Footwear will become Vietnam's next billion-dollar export item to Canada

VCN - At the beginning of the year, leather and footwear, one of the four commodity groups that account for the largest proportion of Vietnam's export turnover to Canada, has maintained a double-digit growth rate - up 46.6%. However, with great competition from other countries, here, the leather and footwear industry must have a new strategy instead of relying on outsourcing orders.
Footwear industry must implement green development to gain growth targets: Experts Footwear industry must implement green development to gain growth targets: Experts
Dealing with outputs for the furniture, textile and footwear industries Dealing with outputs for the furniture, textile and footwear industries
Footwear will become Vietnam's next billion-dollar export item to Canada
In order for the growth of turnover to be sustainable and to expand market share, Vietnamese enterprises need to switch towards building their own brands. Photo: Internet

Ranked second in leather and footwear exports

Ms. Tran Thu Quynh, Trade Counselor, Vietnam Trade Office in Canada, said that Vietnam's exports of leather and footwear products to this market by the end of May 2023 reached USD 433 million. Meanwhile, Canada's total imports in this period were USD 1.14 billion, so Vietnam alone accounted for about 37% market share.

Currently, Canada's footwear import market is quite concentrated, with 10 main partners accounting for over 90% of the market share. Among the 10 largest exporting countries to the Canadian market, Vietnam's main competitors are Cambodia (enjoying GST) and Indonesia (which is about to sign the Comprehensive Economic Cooperation Agreement CEPA with Canada). India and Bangladesh have negligible market share and are decreasing year by year. Italy, Portugal, and Spain do not produce goods in the same segment as Vietnam. China is also gradually reducing the proportion of outsourcing for foreign brands, which mainly export to Canada fashion footwear, home shoes, beach shoes, and cheap sports shoes.

Notably, the size of the Canadian market for leather and footwear products is quite stable with an average annual import volume of over USD 3 billion. Currently, China is still the largest exporter to Canada, and Vietnam ranks second. The growth rate of Vietnam's leather and footwear turnover in the period 2018-2022 will reach 72%, helping Vietnam successfully capture more market share at the rate of 26.5% in 2022 (while China will decrease to 34.7%).

According to the Vietnam Trade Office in Canada, 5 years after the CPTPP, Vietnam's exports have nearly doubled to the market. “The growth rate of Vietnam's leather and footwear turnover and market share in Canada shows the positive effects of the agreement. With the growth rate recorded in the first months of 2023, it is entirely possible to think that leather and footwear will become the next billion-dollar export item of Vietnam to Canada," the Vietnam Trade Office in Canada expects.

However, a recent study by the Trade Office shows that although footwear is the item with the highest rate of preferential use of CPTPP (72%) compared to other Vietnamese products, it is estimated that there are over USD 230 million of Vietnam's exports are exported with the MFN tax rate of 5-20%, while we should be entitled to the CPTTP tax of 0%.

According to the Vietnam Trade Office in Canada, for some footwear products with the difference in tax rates between the MFN and the CPTPP, businesses have to pay an additional tax of 10 to 13.5%.

Quickly convert to build your own brand

In order to have a sustainable turnover growth rate and expand market share in Canada, according to Ms. Tran Thu Quynh, Vietnamese businesses need to transform in the direction of building their own brands. China is an example of a successful transition from outsourcing for multinational brands to specializing in the production of cheap, fashionable leather and footwear products for the world.

Analysis of competitors in the Canadian market in the same segment as China, Indonesia, India, and Bangladesh shows that Vietnam is quite weak in terms of the complete supply chain for the industry. India and Bangladesh have strengths in leather and synthetic materials. Indonesia also owns rubber, wood, and synthetic fibers in addition to footwear. These countries also have high-level dyeing, imitation leather, and tanning technology. Decorative stainless steel and alloy accessories are also available, helping to build new design and styling capabilities.

In other words, the strategy of increasing turnover based on processing orders and relying on the mid-market segment is not feasible because Vietnam does not have many competitive advantages. In the high-end segment, Canadian domestic manufacturers continue to hold a stable market share by holding market experience for specialty items (snow shoes, winter sports shoes, etc.) thanks to Canadians' awareness of supporting domestic brands.

Besides, in the high-end segment, it is difficult for Vietnam to surpass competitors such as Italy, Spain, Portugal, and Germany... because these are countries with a tradition of tanning and an auxiliary industry to make high-end items (key chains, zips, furs...).

Therefore, in order to produce Vietnam's own brand, it is necessary to target the low-middle-income segment of young people, which is still a potential niche market with a high-profit margin.

In addition, Vietnamese businesses need to actively participate in international fairs and exhibitions because this is both an opportunity to work directly with wholesalers to find outsourcing orders and an opportunity to expand its ability to participate in the segments of fashion footwear, handbags, beachwear, children's shoes, and home shoes...

“In addition, specialization in footwear, protective footwear, and industrial uniform shoes can also be taken into account (e.g. tunnel shoes, fire prevention shoes, woodworking shoes…) to have a market and prestigious private brands, avoid depending on outsourcing orders and the conditions of partners because Vietnam will soon no longer have the advantage in labor costs,” said the Vietnam Trade Office in Canada.

In addition, a matter of note for Vietnamese businesses is that Canadian consumers are very interested in certificates confirming the business's green, sustainable, and fair production process and products labeled Eco, certified materials, and recyclable products. Therefore, Vietnamese enterprises must actively standardize and innovate production processes, and at the same time need to prepare in the direction of automation, reducing labor content in production to improve competitiveness.

