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Shoemakers seeking way out

By Zhan Lisheng (China Daily)
Updated: 2008-11-05 09:17

The factory floor of a shoewear manufacturer in Dongguan, Guangdong province. [China Daily]

Amid industry-wide closures, shoemaker Betta Footwear Factory is seeking to buck the trend by focusing on the domestic and online markets.

In doing so, the subsidiary of Hong Kong-based Goddess International Ltd is also moving away from the traditional strategy at previous shoe industry expos of targeting overseas orders, as recently seen at the 8th China Shoes/China Shoetec in Dongguan, a leading footwear event in Asia.

Betta is already reportedly sniffing out every chance to persuade other shoemakers to join

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its B2C or Business-to-Customer platform and recently launched a bid to sell its products online.

It is seen as a major move by the subsidiary, a Hong Kong-funded supplier of medium- to high-end slippers and based in the Pearl River Delta boomtown of Dongguan, itself one of the country's key shoemaking bases.

"The shoe industry in the Pearl River Delta region, or maybe in China, has been weathering a very difficult time. We are looking for ways to survive," Lynn Wong, general manager of the company, told China Daily during the fair.

"As far as I know, several hundred shoemakers have closed their factories in Dongguan, while many others have been struggling."

She said the orders her company has received for next year are about 30 percent less than those of last year. They were worth about HK$80 million ($10.32 million), as the market for medium- and high-end slippers have been shrinking.

The production costs of her company this year are also about 20 percent higher than in 2007.

"We are switching more of our attention to the domestic market, promoting and selling our products online, which is gaining increasing popularity among online customers."

She said her company aims to set up 10 chain stores in first-tier cities like Beijing and Shanghai and partner up with at least 50 dealers to distribute the Betta brand of slippers nationwide by the end of this year, as one way to face economic depression.

Shoemakers elsewhere in China are facing similar challenges.

A business representative of a shoe firm in Fujian's Jinjiang, also a key shoemaking base in China, who wanted to be known as Guo, said the value of his firm's exports might drop by about $2 million this year, with overseas orders seeing a decrease of at least 40 percent from the downturn of the global market amid the financial crisis.

"An industrial expo is the epitome of the industry status quo," said Tony Fung, CEO of Messe Dsseldorf China Ltd.

"Both exhibitors and buyers are less passionate about the industrial expo when the industry is in the doldrums."

Messe Dsseldorf China Ltd and Adsale Exhibition Services Ltd were the co-organizers of the Dongguan footwear event, where more than 500 exhibitors were present.

Fung said that this year's GDS show in Germany in March, the world's leading shoe expo, also saw a decrease in the number of Chinese exhibitors by 11 percent from a year ago.

The number of Chinese exhibitors at the coming session is expected to drop by another 10-15 percent.

"It's high time that export-oriented shoemakers turn to the domestic market as well as the burgeoning markets overseas," added Stanley Chu, chairman of Adsale.

"We have modified our strategy by increasing invitations to domestic buyers as well as those from burgeoning markets such as Russia."

At a forum on the development of the world shoe industry held concurrently with the shoe expo, analysts including Wang Ying, secretary-general of the China Chamber of Commerce for Import and Export of Light Industrial Products and Arts-Crafts; Long Yongtu, secretary-general of the Boao Forum; and Long Guoqiang, a deputy director of the foreign economy research department of the State Council Development and Research Center, acknowledged that China's shoe industry is facing unprecedented challenges.

They attributed the difficult situation to the financial turmoil in the US and EU, the appreciation of the yuan and the rise of production costs due to the implementation of the new labor law.

The price hike of raw materials the nation's tight monetary policies in the past year, as well as the EU's anti-dumping measures against shoes from China were also cited as negative factors.

Analysts suggested the shoemakers forge ties among themselves to seek for more survival room in the industrial chain.

Firms relying on processing trade should upgrade to greater added value in the sector, they said.

Analysts also suggested that the government consider adjusting tariff rebate policies for shoe exporters by increasing the rebate rate, similar to that in the garment and textile industries.

Customs statistics indicate that China exported 6.27 billion pairs of shoes from January to September, down 2.76 percent from a year ago; their exports were worth $20.96 billion, up 14.2 per cent.

The country exported 8.18 billion pairs of shoes last year, accounting for 73 percent of the world's total.