Association leader points out three major challenges for Vietnam’s shoe industry

Vietnam’s footwear industry is grappling with three persistent problems: lack of quality standards in the domestic market, a weak raw material supply chain, and the widespread presence of counterfeit goods.

Phan Thanh Xuan, vice president of the Vietnam Leather, Footwear and Handbag Association (Lefaso), made the remarks at a workshop on “Developing the domestic market for the textile and footwear sectors” in Ho Chi Minh City on Friday.

She highlighted an alarming statistic: despite a domestic demand of about 200 million pairs of shoes annually, Vietnamese companies supply only 40%. The remaining 60% are imports - half of which are low-cost Chinese shoes.

Vietnamese firms dominate the mid-range segment, she noted, but the low-end market has been almost entirely captured by Chinese imports.

According to Xuan, Vietnamese enterprises are facing a series of paradoxes right at the domestic market.

First, the domestic market is almost completely free of quality. Most domestic footwear products are not subject to any pressure on technical standards and regulations. This creates an unhealthy competitive environment.

Second, the domestic supply chain of raw materials is too weak. Vietnamese enterprises are struggling to find sources of supply, while China's supply chain is very complete.

“The paradox is that we lack the raw materials to make a complete pair of shoes. Sometimes importing finished products from outside is cheaper than producing them domestically. That is what makes us extremely worried," said Xuan.

This situation is becoming more serious due to policy shortcomings. According to Xuan, the free trade agreements (FTAs) that Vietnam has signed, especially the ASEAN-China FTA, stipulate a 0% import tax on complete footwear, while Vietnamese enterprises importing raw materials from China for production have to pay a tax of 5-10%.

"This inadequacy is creating an unequal competition, limiting the domestic raw material production industry of enterprises in Vietnam," added Xuan.

The third pressing problem that many enterprises pointed out is that counterfeit, fake, and smuggled goods are flooding the market, especially on social networks.

The third is that counterfeit and fake goods are priced only half of genuine goods, while consumers prefer cheap prices, causing many domestic enterprises to lose market share.

A representative of May 10 Corporation - JSC, a leading garment maker, described one incident: “I once saw an online ad for a clearance sale at the General Warehouse of May 10, but we never had such a program. They import Chinese goods, label them as made in Vietnam, and mislead consumers.”

Nguyen Tri Kien, director of Minh Tien Handbag Sewing Company, added that many businesses had long focused only on exports, neglecting the domestic market. Now, even those wishing to return struggle to compete.

“Many traditional handbag-making villages have disappeared because they cannot compete with cheap counterfeit and smuggled products. State management agencies need to address this problem,” Kien said.