Technical barriers to Vietnam leather footwear exported to the European union market
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Transcript of Technical barriers to Vietnam leather footwear exported to the European union market
FOREIGN TRADE UNIVERSITY
HO CHI MINH CITY CAMPUS
GRADUATION THESIS
Major: International Business Economics
TECHNICAL BARRIERS TO VIETNAM
LEATHER FOOTWEAR EXPORTED
TO THE EUROPEAN UNION MARKET
Author: Nguyen Ngoc Mai
Student ID: 1001017145
Class: K49CLC3
Supervisor: Tran Quoc Trung
Ho Chi Minh City, May 2014
TABLE OF CONTENTS
LIST OF ABBREVIATIONS
LIST OF TABLES AND CHARTS
PREFACE ................................................................................................................. 1
Chapter 1: OVERVIEW OF TECHNICAL BARRIERS TO VIETNAM
LEATHER FOOTWEAR EXPORTED TO THE EU MARKET AND THE
NECESSITY OF STUDYING TECHNICAL BARRIERS TO VIETNAM
LEATHER FOOTWEAR EXPORTED TO THE EU MARKET ...................... 4
1.1. Overview of technical barriers ..................................................................... 4
1.1.1. Definition of technical barriers ................................................................... 4
1.1.2. Roles and purposes of technical barriers .................................................... 4
1.1.3. Types of technical barriers .......................................................................... 5
1.2. Technical barriers to Vietnam leather footwear exported to the EU
market ............................................................................................................ 6
1.2.1. Regulation of Registration, Evaluation, Authorization and Restriction of
Chemicals (REACH) .................................................................................. 6
1.2.2. Labeling requirements ................................................................................ 8
1.2.3. Quality management system: ISO 9001 ................................................... 10
1.2.4. Environmental management system: ISO 14001 ..................................... 12
1.2.5. Social Accountability 8000 (SA 8000) ..................................................... 14
1.3. The necessity of studying technical barriers to Vietnam leather footwear
exported to the EU market ......................................................................... 16
1.3.1. For Vietnam economy .............................................................................. 16
1.3.2. For Vietnam enterprises ............................................................................ 18
1.4. Experience of China in overcoming technical barriers to leather
footwear and lessons for Vietnam .............................................................. 20
1.4.1. Reasons for choosing China ..................................................................... 21
1.4.2. Experience of China to overcome technical barriers to leather footwear
exported to the EU .................................................................................... 21
1.4.3. Lessons for Vietnam ................................................................................. 23
Chapter 2: CURRENT SITUATION OF VIETNAM LEATHER FOOTWEAR
EXPORTS TO THE EU MARKET AND OVERCOMING TECHNICAL
BARRIERS TO VIETNAM LEATHER FOOTWARE EXPORTED TO THE
EU MARKET FROM 2008 TO 2013 ................................................................... 24
2.1. Vietnam leather footwear exports to the EU market from 2008 to 2013 ... 24
2.1.1. Export turnover .......................................................................................... 24
2.1.2. Market structure ......................................................................................... 27
2.1.3. Export structure.......................................................................................... 29
2.2. Overcoming technical barriers to Vietnam leather footwear exported to
the EU market from 2008 to 2013 ......................................................................... 30
2.2.1. Meeting REACH........................................................................................ 30
2.2.2. Meeting labeling requirements .................................................................. 34
2.2.3. Meeting ISO 9001 ...................................................................................... 35
2.2.4. Meeting ISO 14001 .................................................................................... 37
2.2.5. Meeting SA 8000 ....................................................................................... 38
2.3. Comments ........................................................................................................ 39
2.3.1. Strengths .................................................................................................... 39
2.3.2. Weaknesses ................................................................................................ 42
Chapter 3: ORIENTED DEVELOPMENT AND RECOMMENDATIONS TO
OVERCOMING TECHNICAL BARRIERS TO VIETNAM LEATHER
FOOTWEAR EXPORTED TO THE EU MARKET FROM 2014 TO 2020
.................................................................................................................................. 54
3.1. Trends of leather footwear consumption in the EU market ........................ 54
3.2. Trends of application of technical barriers to leather footwear in the EU
market ..................................................................................................................... 56
3.3. Basic orientations and goals to overcome technical barriers to Vietnam
