According to the Vietnam Leather and Footwear Association (Lefaso), the country produced and exported some $1 billion worth of handbags in 2011. That number is expected to surge to $1.5 billion this year as more Vietnam-based companies develop their own export businesses and as eight “well-known companies” shift their production from China to Vietnam.
The largest import market for the Vietnamese handbags and footwear is expected to the United States, since the Trans-Pacific Partnership (TPP) takes effect next year. Under the TPP agreement, Vietnamese products will enjoy a tariff reduction to below the level imposed on similar Chinese products.
Vietnam’s Largest Export Market: United States
Vietnam has become an alternative source for many apparel, footwear and accessories companies after price increases and labor cost have risen in Greater China in recent years. Vietnam’s leather and footwear industry exported $6.5 billion worth of goods last year.
This year, Lefaso predicts that leather products and footwear exports to reach $8.5 billion, up nearly 9% over 2011, and that handbag exports would grow as much as 15%, too.
The vast majority of exports were through foreign-based direct investment companies, but Lafaso reported that it expects to see at least 30% of volume coming from Vietnamese handbag companies in the next few years.
While the outlook for exports has brightened due to the U.S. market, Vietnamese footwear and handbag makers are still concerned about a drop in exports to the European Union, where business has reportedly declined 20% to 30% as fears on a debit crisis heightened.
Moreover, the EU continues to supervise Vietnamese footwear products due to anti-dumping litigation, which will cause Vietnamese product to be less competitive than those of Indonesia, India, Bangladesh and Sri Lanka, which will benefits from preferential tariffs.