Footwear market out of step
Industry misses target as exports take a dive
published : 10 Apr 2015 at 06:00
newspaper section: Business
writer: Lamonphet Apisitniran
Thailand's footwear industry expects to see flat growth this year, due largely to falling exports as demand from major importers remains weak, the chairman of the footwear club under the Federation of Thai Industries said yesterday.
Mingpant Chayavichitsilp said the industry, worth 40 billion baht a year, expects to miss the target of 3% growth set earlier. The industry, which relies heavily on export markets, has been hit by a drop in demand, especially from the European Union and the United States.
"The economic slowdown in the US and the EU, our major markets, has had an adverse impact on the Thai footwear industry as consumers now spend less money on shoes annually," he said.
The local footwear industry relies heavily on exports, with the international market representing 90% of sales, and domestic sales accounting for the remaining 10%.
He said that expanding sales at home to help pare losses at the moment was unlikely as Thais spend very little on footwear, buying four pairs of shoes a year on average, compared to around 15 pairs in the US and the EU.
"The footwear market here is very small compared to the overseas market," said Mr Mingpant, adding that Thailand is now the production base for several international brands such as ECCO, Buddy, Camel Shoe, Clicks and Stuttgart.
The overall production capacity of the Thai footwear industry stands at 13 million pairs a year.
Mr Mingpant said Thai footwear manufacturers have to compete in the middle and upper markets as the lower market is largely shared by cheaper products from neighbouring countries such as Cambodia, Vietnam, Indonesia and China.
Indonesia, China and Vietnam are snapping up Thailand's export market, especially in the lower market, since they can offer lower prices due to cheaper labour costs, especially in China, where wage costs are 50% below Thailand's.
"Since we can't compete with those countries that boast lower wage costs, the only course is to convince international brands to continue to use Thailand as their production base.
"We hope that our perfect location as the logistics hub of Asean will encourage those brands to remain here to take advantage of the competitive logistics costs," said Mr Mingpant.
- Mingpant Chayavichitsilp