leather footwear exported to the EU market from 2014 to 2020 ....................... 57
3.3.1. Basic orientations ....................................................................................... 57
3.3.2. Detailed goals ............................................................................................ 58
3.4. Recommendations for improving the overcoming of technical barriers to
Vietnam leather footwear exported to the EU market from 2014 to 2020 ....... 59
3.4.1. Recommendations for the government ...................................................... 59
3.4.2. Recommendations for Vietnam Leather, Footwear and Handbag
Association ........................................................................................................... 68
3.4.3. Recommendations for Vietnam leather footwear exporting enterprises ... 75
CONCLUSION ....................................................................................................... 80
REFERENCES ....................................................................................................... 81
ANNEXES ............................................................................................................... 88
LIST OF ABBREVIATIONS
ABBREVIATION FULL MEANING
1 CMS Chemical management system
2 EMS Environment management system
3 EC European Commission
4 ECHA European Chemicals Agency
5 EU European Union
6 FDI Foreign Direct Investment
7 ISO International Organization for Standardization
8 LEFASO Vietnam Leather, Footwear and Handbag
Association
9 GSP Generalized System of Preferences
10 MARD Ministry of Agriculture and Rural Development
11 MOET Ministry of Education and Training
12 MNRE Ministry of Natural Resources and Environment
13 MOIT Ministry of Industry and Trade
14 MOLISA Ministry of Labor, Invalids and Social Affairs
15 MOST Ministry of Science and Technology
16 MPI Ministry of Planning and Investment
17 ODA Official Development Assistance
18 REACH Regulation on Registration, Evaluation,
Authorization and Restriction of Chemicals
19 R&D Research and Development
20 SVHC Substance of Very High Concern
21 TBT Technical Barriers to Trade
22 QMS Quality management system
23 USD US Dollar
24 VSQI Vietnam Standard and Quality Institute
25 SAI Social Accountability International
LIST OF TABLES AND CHARTS
No. Name of Table Page
1 Table 1.1: Total export turnover and export turnover of leather
footwear of Vietnam from 2008 to 2013 16
2 Table 2.1: Total export turnover and export turnover to the EU of
Vietnam leather footwear from 2008 to 2013 25
3 Table 2.2: Vietnam leather footwear export turnover from the 5
main markets in the EU from 2008 to 2013 28
4 Table 2.3: Number of ISO 9001 certificates given to Vietnam from
2008 to 2012 35
5 Table 2.4: Number of ISO 14001 certificates given to Vietnam
from 2008 to 2012 37
6 Table 2.5: Legal documents relating to supporting Leather and
Footwear industry to overcome technical barriers 41
7 Table 3.1: Production, consumption and external trade of footwear
of the EU market from 2008 to 2012 54
No. Name of Chart Page
1 Chart 2.1: Total export turnover of Vietnam leather footwear
exported to the EU and other countries from 2008 to 2013 24
2 Chart 2.2: Turnover ratio of three main export markets for leather
footwear of Vietnam from 2008 to 2013 27
3 Chart 2.3: Export turnover of Vietnam leather footwear to 5 major
export markets in the EU from 2008 to 2013 28
4 Chart 2.4: Export turnover of Vietnam leather footwear exported to
the EU in 3 categories from 2008 to 2013 29
5 Chart 2.5: Evaluation of Vietnam leather footwear companies of
their chemicals management system 31
6 Chart 2.6: Percentage of companies that have decreased revenue
from the EU market due to REACH from 2008 to 2013 33
7 Chart 2.7: Evaluation of Vietnam leather footwear companies of
their compliance to labeling requirements from 2008 to 2013 34
8 Chart 2.8: The implementation of ISO 9001 of Vietnam leather
footwear exporters to the EU market 36
9 Chart 2.9: The implementation of ISO 14001 of Vietnam leather
footwear exporters to the EU market 37
10
Chart 2.10: Evaluation of Vietnam leather footwear companies
about the importance of input material quality to overcoming
technical barriers
42
11 Chart 2.11: Proportion of three types of exports in total footwear
export turnover of Vietnam in 2013 43
12 Chart 2.12: Evaluation of Vietnam leather footwear companies
about capital support policy of the Government 45
13 Chart 2.13: Evaluation of leather footwear companies of their
attention to and investment in upgrading technology 48
14
Chart 2.14: Evaluation of Vietnam leather footwear companies
about the support of information from the Government and
LEFASO
49
15 Chart 2.15: Evaluation of Vietnam leather footwear companies
about connection between enterprises in the industry 53
1
PREFACE
1. The reasons for choosing the research topic
Exports of goods and services today represent around 81% of Vietnam's
GDP (Cong Tri, 2014). For many years, export always plays a key role in the
development of Vietnam economy. It helps increase foreign currencies and create
the base to import modern machines and facilities to serve the modernization and
industrialization of Vietnam. Export also contributed to solve unemployment and
expand international trade relationships. Among the key export industries of
Vietnam, leather footwear plays the role of a spearhead with the third rank in terms
of export turnover. In 2012, Vietnam ranks fifth in top leather footwear exporters of
the world with 3.3% of total market share (World Footwear Yearbook, 2012).
