Shoemaking orders back to China, a year of exports more than 86 billion | big maker


China’s shoe industry reversed a slump in exports and saw a sharp rebound in orders last year.Exports of shoes, leggings and similar goods and parts have fallen from a peak of $56.2 billion in 2014 to $38.1 billion in 2020, according to Wind.By 2021, that figure had grown to $51.7 billion, surpassing even the pre-pandemic level of 2019, when December was the highest monthly export in recent history.This is largely due to the restructuring of the global industrial chain during the COVID-19 pandemic.When the epidemic clears, will those growing orders flow out of China again?How can Chinese shoes and clothing enterprises create a strong own brand?Over the past year, China’s shoe industry has placed orders for more than a billion pairs of shoes.According to the General Administration of Customs, China exported 8.7 billion pairs of shoes and boots in 2021, a significant increase from 7.4 billion pairs in the whole of 2020, but it has yet to recover to the pre-epidemic level of 2019.China exported 9.5 billion pairs of shoes globally in 2019.The export volume has increased by 1.3 billion pairs over the past year, and the corresponding export value has also increased.China exported $51.7 billion in shoes, boots, leg warmers and similar products and their parts in 2021, up 35.7% from $38.1 billion the year before and up slightly from $47.7 billion in 2019, before the pandemic, according to Wind.In other words, China’s shoe industry exported $13.6 billion more in 2021, or about 86 billion yuan based on the current dollar-YUAN exchange rate.Although its share has declined in the past few years, the U.S. is still the largest exporter of Chinese shoes and boots.As traditional export destinations, the United States, the European Union and Russia ranked the top three in the export of China’s shoes, boots, leg warmers and similar products and their parts in 2021, respectively reaching 12.1 billion US dollars, 8.6 billion US dollars and 2.4 billion US dollars, with an increase of 56.5%, 33% and 54.3% compared with the previous year.Exports to the above three countries in 2021 will account for 23.4 percent, 16.8 percent and 4.6 percent of China’s total exports respectively.Demand is growing fast in South America.In terms of export growth, Argentina, Switzerland and Chile have the fastest growth rate of 92.5%, 78.7% and 64.2% respectively, and their exports in 2021 will be 63 million US dollars, 106 million US dollars and 733 million US dollars respectively.South American countries account for two of the three fastest-growing markets.It is worth noting that Singapore was the only country (region) to record negative growth, with imports of us $319 million in 2021, down 6.6% from the previous year.The sharp rebound in export orders of China’s shoe industry is partly due to the recovery of the demand side — the economic recovery of developed countries such as Europe and the United States, as well as the monetary stimulus of consumer demand;This is partly due to supply-side adjustments — some orders from Southeast Asia, such as Vietnam and Indonesia, have shifted to China due to the COVID-19 pandemic.Zhang Li (pseudonym), head of foreign trade of a small and medium-sized footwear company, said in an interview with China Finance and Economics that she felt the return of orders from Southeast Asia and the rise in raw material prices during the same period.Vietnam, for example, retained its title of “model student” until spring 2021.Since the second half of the year, the Delta strain of the virus began to spread in Vietnam, and since then it has been out of control.The outbreak first occurred in industrial parks and the economic hub of Ho Chi Minh City, forcing factories to shut down and causing a shock to Vietnam’s domestic and international industrial chain, with many orders being lost from Vietnam.For example, phong Tai (9910.TW), one of Nike’s top five suppliers, suspended operations at several factories in Vietnam to comply with the local government’s quarantine requirements.Factories shut down, orders lost, Vietnam footwear exports show a cliff – type decline.According to Wind data, from August to October 2021, Vietnam exported shoes worth 850 million US dollars, 700 million US dollars and 750 million US dollars.The level of exports fell by half from $1.75 billion in July of that year.A brief backflow?”China’s institutional advantages have controlled the epidemic well, leading to the temporary return of footwear production capacity, but is this necessarily a good thing?Not necessarily.”Ernst & Young consulting services partner Zhou Liang told CBN reporters that the return of footwear production capacity is easy for some domestic enterprises to re-embark on the “old road” of low value-added, labor-intensive industries, which is not good for industrial upgrading.Zhou believes that orders from the shoe and clothing industry that flowed back during the epidemic will eventually flow out of China again after the epidemic ends.Specifically, this depends on the resumption of production of footwear factories in Southeast Asia and the subsequent expansion of capacity.Since September 2021, Vietnam’s quarantine policy has changed from “zero out” to “live with the virus,” requiring entire factories to stop production if there are confirmed cases of employees or indirect contacts.In an investor survey held in January, Nike’s huali Group said it had started a third dose of vaccine at its Vietnam factory, which has a high vaccination rate.According to the daily attendance statistics of the factory, the attendance rate of the Vietnam factory has been maintained at a normal level, and the daily production plan completion rate is high.Up to now, the customer’s order demand and order forecast are still strong. The factory of Huali Group in north Vietnam is operating normally, and each factory is making every effort to