Footwear industry's focus on Asean

Thai footwear producers and raw-material suppliers will set up new factories in Asean in the next few years, focusing to Myanmar, as exports to Southeast Asian markets strengthen amid sluggish exports to major markets such as the United States and the European Union.

Chanin Jitkomut, president of the Thai Footwear Association, said many in the industry were planning to expand into other Asean countries to ensure business growth amid falling exports to traditional markets.

"Higher labour costs and shortage of workers domestically have also encouraged footwear enterprises to invest overseas to support business growth," he said.

Chanin explained that Thai footwear exports had fallen significantly in the past few years, particularly to the US and EU. However, shipments to Asean countries, particularly Myanmar, have jumped amid regional economic integration and significant demand as consumer incomes rise.

Given these developments, shoe manufacturers and their suppliers are planning to establish factories in Myanmar to reduce logistics costs.

According to a report by the Customs Department, total shipments of footwear and related materials declined in the first six months of this year by 18.69 per cent to US$380.72 million (Bt11.97 billion). Export to the US, which is the Kingdom's largest destination with a share of 13.25 percent, fell seriously by 27.94 per cent during the first half. Export to the United Kingdom, the third-largest market, dropped by 1.65 per cent.

However, shipments to the United Arab Emirates, the second-largest market, increased by 2.29 per cent, while those to Myanmar soared by 30.29 per cent.

Chanin said the significant export growth to Myanmar and the upcoming seamless trade and investment under the Asean Economic Community had encouraged Thai footwear producers to invest in this region.

Vietnam is another interesting investment destination as it has a strongly developing footwear industry, and workers there are familiar with footwear production.

He added that the Thai footwear industry was falling behind China, Vietnam, Malaysia and Indonesia because of a shortage of skilled and non-skilled labour, weak support for small and medium-sized enterprises, and low brand creation.

Currently, SMEs account for 99.8 per cent of the Kingdom's 6,000 footwear enterprises. Most local producers do not have their own brand, but only take orders from other companies. The increasing cost of labour has caused many of those companies to hire Chinese or Vietnamese producers instead of Thai firms.

Sneakers are the first product to be severely hit by rising costs of production in Thailand, and leading producers have shifted their orders to less developed countries. However, the export of leather footwear from Thailand is on the rise thanks to high quality and good design.

China is the world's leading footwear exporter, followed by Vietnam and Indonesia, while Thailand ranks eighth or ninth.The footwear industry employs about 250,000-300,000 workers.