According Vietnam's Socio-Economic Development Strategy for 2011 –
2020, Oriented to 2030, among the main import markets of Vietnam, the EU is
considered as one of the most important market because of its size, potential and
stable growth. From 2008 to 2013, EU is the largest export market of Vietnam
leather footwear with the export turnover each year exceeds 2 million USD.
Besides being a large and potential markets with great demands, the EU
applies a system of technical barriers for imported goods that are considered
worldwide strictest and most complicated. They are projected to become more
complex in the near future, posing a threat to the exports of Vietnam.
Acknowledging the importance of the EU technical barriers to the growth of
Vietnam leather footwear exports, a research on “Technical barriers to Vietnam
leather footwear exported to the European Union market” is chosen to meet the
urgent need of finding solutions to overcome those technical barriers effectively for
sustainable development in this market.
2. Prior studies relating to the topic
Prior studies relating to leather footwear exports mainly focused on
analyzing current situation of exporting leather footwear to the EU and other
markets in order to provide recommendations to increase exports. Nguyen Huynh
Thanh Thao (2011) analyzed factors of Vietnam and the EU market that affect
exports of leather footwear, which include the factor of technical barriers but did
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not provide detailed research on the system of technical barriers as well as the
ability to overcome those technical barriers of Vietnam leather footwear. Regarding
research of technical barriers, Nguyen Thi Hong Anh (2010) mentioned technical
barriers as one of the mechanisms to restrict imports of the EU market but did not
go into details about technical barriers applied to specific commodities of Vietnam.
There are studies researching on technical barriers to other commodities of Vietnam
exported to foreign markets. Truong Thi Hoai Ngoc (2010) analyzes in details the
current situation of overcoming technical barriers to Vietnam agricultural products
and provides recommendations to enhance the ability of agriculture sector to
overcome those technical barriers. There have not been any studies that directly
address technical barriers to Vietnam leather footwear exported to the EU market.
3. The research purpose
The main purposes of this research include:
- Analyzing the current situation of overcoming technical barriers and ability
to overcome technical barriers of Vietnam leather footwear exports to the EU.
- Providing recommendations for Vietnam leather footwear to overcoming
technical barriers of the EU market.
3. The research object and scope
3.1. The research object
The research object is technical barriers to Vietnam leather footwear
exported to the EU market.
3.2 The research scope
Time: The current situation of overcoming technical barriers for Vietnam
leather footwear exported to the EU market is studied during the period from 2008
to 2013 and the recommendations are for the period from 2014 to 2020.
Space: The topic is researched within Vietnam country.
4. The research methods
Data collection methods: is applied to search and select relevant secondary
information (annual reports, specialized magazines, newspapers, legal documents
and so on) from available sources, such as the Internet and libraries.
Statistical methods: is applied to describe survey data from 51 leather
3
footwear companies in Vietnam that export to the EU market and evaluate current
situation of overcoming EU technical barriers of Vietnam leather footwear.
Analysis method: is applied to analyze the reasons of strengths and
weaknesses in overcoming technical barriers of Vietnam leather footwear
companies, from which providing recommendations for improvement.
5. The structure of the research
Apart from table of contents, list of abbreviations, list of tables and charts,
preface, conclusion, reference and appendix, the thesis include three main sections:
Chapter 1: Overview of technical barriers to Vietnam leather footwear
exported to the EU market and the necessity of studying technical barriers to
Vietnam leather footwear exported to the EU market
Chapter 2: Current situation of Vietnam leather footwear exports to the EU
market and overcoming technical barriers to leather footwear exported to the EU
market from 2008 to 2013
Chapter 3: Orientations and recommendations to overcoming technical
barriers to Vietnam leather footwear exported to the EU market from 2014 to 2020
To complete this thesis successfully, I have received a lot of assistance from
Vietnam leather footwear exporters and Foreign Trade University. I would like to
thank all the leather footwear companies that completed the questionnaire to assist
me in collecting primary data for my research. From Foreign Trade University, I
would like to thank all lecturers of Professional Operation Faculty for their
enthusiastic help and support in the process of completing this thesis. Most
importantly, I would like to express my deep gratitude to MBA. Tran Quoc Trung
for providing me with detailed research method and academic guidance on the topic
as well as his dedication in explaining all of my concerns clearly.
Due to limited research time, limitations and shortcomings in this thesis are
inevitable. Therefore, the author hopes to receive valuable opinions from lecturers
and readers in order to improve the practical value of the thesis in the future.