By Ngoc Linh/Bui Diep

Related News

Latest News

VN

VN's food processing industry struggles to improve quality and value chain integration

Despite accounting for 19.1 per cent of Việt Nam’s processing sector, the food processing industry has been struggling with major issues such as poor-quality raw materials and subpar value chain integration, said industry insiders and economists.
Approach strategy of the seafood industry when implementing UKVFTA

Approach strategy of the seafood industry when implementing UKVFTA

VCN - As one of Vietnam's strong export industries to the UK, especially when the Vietnam - United Kingdom of Great Britain and Northern Ireland Free Trade Agreement (UKVFTA) comes into effect, with a detailed information approach strategy, it has created a great driving force to promote the export of Vietnamese seafood products to this market.
Mid-November: Vietnam

Mid-November: Vietnam's trade volume matches 2023 total, eyes record-breaking growth

VCN - By mid-November 2024, Vietnam's total import-export turnover reached an impressive US$681.48 billion, equaling the full-year trade figure for 2023
Vietnamese enterprises facing challenges from cross-border e-commerce platforms

Vietnamese enterprises facing challenges from cross-border e-commerce platforms

VCN – In recent years, with the rapid development of cross-border e-commerce (CBEC) platforms, domestic enterprises in Vietnam have been facing numerous difficulties and challenges.

More News

Vietnam, Malaysia eye new milestone in trade ties

Vietnam, Malaysia eye new milestone in trade ties

The official visit to Malaysia from November 21-23 by Party General Secretary To Lam is expected to open up new opportunities for and mark a new milestone in the economic and trade cooperation between Vietnam and Malaysia. Vietnam and Malaysia are key economic, trade, and investment partners. Their economic and trade ties have steadily grown since the two nations established diplomatic relations in 1973.
Shrimp exports surge in 10 months, generating 3.2 billion USD

Shrimp exports surge in 10 months, generating 3.2 billion USD

Vietnam’s shrimp exports in October reached US$394 million, a strong 24% increase year-on-year, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).
Vietnam’s exports to the U.S. near US$100 billion milestone

Vietnam’s exports to the U.S. near US$100 billion milestone

VCN - By the end of October, Vietnam's exports to the United States approached US$100 billion, reaffirming its position as Vietnam's largest export market.
From the “abnormal” coffee price, worries about the new crop

From the “abnormal” coffee price, worries about the new crop

VCN - The Vietnamese coffee industry enters the new crop with the question of what is a reasonable price to ensure benefits for coffee growers while still retaining international consumers.
What obstacles limit the market share of Vietnamese goods in the UK?

What obstacles limit the market share of Vietnamese goods in the UK?

VCN - Vietnamese goods account for only about 1% of total imports into the UK market. One of the reasons is that they have not yet built their own brands and have not focused on effective strategies and approaches to market information.
Why seafood exports to some Middle Eastern Countries are stalled

Why seafood exports to some Middle Eastern Countries are stalled

VCN - Several shipments of seafood exported to certain Middle Eastern countries have been delayed due to legal challenges related to consular legalization procedures. This has created significant bottlenecks in accessing these markets.
Storm No. 3 destroys profits of many insurance companies

Storm No. 3 destroys profits of many insurance companies

VCN - Due to the impact of storm No. 3, the business results of the third quarter and the first 9 months of 2024 of the insurance sector have been significantly affected. This requires more efforts from businesses for the results of the whole year 2024.
Vietnam, Malaysia eye golden partnership opportunities in Halal industry

Vietnam, Malaysia eye golden partnership opportunities in Halal industry

Cooperation in the Halal industry can help Vietnamese products reach nearly 2 billion Muslim consumers worldwide, representing over 24% of the global population, according to Malaysia’s Minister of Investment, Trade, and Industry Zafrul Abdul Aziz.
Tra fish sector aiming for production, processing greening for sustainable development

Tra fish sector aiming for production, processing greening for sustainable development

Greening production and processing to meet export requirements is both a trend and a necessity for many industries, including the tra fish sector.
Read More

Your care

Latest Most read
VN

VN's food processing industry struggles to improve quality and value chain integration

Despite accounting for 19.1 per cent of Việt Nam’s processing sector, the food processing industry has been struggling with major issues such as poor-quality raw materials and subpar value chain integration, said industry insiders and economists.
Approach strategy of the seafood industry when implementing UKVFTA

Approach strategy of the seafood industry when implementing UKVFTA

VCN - Mr. Nguyen Hoai Nam, Deputy General Secretary, Vietnam Association of Seafood Exporters and Producers (VASEP), said that the advantage that UKVFTA brings is that the main products of the seafood industry enjoy 0% import tax to the UK, especially key
Mid-November: Vietnam

Mid-November: Vietnam's trade volume matches 2023 total, eyes record-breaking growth

By mid-November 2024, Vietnam's total import-export turnover reached an impressive US$681.48 billion, equaling the full-year trade figure for 2023
Vietnamese enterprises facing challenges from cross-border e-commerce platforms

Vietnamese enterprises facing challenges from cross-border e-commerce platforms

VCN - E-commerce platforms have emerged as crucial distribution channels, enabling goods to reach consumers quickly and conveniently.
Vietnam, Malaysia eye new milestone in trade ties

Vietnam, Malaysia eye new milestone in trade ties

The official visit to Malaysia from November 21-23 by Party General Secretary To Lam is expected to open up new opportunities for and mark a new milestone in the economic and trade cooperation between Vietnam and Malaysia. Vietnam and Malaysia are key economic, trade, and investment partners. Their economic and trade ties have steadily grown since the two nations established diplomatic relations in 1973.
Mobile Version