The global’s tanning industry is characterized by small or medium-sized family businesses. Countries with the fastest growing in tanning industry such as South Korea, Taiwan, China, and Indonesia, have difficulty in supplying raw materials and have to import large quantities of raw materials.
Currently, many tanneries have been built in these countries to meet the growing demand for leather, while most of the tanneries in Europe, Japan, and the United States have been shut down.
Over the years, the global’s leather consumption growth has been negligible for cow leather and decreased by 2% per year for sheep and goat leather. In contrast, skin consumption in developing countries has tended to increase sharply. In the Far East especially in China, where improvements in incomes combined with increased tanning capacity and increased efficiency in the production of footwear to boost demand.
Vietnam leather and footwear industry continues to benefit from China’s fluctuations such as the devaluation of the Chinese yuan and the high increase in labor costs. In addition, many investors in the leather and footwear industry are turning to invest and expand production in Vietnam (utilizing cheap labor) and to reduce investment risks in China. Along with the participation of foreign invested enterprises, the export turnover of footwear in 2017 reached xx.xxx billion, up 12.7% compared to the same period in 2016. Meanwhile, in China, due to production costs tend to increase, FDI leather and footwear enterprises tend to shift investment from China to Vietnam. The footwear industry is forecast to continue to grow sharply from 8-15% in the period 2018 to 2020.
The Far East continues to be the largest net importer of cow leather. This is due to the development of leather products and footwear production in China, Vietnam Export of cow leather from Africa has grown at a rapid pace due to the important supply of some countries such as Kenya, Ethiopia, Somalia, and Zimbabwe, while exports of sheep and goat leather are likely to decline due to the reduction of domestic demand.
Total global footwear production maintained 23 billion pairs in the past two years after an average growth rate of 15% from 2010 to 2014. China, India, and Vietnam are the global’s largest footwear producers with 70% of world output.
Leather and footwear manufacturing is a key industry of Vietnam. However, the production of leather and footwear is still mainly in the form of export processing, with the source of input materials specified by importing customers. Therefore, the value added to the product is low and highly dependent on the supply from abroad. Each year, Vietnam consumes billions of dollars to import. The localization rate of leather and footwear industry at 50% is not enough to meet the export requirements of Trade Agreements (almost 55%) signed and being negotiated. For leather footwear products, the localization rate is even lower due to the dependence on the imported leather source.
For more information on the research report, refer to Vietnam Leather and Footwear Market.