Ho Chi Minh City, May 2014
Student
Nguyen Ngoc Mai
4
Chapter 1: OVERVIEW OF TECHNICAL BARRIERS TO VIETNAM
LEATHER FOOTWEAR EXPORTED TO THE EU MARKET AND THE
NECESSITY OF STUDYING TECHNICAL BARRIERS TO VIETNAM
LEATHER FOOTWEAR EXPORTED TO THE EU MARKET
1.1. Overview of technical barriers
1.1.1. Definition of technical barriers
Technical barriers to trade refer to technical regulations, minimum standards
and certification systems for health, safety and environmental protection and to
enhance the availability of information about products, which may result in the
erection of technical barriers to trade (The Organization for Economic Co-operation
and Development Glossary of Statistical Terms, 2003)
1.1.2. Roles and purposes of technical barriers
Technical barriers refer to mandatory technical regulations, voluntary
standards and the specific procedures followed to check whether a product is in
compliance with the requirements, which is called conformity assessment
procedures. The conformity assessment procedures can include, for example,
product testing, inspection, certification and accreditation activities.
Technical barriers can arise whenever a producer may have to alter his or her
product in order to conform to requirements of foreign partner countries such as for
health, safety, environmental and consumer protection issues. These requirements
can be imposed by both governments (technical regulations) and non-governmental
organizations (non-regulatory barriers, standards). The legal character of technical
regulations distinguishes them from non-regulatory barriers or standards. Non-
regulatory barriers or standards are voluntary, not legally binding and arise from the
self-interest of producers or consumers involved, for example, to improve the
information in commercial transactions and ensure compatibility between products.
Technical regulations mainly relate to either technical specifications or testing and
certification requirements in conformity assessment procedures (Paul Brenton,
2000). They have different implications for international trade. If imported products
do not fulfill the requirements of a technical regulation, they will not be allowed to
be put on the market. In case of standards, non-complying imported products will be
5
allowed on the market, but then their market share may be affected if consumers
prefer products that meet local standards (WTO Technical information on TBT).
Technical barriers are usually introduced by government authorities with a
legitimate public policy objective in mind – for example, maintaining national
security, ensuring product quality, protecting human health and safety, animal and
plant life and health or the environment, or safeguarding consumers from deceptive
practices. Nevertheless, technical barriers often have an impact on trade and the
competitiveness of exporters. Adjusting products and production processes to
conform to different requirements in export markets, as well as demonstrating
compliance with these requirements, increase production costs and time-to-market.
Additional costs here involve loss of economies of scale when companies must
adjust their production facilities to diverse technical requirements of different
markets as well as conformity assessment cost and information cost. They can
considerably hurt the competitiveness of exporters. Therefore, technical barriers can
become effective protectionism tools. This is the reason for many exporters to put
technical barriers at or near the top of their prioritized concerns on trade barriers.
1.1.3. Types of technical barriers
Technical barriers may be divided into a number of different types. First, and
most important, are technical barriers used for the protection of human health and
safety. The largest number of technical standards and regulations are adopted for
this purpose. A wide variety of examples can be given, from standards on electrical
equipment, regulations on the use of fire-retardant materials in production of
household furniture, regulations on harmful materials in food and drink to labeling
of tobacco to indicate that they are damaging to human health.
The second type is technical barriers for the protection of animal and plant
health and life. They are adopted to protect endangered species and rare plants from
distinction. For example, some countries require that endangered species of fish
reach a certain length before they can be caught or ban the trade of specific animal
products like ivory and medical ingredients from endangered animals.
The third type is technical barriers put in place to protect the environment.
They may include requirements on levels of automobile emission or restriction
6
against products that generate environmentally harmful substances such as CFCs.
Increasing concerns of consumers about the environment and raising level of
pollution have led to greater popularity of this type of technical barrier.
The final type is technical barriers for prevention of deceptive practices,
which aim to protect consumers through information by labeling, packaging and
classification requirement and controls on weights and measurements.
1.2. Technical barriers to Vietnam leather footwear exported to the EU market
1.2.1. Regulation of Registration, Evaluation, Authorization and Restriction of
Chemicals (REACH)
1.2.1.1. Overview of REACH
REACH, Regulation (EC) No 1907/2006 of the European Parliament and of
the council of 19 December 2006, governs the Registration, Evaluation,
Authorization and Restriction of Chemicals, which simplifies and consolidates more
than 40 former regulations. REACH came into force on June 1, 2007 to coalesce
and improve the former legislative framework on chemicals of EU. REACH is the
worldwide strictest regulation on chemicals. The European Chemicals Agency
(ECHA) has been established to manage registration and authorization, carry out
dossier evaluation, co-ordinate substance evaluation and restrictions on chemicals.
