase by 7.38% over the same period

    last year, which is the highest increase of the first quarter during 10 years.

    • In the first three months of 2018, the consumer price index has

    fluctuated when CPI in March 2018 decreased by 0.27% against last

    month, of which 8/11 groups of goods and services have a decrease in

    consumer price index.

    Source: VIRAC, GSO

    GDP growth, 2010 – 3M/2018

    Source: VIRAC, GSO

    Monthly CPI fluctuations 2014 - 3/2018

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    Increasing disposable income is a positive factor in boosting the

    domestic footwear and handbags industry.

    1. Business environment

    1.1 Macroeconomic situation

    Average population and population growth, 2006 -2017

    Million people

    Total disposable income and household expenditure, 2010 – 2017f

    Source: VIRAC, Economist Intelligence Unit

    USD billion

    Source: VIRAC, GSO

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    1. Business environment

    1.1 Macroeconomic situation

    Source: VIRAC, GDVC

    Source: VIRAC, GDVC

    USD million Import export, Q1/2015 – Q1/2018

    Export structure by commodity category, 3M/2018

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    1. Business environment

    1.1 Macroeconomic situation

    In the first 3 months of 2018, the USD/VND exchange rate tended to

    increase slightly, fluctuating around 22,440.

    Source: VIRAC

    Source: VIRAC, FIA

    FDI attraction by sector, 3M/2018

    USD/VND exchange rate, 2016 - 3/2018

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    1. Business environment

    1.1 Macroeconomic situation – Effects of related industries

    Source: VIRAC, GSO

    The market share of modern retail in total retail revenue 2014

    Source: VIRAC, GSO

    VND trillion

    Retail sales of goods in Vietnam, 2010 – 3M/2018

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    1. Business environment

    1.1 Macroeconomic situation

    Source: VIRAC

    Consumer confidence index - CCI

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    1. Business environment

    1.1 Macroeconomic situation

    1.2 Legal framework

    Content

  • 15

    Regulations on export-import:

    Document Date Ministry/Department Content

    Legal documents related to leather quarantine

    Source: VIRAC summarized

    1. Business Environment

    1.2 Legal Framework

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    1. Business environment

    1.2 Legal framework

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    Regulations on production:

    1. Business environment

    1.2 Legal framework

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    2. Overview of global leather and footwear Industry

    2.1 Value chain of Leather and Footwear Industry

    2.2 Production Methods

    2.3 Leather industry

    2.4 Footwear industry

    Content

  • 19

    2. Overview of global leather and footwear Industry

    2.1 Value chain of Leather and Footwear Industry

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    Designing

    Manufacturing

    Retailing

    2. Overview of global leather and footwear Industry

    2.1 Value chain of Leather and Footwear Industry

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    Content

    2. Overview of global leather and footwear Industry

    2.1 Value chain of Leather and Footwear Industry

    2.2 Production Methods

    2.3 Leather industry

    2.4 Footwear industry

  • 22

    OEM/FOB

    ODM

    OBM

    2. Overview of global leather and footwear Industry

    2.2 Production Methods

    Source: VIRAC

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    Content

    2. Overview of global leather and footwear Industry

    2.1 Value chain of Leather and Footwear Industry

    2.2 Production Methods

    2.3 Leather industry

    2.4 Footwear industry

  • 24

    2. Overview of global leather and footwear Industry

    2.3 Leather industry – 2.3.1 Production

    India and Brazil have abundant sources of raw materials and have

    developing tanning industry.

    Thousand tons

    Leather production, 2010 - 2015

    Source: VIRAC, FAO

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    2. Overview of global leather and footwear Industry

    2.3 Leather industry – 2.3.2 Leather consumption

    Source: VIRAC, FAO

    Million square feet Leather consumption, 2010 – 2014

    Leather consumption structure by products, 2013

    Source: VIRAC

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    Content

    2. Overview of global leather and footwear Industry

    2.1 Value chain of Leather and Footwear Industry

    2.2 Production Methods

    2.3 Leather industry

    2.4 Footwear industry

  • 27

    2. Overview of global leather and footwear Industry

    2.4 Footwear industry – 2.4.1 Footwear production

    According to World Footwear data, total global footwear production

    maintained at 23 billion pairs in the last two years after an average growth of

    5% from 2010 to 2014.

    Source: VIRAC, World Footwear

    No Country Share Volume

    Top 10 footwear producers 2016

    Source: VIRAC, World Footwear

    Billion pairs

    Source: VIRAC, World Footwear

    Global footwear output, 2011 - 2016

    Footwear production structure by region, 2016

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    2.

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