Chances await VN shoemakers in EU market

The Generalized System of Preferences, known as GSP for short, is a scheme that gives preferential access for a wide range of industrial and agricultural products originating from certain developing countries to the EU markets. The preferential treatment includes reduced or zero customs duties.

Under the newly-released GSP scheme, the average duty for Vietnamese-made footwear exports to the EU is lowered from 12.4 percent to between 3.5 and 4 percent, starting January 1, 2014.

“The door to the EU market is open wide for local footwear manufacturers if they can take advantage of this opportunity,” commented Nguyen Van Le, deputy CEO of Dong Hung shoemaker.

The EU is the Vietnam’s largest exporting market for footwear products, accounting for $3 billion, or 35 percent, of total export turnover last year.

However, the global economic slowdown has forced consumers in the market to cut spending. Many European importers have asked Vietnamese shoemakers to cut prices by 5 to 7 percent for new contracts in 2013 as more and more consumers are thinking twice about their shopping.

“The GSP will enable manufacturers to lower prices,” Le said.

Dong Co has made some 2.5 million pairs of shoes, worth a combined $15 million, so far this year, and some importers have also demanded that the company cut prices as “the import tax to the EU remains high,” he said.

“The EU consumers will benefit from the lowered import tax under the GSP, while local footwear makers can also grab this chance to increase export volumes,” he added.

Vietnam currently stands only behind China when it comes to footwear exports to the EU, according to Diep Thanh Kiet, deputy chairman of the Vietnam Leather and Footwear Association (Lefaso).

“This is because of our young workforce with good skills,” he explained, adding that the competitiveness can even be increased if Vietnam manages to reach a free trade agreement with the EU.

“Under the FTA, the tax rate for footwear will be reduced to zero, which will enable local shoemakers to expand markets,” he said.