The main aims of REACH are to ensure a high level of protection of human
health and the environment from the risks that can be posed by chemicals, the
promotion of alternative test methods, and the free circulation of substances on the
internal market and enhancing competitiveness and innovation. REACH establishes
a registration system for chemical substances that requires the traceability of
chemicals and identification of substances within products.
Key elements and procedure of REACH include:
- Registration of chemicals in quantities of one tonne per year and above by
manufacturers and importers of chemicals, chemical preparations and articles.
Companies have the responsibility of collecting information on the properties and
the uses of substances that they manufacture or import at or above one tonne per
year. They also have to make an assessment of the hazards and potential risks
presented by the substance.
7
- Evaluation of registered chemicals to establish if information submitted is
compliant, whether further information is needed (dossier evaluation) and additional
measures are required (substance evaluation) to ensure their safe use.
- Authorization of chemicals identified as substances of very high concern
(SVHC) - chemicals that may cause severe health or environmental problems —
before they can be made, imported or used in the EU market.
- Restrictions imposed on the manufacture, import and use of high risk
chemicals - chemicals which cause unacceptable risks to the health and environment
and which need EU-wide action. Restrictions may limit or ban the manufacture,
placing on the market or use of a substance.
REACH affects those companies based in the EU manufacturing, importing
or using quantities of one metric tonne or more per year of the following:
- Chemical substances, either single elements or their compounds
- Preparations, which mean mixtures or a solutions composed of two or more
substances (including plastics and alloys)
- Articles, which mean objects which during production are given a special
shape, surface or design that determines their function to a greater degree than does
their chemical composition. Examples of articles are garment, furniture and leather
goods. Leather footwear is classified as article.
1.2.1.2. Obligations of leather footwear exporters under REACH
Registration is the submission to ECHA of a technical dossier with
information on the properties of a substance and, if required, a chemical safety
report documenting the chemical safety assessment for this substance. Registration
of a substance in articles is mandatory for an article producer or importer only if the
following two conditions are met:
- The substance is intended to be released from the imported articles during
normal or reasonable foreseeable conditions of use.
- The total amount of the substance present in all articles imported, from
which the substance is intended to be released, exceeds 1 tonne per year.
The key part of REACH that affects the leather footwear sector relates to
substances in articles, whether those substances are intended to be released and
8
whether they are SVHCs. Companies that place products onto the EU market
including manufacturers, importers and retailers of footwear, need to ensure that
their products do not contain substances above the set limits that have been
classified as SVHCs or as restricted substances.
The identification of a substance as a SVHC and its inclusion in the
Candidate List creates certain legal obligations for the importers, producers and
suppliers of an article that contains such a substance. SVHCs include those
classified as Carcinogenic, Mutagenic or toxic to Reproduction (CMRs), Persistent,
Bio accumulative & Toxic (PBTs) and very persistent very bioaccumulative
(vPvBs). SVHC Candidate List has undergone several updates and now there are a
total of 151 SVHCs in the list (updated April 2013). Producers and importers have
to notify to ECHA the SVHCs listed on the Candidate list that are present in their
articles no later than six months after the inclusion of the substance in the Candidate
List, if both the following conditions are met:
- The substance is present in their relevant articles above a concentration of
0.1% weight by weight.
- The substance is present in these relevant articles in quantities totalling
over one tonne per year.
Although REACH is a European regulation, irrespective of the location of
the factory, it does apply if the manufactured chemicals, leather or finished products
are finally sold on the European market. REACH will most likely affect parts of the
supply chain that are not directly involved in Europe because of the global nature of
leather footwear manufacture and tannery suppliers. Concerning the effect of
REACH to Vietnam leather footwear exporters, the EU importers shall ask Vietnam
producers to furnish requirement for submission to ECHA. It is important to note
that the submission of information to ECHA must be done by EU manufacturers or
importers. The obligation of foreign exporters is to provide information about
chemical substances in the products as required by EU importers to serve the
implementation of their legal duty with ECHA.
1.2.2. Labeling requirements
There is currently no EU-level framework that covers the labeling of leather
9
and leather products. The EU has only set up legislation regarding the labeling of
footwear, and there is only limited legislation on leather product labeling in certain
European countries. Footwear labeling is covered by Directive 94/11/EC of the
European Parliament and Council of 23 March 1994, on the approximation of the
laws, regulations and administrative provisions of the Member States relating to
labeling of the materials used in the main components of footwear for sale to the
consumer. The amending act (Directive 2006/96/EC) came into force in 2007.
