Footwear industry strategy
- Published: 16/05/2011 at 06:02 PM
- Online news:
China faces environmental and dumping problems, so Thailand has high potential as a center for high-end footwear production.
A foot in the door, Asean Economic Community will pose more of an opportunity than a threat to Thailand's footwear industry, but labour retention remains a key concern by Nanchanok Wongsamut
Only six months into his presidency of the Thai Footwear Association, Chanin Jitkomut has high hopes for the Asean Economic Community (AEC) due to take shape in 2015, as he intends to make Thailand the regional footwear leader.
Mr Chanin, 32, believes the 6,000 local small and medium-sized footwear manufacturers that comprise 90% of the local footwear market will be the main industry drivers.
As well, the 45-billion-baht China City Complex planned for Bang Na district to serve the wholesale trade will push Thai makers to focus more on high-end, premium products and turn away from the mass market, he said
Mr Chanin, who is also the president of the Thai Business District Federation, believes that rather than posing a threat, the China City Complex will serve to highlight the differences between Thai and Chinese products.
"The premium segment is where we will be able to compete, and it's the only path for industry survival. We will not, for instance, see genuine leather shoes from China that are cheap," he said
Mr Chanin said by maintaining relationships with other Asean countries including through projects and fairs, Thailand will be able to portray itself as a country of high-quality labour and goods, thereby building up brand awareness and loyalty.
Right now, there are so many mass-produced items targeted at the low-end market, where dumping is prevalent. You also need a lot of working capital, labour and large machinery," he said.
Globally, China is now the top exporter of footwear, followed by Vietnam and Indonesia. Thailand is ranked seventh or eighth globally and sixth in Asean, with exports mainly to the US, Italy, Singapore, Hong Kong and the EU, particularly Denmark and France.
"What makes me confident [about achieving leadership] is the decreasing role of mass-produced items. Stricter anti-dumping measures by the EU and the US have also triggered a shift in orders from China to Thailand," said Mr Chanin.
He said the AEC would also allow manufacturers to choose from among a greater variety of raw materials, resulting in lower costs.
Mr Chanin expects Thai footwear exports to increase by 10-20% this year from 14 billion baht last year.
"People are becoming more aware of the AEC, and exports of raw materials are increasing - for example, para rubber, which represents 40-45% of the raw materials used in producing shoes," he said
Under the AEC, export value will increase to 40-50 billion baht.
For example, Taiwan, the top Asian investor in footwear, will up its investment in Thailand since its current investment in China is facing environmental and dumping problems, said Mr Chanin.
Local footwear manufacturers will also benefit from rules of origin, as parts imported from other countries will be assembled in Thailand and declared a Thai product.
However, Mr Chanin warned the labour crisis will worsen under the AEC, as foreign workers may switch to other countries.
The footwear industry, which now employs 200,000 mostly foreign workers, is short by at least 20,000.
We need twice the amount if we want to become No. 1 in Asean, and for that we need to make workers stay with us by providing incentives such as health care and other benefits.
He said in an industry where labour is more important than machinery, becoming a professional footwear worker takes two years of experience, but most workers do not last that long despite earning above minimum wage.
As in the Italian industry, which is dominated by family businesses and renowned as a top exporter of premium shoes, government support is vital.
Measures could include a "shoe community" of clusters, business matching and even shoe museums
"But today, very little attention is paid to the shoe industry, and support is not continuous," said Mr Chanin.
He said that during the Thaksin Shinawatra administration, shoe exports reached 40-50 billion baht thanks to strong support from the Bangkok Fashion City project.
