FIEs hold lion’s share of footwear exports

photo baodautu.vn

According to the Vietnam Leather, Footwear and Handbag Association (Lefaso), with 800 businesses employing about one million labourers, foreign-invested enterprises (FIEs) account for less than one quarter in the number of businesses, but contribute as much as 70 per cent of the sector’s total export value.

Hailing mainly from South Korea and Taiwan, footwear FIEs operating in Vietnam are typically large in scale, and sometimes recruit labourers in the dozens of thousands.

According to the Lefaso’s deputy chairman Diep Thanh Kiet, large-scaled and well-managed FIEs are emerging as the top choice of global footwear brands. Of nearly 100 Vietnam-based factories conducting processing work for the well-known German brand Adidas, over 90 per cent of them are of Korean and Taiwanese origin. Similarly, about 60 Vietnam-based plants run by Korean and Taiwanese managers are responsible for the $2.3 billion accrued through the annual export of made-in-Vietnam Nike products to the US market.

After 20 years operating in Vietnam, Korean-owned Changshin Vietnam Limited lifted its production capacity 54-fold – from 1,695 pairs of shoes per day, to 95,000 pairs a day in 2015. Its production plant now covers 44 hectares, a dramatic expansion from its 11ha site in 1995. The company is expected to rake in $430 million in the total export value this year, according to general director Bang Jin Woo.

Similar to Changshin Vietnam, Taewang Vina currently possesses three production plants based in southern Vietnam with the export value approximating $450 million annually.

Meanwhile, Taiwanese group Pouchen annually contributes over $1 billion towards Vietnam’s footwear sector export value.