It was introduced because:
- There were different provisions in the EU Member States on footwear
labeling and these created obstacles to the functioning of the internal market
- Consumer interests needed to be protected by correct information risk of
fraud for both consumers and industry need to be reduced.
The Directive covers:
- For each pair, at least one of the footwear items (defined and illustrated in
the Directive) must bear information relating to the upper, the lining and insole
sock, and the outer-sole of the footwear article. The information may be conveyed
by means of approved pictograms or textual information, as defined and illustrated
in the Annex to the Directive, and must relate to the material which constitutes at
least 80% of the surface area of the upper, the lining and insole sock of the footwear
article, and at least 80 % of the volume of the outer-sole. However, if no single
material accounts for at least 80 %, information must be given concerning the two
main materials in the composition of the article.
- Given that the aim of the above measures is to provide information, the
label must be legible, durable and accessible, and the manufacturer or his authorized
agent established in the Community is responsible for supplying the label and for
the accuracy of the information contained on it. Only the information provided for
in the Directive has to be supplied, but there is nothing to prevent additional
information being given on the label.
The rules are:
- The labeling shall convey information relating to the three parts of the
footwear: the upper, the lining and the sock, and the outer sole (Article 1).
10
- Either pictograms or written indications may be chosen (Article 3).
- The label must be visible on at least one shoe of the pair by printing,
sticking, embossing or using attached labels (Article 3).
- The manufacturer is responsible for supplying the label and for its
accuracy. If he is not established in the Community, the person who first places the
footwear on the market is responsible (Article 4).
1.2.3. Quality management system: ISO 9001
1.2.3.1. Overview of ISO 9001
ISO (the International Organization for Standardization) is a worldwide
federation of national standards bodies (ISO member bodies). The ISO 9000 family
addresses various aspects of quality management. The standards provide guidance
and tools for companies and organizations who want to ensure that their products
and services consistently meet customer’s requirements, and that quality is
consistently improved. ISO 9000 is divided into three parts respectively referred to
as: ISO 9001, ISO 9002 and ISO 9003. ISO 9001 is the standard that gives the
requirements for a quality management system. ISO 9001:2008 is the latest,
improved version. It is the only standard in the ISO 9000 family that can be used for
certification. ISO 9001 specifies the quality system requirements in the situation
where a supplier’s capability to design and supply conforming products is at issue.
The language of the ISO 9001 is that of what the supplier’s system ―shall‖ do. The
standard is aimed at achieving customer satisfaction through the elimination of
nonconformity at all stages of manufacturing and servicing.
ISO 9001 certification is not technically mandatory to export to the EU
market. However, exporters with certification will have more opportunities to gain
and maintain contracts with EU partners. Adherence to the ISO standards can also
be publicized to gain market access abroad, because many foreign buyers place a
premium on these standards (ITC, 2012). In addition, even if the law does not
require ISO 9001 certification, EU importers may require ISO 9001 compliance
from their suppliers since buying materials and products from ISO 9001 certified
businesses limits the importers’ exposure to product liability.
1.2.3.2. Procedure to implement ISO 9001
11
Step 1: Team nomination
A small team consisting of a senior person from each of functions of the
company should be appointed by board of management for system development.
One member of the team should be designated as the coordinator; the management
representative could be given this role. The team should undergo awareness and
documentation training on the ISO 9001 with a professional training organization.
Step 2: Gap analysis
For the gap analysis, a flow chart should be drawn, showing how information
currently circulates, from order placement by the customer to delivery of the
product. Next, with the built diagrams, a list of existing procedures and work
instructions for the most relevant activities can be formulated. Throughout that
process, the company may identify some infrastructural gaps such as:
- The need for additional building space, equipment and machines, utilities,
facilities, support; the need for proper handling and storage of raw materials to
avoid their mix up and spoilage.
- The need for additional test facilities for routine testing of the product
during production and before dispatch to customers.
- The need for periodic check-ups of measuring instruments and subsequent
repair, maintenance or calibration.
Step 3: Documentation
QMS-related documents such as quality policy, quality objectives, process
performance parameters, skills requirements, quality manual, quality plans,
procedures and work instructions should be prepared. The documentation on
procedures and work instructions should reflect current practice.
Step 4: Training and implementation
Train all employees in how to use the new QMS. As the system gets
developed (refer to step 3 above), the implementation phase should get going at the
same time, i.e. supporting evidence like records, minutes of meetings and customer
feedback data should be maintained.