(Source: Bangkok Post, A foot in the door, Asean Economic Community will pose more of an opportunity than a threat to Thailand's footwear industry, but labour retention remains a key concern, 16/05/2011, Nanchanok Wongsamut, link)
pose - create or cause something, especially a problem or difficulty เป็นเหตุให้
pose a threat - to create a dangerous situation
opportunity - a situation when it is possible to do something that you want to do (See glossary)
threat - a danger อันตราย
retain X (verb) - continue to have X, do not get rid of X
retention (noun) - the process or state of keeping something, continueing to have it, not losing it
labour retention - when a company is able to keep the employees who work for the company (don't leave company and industry in search of higher paying jobs)
key - important คนสำคัญ
concern - a worry ความกังวล
key concern - and important thing that people are worried about
has high hopes for X - believes that X will have a good future, a bright future
ASEAN Economic Community (AEC) - ASEAN's plan for economic integration over the next few years (Read ASEAN Economic Community Blueprint)
X intends to Y - X plans to do Y in the future
local - in this country (here: Thailand)
small and medium-sized - meaning: SMES (Small and Medium-Sized Enterprises)
comprise - to form something to consist or be made up of two or more things (example: the group of common house pets is comprised of two members, dogs and cats) ประกอบด้วย
industry drivers - the company's causing change in the industry, initiating change
wholesale - buying and selling goods in large quantities, especially to people who are going to sell them in a shop, during distribution before the goods reach the store การขายส่ง
trade - the buying and selling of goods การค้าขาย
focus - the main thing it is concerned with ให้ความสำคัญ
premium products - products that have higher quality and are more expensive
mass - large numbers จำนวนมหาศาล
mass market - a market for some good or product with large numbers of buyers (usually seeking cheap, inexpensive goods)
X highlights Y - X shows Y in a clear way
segment - a separate part ส่วนต่างๆของสังคม, ตอน (here the meaning is: market segment)
market segment - one group of customers with similar needs (identified by a company as potential customers)
genuine - real; honest; sincere
portray - to represent or describe someone or something in a painting, film, book or other artistic work แสดง, พรรณนา
brand - a type of product made by a particular company ตรา, ยี่ห้อ
awareness - the state of knowing about something การรับรู้, การทราบ
loyalty - support that you always give to someone or something because of your feelings of duty and love towards them ความจงรักภักดี
loyalty - the quality of being firm and not changing in your friendship with or support for a person or an organization, or in your belief in your principles ความจงรักภักดี
mass-produced - a good produced in very large amounts
targeted - when a smaller group is selected out from a larger group for special treatment ตั้งเป้า
dumping - sell large amounts of goods at far below their true value (often to gain market share and force other companies out of the market)
dumping - unfair pricing of export goods, when a manufacturer exports a product to another country at a price which is below its costs of production or below the price it charges in its home market (against the law in many countries but subject to wide interpretation as to what it actually is) (See Wikipedia)
measures - actions taken to deal with a problem มาตราการ
anti-dumping measures - actions taken as punishment against a country accused of dumping (such "punitive tariffs" an extra tax on the goods, that make it difficult for them to export)
prevalent - very common แพร่หลาย พบได้บ่อยๆ
working capital - money invested in a business
X ranked Y in Z - X has the Yth position or level in group Z
globally - throughout the world ทั่วโลก
confident - being certain of your abilities or of having trust in people, plans, or the future มั่นใจ
achieving leadership - becoming the best company or becoming the best country
role - the position, function or purpose that someone or something has in a situation, organisation, society or relationship บทบาท
triggered - caused
shift - to change, to transfer; to move from one place to another เคลื่อนย้าย
variety - many different types of things or people ความหลากหลาย
raw materials - materials in their natural state before being processed or used in manufacturing
aware - knowing that something exists, or having knowledge or experience of a particular thing ทราบ
para rubber - rubber from a rubber tree, natureal rubber, not synthesized rubber (See Wikipedia)
investor - a person or organisation that puts money into a company in exchange for a future profit นักลงทุน
investment - taking your money and putting it into projects to make a profit or earn interest (buying stock shares, bonds, real estate)
current - of the present time ปัจจุบัน
benefit - to get help or an advantage from something ผลประโยชน์
crisis - an urgent, difficult or dangerous situation วิกฤต
switch - to change เปลี่ยน
incentives - rewards for behaving in a certain manner สิ่งกระตุ้น
benefits - things like health insurance that employees receives in addition to their salary and wages สวัสดิการเพิ่มเติม
professional footwear worker - a skilled worker (with special training and accumulated experience that helps them do their job better)
wage - an amount of money that you earn for working, usually according to how many hours or days you work each week or month ค่าจ้าง
minimum wage - the lowest possible amount of money per day that can legally be paid to a worker
dominated - controlled ถูกควบคุม ถูกชักใย บงการ
renowned - famous and admired for a special skill or achievement ที่มีชื่อเสียง
support - help, by giving money, for example สนับสนุน
vital - very important; necessary for the success or continued existence of something จำเป็นสำหรับชีวิต; สำคัญมาก
community - a group of people with the same interests
cluster - a group of related things กลุ่ม (สิ่งของหรือคน)
shoe community of clusters - an organization for the shoe industry (that brings together companies, designers, students, perhaps)
very little attention is paid to - policymakers and government do not spend much time making policies to help or promote the industry (as an export industry, for example)
administration - one government that a country has for a period of time
Thaksin Shinawatra administration - the government that Thaksin had for a period of time
Bangkok Fashion City Project - a 1.8-billion-baht program to "establish Bangkok as a regional fashion hub and eventually as a world fashion leader" that was discontinued in 2006 (See Wikipedia)
About the author
- Writer: Jon Fernquest
Position: Assistent Manager Educational services