ensure the delivery of orders. All the production plans are basically in accordance with the established targets.As one of the major production bases of the global shoe industry, Vietnam’s labor costs can still be maintained at a low level in 2022 according to the current situation, because of the impact of the epidemic and recruitment difficulties, workers’ basic salary adjustment has little impact on labor costs.Factories across Vietnam are gradually restoring capacity as vaccination rates improve and the epidemic becomes more normal.According to Wind data, In November and December 2021, Vietnam’s footwear exports reached $1.3 billion and $1.8 billion respectively, gradually approaching normal levels.At the same time, the pace of expansion of major footwear manufacturers in Southeast Asia did not stop because of the epidemic.”Compared with last year, this year’s production capacity increased significantly. Considering the demand of customers’ orders in the future, the company will still maintain active capacity expansion.In the coming years, three new plants that opened this year in Vietnam will come on stream, while the Indonesian plant is currently under construction as planned.We will speed up the construction of factories in Myanmar when the local situation stabilizes.”According to huali Group, affected by the epidemic and supply chain strain, the company will continue to expand and build new factories in Vietnam, and plans to increase production capacity by purchasing land for new plants, leasing plants, adding production lines in existing plants, and purchasing plants.Practitioners have the deepest feelings about “hot and cold” exports.”Customers are mainly distributed in the United States, Australia, New Zealand, Japan and other places.Affected by the epidemic, some of our customers’ countries have taken containment measures, and many offline outlets have been closed, which has had a significant impact on sales.”Zhang Li told China Business News.She said that while some orders have shifted from Southeast Asia to China, companies face rising prices for raw materials, surging shipping costs, power cuts and labor shortages.As costs rise, Zhang does not dare to raise prices for fear of losing customers.Zhang Li’s shoes have been going through traditional foreign trade channels, not directly facing consumers.”E-commerce is the trend of the future, but I haven’t found a breakthrough point. I still hope to find partners who understand e-commerce in the future.”Zhang tried to do e-commerce, due to the lack of professional operation talent, the final hastily ended.Zhang Li’s desire for the right to speak, to a certain extent, represents the aspirations of the majority of Small and medium shoe enterprises in China.China exports more than 7 billion pairs of shoes a year, but few companies are able to make a name for themselves in international markets.”The most basic advantage of Chinese brands is that our products are very strong.However, in the early days, we saw that there were many sellers who created popular models and made quick money through low prices or standardized products.I think in the future, sellers will pay more attention to product innovation, which is different from us in other countries, because China’s manufacturing and supply chain capabilities are very strong.”Dai 竫 Fei, global vice president of Amazon, said in an interview with China Business News that how to integrate supply chain capabilities based on insights into consumer demand, so as to launch more competitive products, is the core skill that cross-border sellers need to continue to hone.But for now, the energy of Chinese sellers has not been fully tapped.Cross-border e-commerce platforms have attracted increasing attention from governments and enterprises in recent years because of their ability to reach consumers directly.Over the years, a number of domestic policies have been introduced to support the development of cross-border e-commerce.Dai 竫 Fei said that domestic enterprises to go overseas need to have the following basic conditions: products to have the opportunity to go to a large number of high-quality consumers;Enterprises should have tools and products for brand building, such as brand image building, brand drainage, and even the cultivation of loyal customers;Brands themselves need to have some long-term commitment and long-term goals, rather than just focus on short-term sales.Zhou liang believes that technological progress will help China’s manufacturing industry balance its lost advantages in labor, taxation and other aspects.Some shoemaking enterprises have also begun to reduce costs and improve benefits through digitization.Take Xtep as an example, the company’s digital construction can be roughly divided into three stages: The first stage started to cooperate with SAP ten years ago, and integrated business and finance with ERP as the core.In the second stage, we started to cooperate with Aliyun from around 2016. At that time, the online and offline systems were split and there were many information islands, so we needed to connect the operation center and commodity center online and offline, so we found a middle stage to build the whole business system.The third phase, which starts in 2021, is consumer-centric product development and marketing strategy through digitization.”A lot of large-scale manufacturing in China is now all digital, from every spare part in the factory to the production turnover and the storage of goods in the warehouse, the product situation is all in the cloud.””I have been following the manufacturing and supply chain in China, and I know there are a lot of concerns about production costs and labor,” Said Yang Jun, head of seller expansion in Asia-pacific region of Amazon’s global store.But every time I visit a Chinese manufacturer, I come back full of confidence.Source: China Business News

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