Step 5: Internal audit and improvement
Some of managers and staff of the companies should be trained by a
12
professional trainer to carry out internal auditing of the QMS. The management
representative may also carry out audit management activities. After the system has
been implemented for about three months, trained auditors should conduct an
internal audit. Any gaps found during the audit should be corrected; any
modification required in the system documents should be carried out; any need for
additional awareness and skills training or improving the infrastructure should be
taken care of. Once the system stabilizes, internal audits should be conducted at
planned intervals, once every six months for example, or as needed.
Step 6: Management review
The management board should review internal audit results, customer
feedback data, status of quality objectives, analysis of process performance, product
conformity trends, status of corrective and preventive actions. As a result of this
review, management may decide to set new targets for quality objectives and to
make the improvements needed in the QMS. Management reviews should be held at
regular intervals, for example at least once every six months.
Step 7: Certification
Once the system has been in operation for a few months and at least one
internal audit and one management review has been conducted, the company may
consider applying for certification from an accredited certification bodies.
1.2.4. Environment management system: ISO 14001
1.2.4.1. Overview of ISO 14001
The ISO 14001 standard is an environmental management system standard,
not an environmental performance standard. The standard is designed to establish a
management system that evaluates and addresses how the organization interacts
with the environment. ISO 14001 is the world’s most recognized framework for
environmental management systems (EMS). The overall aim of an EMS based upon
ISO 14001 is to support environmental protection and the prevention of pollution in
a balance with socio-economic needs.
Although the EU claims that ISO 9000 certification is not required to do
business in the EU, that was the message received by many non-European
companies and lead to the success of that standard. If ISO 14001 is similarly
13
successful, the companies who are already ISO 14001 certified will have an
advantage in the EU market. In addition, producers may find that many consumers
not only try to purchase from environment-friendly companies, but will spend a
little more if they feel they are helping the environment.
1.2.4.2. Procedure to implement ISO 14001
It will be possible for companies to integrate their EMS ISO 14001 with their
QMS ISO 9001, as they are compatible with each other (ITC, 2012). Within the
standard, there are 17 elements of ISO 14001 that are required to be met by
companies seeking formal recognition for their ISO 14001 EMS, as follows:
- An environmental policy supported by senior management;
- Identification of environmental aspects and impacts, and the identification
of significant environmental impacts that the organization may cause;
- Identification of environmental compliance requirements;
- Development of objectives and targets, and environmental management
programs of the company;
- Defined resources, roles, responsibilities and authorities for environmental
management of the company;
- Development of competence, training and awareness procedures;
- A communication process of the EMS to all stakeholders;
- Development of EMS documentation as required by the standard;
- Development of document control procedures;
- Development of operational control procedures;
- Development of emergency preparedness and response procedures;
- Development of procedures to monitor and measure operations that can
have significant impact to the environment;
- An evaluation of compliance procedure;
- Procedures developed for the management of non-conformance, corrective
and preventative actions;
- Development of a records management procedure;
- A program for completing internal EMS audits and corrective actions;
- Development of management review procedures by management board.
14
1.2.5. Social Accountability 8000 (SA 8000)
SA8000 is an international standard developed by Social Accountability
International (SAI), a Non-Government Organization for improving working
conditions around the world. It is one of the world’s first auditable social
certification standards for decent workplaces, across all industrial sectors. It is based
on conventions of the ILO, UN and national law, and spans industry and corporate
codes to create a common language to measure social compliance. It takes a
management systems approach by setting out the structures and procedures that
companies must adopt in order to ensure that compliance with the standard is
continuously reviewed. Those seeking to comply with SA8000 have adopted
policies and procedures that protect the basic human rights of workers. As of June
2013, there are 3231 SA 8000 certified facilities.
SA 8000 is a voluntary requirement for companies that export to the EU. In
certain cases, importers of some product ranges may require SA 8000 when their
target customers highly value social responsibility, and a certification like SA 8000
significantly affect buying decisions.
Below are the nine elements in the SA8000 Standard:
- Child Labor: No use or support of child labor; policies and written
procedures for remediation of children found to be working in situation; provide
adequate financial and other support to enable such children to attend school; and
employment of young workers conditional.
- Forced and Compulsory Labor: No use or support for forced or compulsory
labor; no required 'deposits' - financial or otherwise; no withholding salary, benefits,
property or documents to force personnel to continue work; personnel right to leave
premises after workday; personnel free to terminate their employment; and no use
nor support for human trafficking.
- Health and Safety: Provide a safe and healthy workplace; prevent potential
occupational accidents; appoint senior manager to ensure occupational safety and
health (OSH); instruction on OSH for all personnel; system to detect, avoid,
respond to risks; record all accidents; provide personal protection equipment and
medical attention in event of work-related injury; remove, reduce risks to new and
15
expectant mothers; decent dormitories- clean, safe, meet basic needs; and worker
right to remove from imminent danger.
- Freedom of Association and Right to Collective Bargaining: Respect the
right to form and join trade unions and bargain collectively. All personnel are free
to: organize trade unions of their choice; and bargain collectively with their
employer. A company shall respect right to organize unions and bargain
collectively; not interfere in worker organizations or collective bargaining; allow
workers freely elect representatives; ensure no discrimination against
personnel engaged in worker organizations.
- Discrimination: No discrimination based on race, national or social origin,
caste, birth, religion, disability, gender, sexual orientation, union membership,
political opinions and age. No discrimination in hiring, remuneration, access to
training, promotion, termination, and retirement. No interference with exercise of
personnel tenets or practices; prohibition of threatening, abusive, exploitative
behavior at workplace or company facilities.
- Disciplinary Practices: Treat all personnel with dignity and respect; zero
tolerance of corporal punishment, mental or physical abuse of personnel; no harsh
or inhumane treatment.
- Working Hours: Compliance with laws & industry standards; normal
workweek, not including overtime, shall not exceed 48 hours; 1 day off following
every 6 consecutive work days, with some exceptions; overtime is voluntary, not
regular and not more than 12 hours per week; required overtime only if negotiated.
- Remuneration: Respect right of personnel to living wage; all workers paid
at least legal minimum wage; wages sufficient to meet basic needs & provide
discretionary income; wages and benefits clearly communicated to workers; paid in
convenient manner – cash or check form; overtime paid at premium rate; prohibited
use of labor-only contracting, short-term contracts, false apprenticeship schemes to
avoid legal obligations to personnel.
- Management Systems: Facilities seeking to gain and maintain certification
must go beyond simple compliance to integrate the standard into their management
systems and practices.
16
1.3. The necessity of studying technical barriers to Vietnam leather footwear
exported to the EU
1.3.1. For Vietnam economy
1.3.1.1. Contributing to increase export turnover
Vietnam’s leather footwear sector has been growing stably since the mid-
nineties and become one of biggest foreign currency earners for the country.
Leather footwear is one of the key export industries that take an important position
in the export structure. The average annual growth of export value of Vietnamese
footwear reached 17.35% in 2013 with total turnover of about 8.52 billion USD.
From 2008 to 2013, exports of leather footwear have retained the third rank in
contribution to total export turnover of Vietnam, behind crude oil and textile and
garments products (Vietnam Statistical Handbook, 2013). As shown in table 1.1, the
contribution of leather footwear exports to total export turnover of Vietnam from
2008 to 2013 is considerable with the stable level of 6 – 7%. From 2008, Vietnam
has been successful in retaining the position in top five largest footwear producers
of the world. In 2012, Vietnam ranked fifth in top leather footwear exporters with
total export turnover of 7.262 million USD (World Footwear Yearbook, 2012).
Table 1.1: Total export turnover and export turnover of leather footwear of
Vietnam from 2008 to 2013
Measurement: billion USD
2008 2009 2010 2011 2012 2013
Total export
turnover 62.685 57.096 72.236 96.905 114.529 132.134
Export turnover of
leather footwear 4.776 4.006 5.212 6.594 7.262 8.525
Ratio (%) 7.62 7.01 7.22 6.80 6.34 6.45
Source: Author’s collection from Statistical Handbook of Vietnam 2013
In EU market only, Vietnam ranks second behind China in terms of market
share. From 2008 to 2013, the EU maintained largest export market for Vietnam
leather footwear. Therefore, the performance of Vietnam leather footwear in the EU
has a significant impact on total export turnover of the sector, and thereby
17
contributing to total export turnover of Vietnam. Besides economic crisis, one of the
most important reasons that can potentially hurt export turnover and development
prospects in the EU market is the increasing complication and rigorousness of
technical barriers. If products cannot overcome technical barriers, they will not be
allowed to be imported into the EU market. The failure in meeting standards and
regulations of the EU will certainly lead to decrease in export turnover and future
exports development. Therefore, the success in overcoming technical barriers will
contribute to maintaining and raising export turnover in the EU.
Compliance with standards and regulations of technical barrier system of the
EU would not only help Vietnam exporters increase export turnover in this market
but also create favorable conditions to expand exports in other developed countries
since Vietnam products have passed the strict test of quality of the EU. It will
contribute to enhance the international prestige of Vietnam leather footwear
products to facilitate development in many foreign markets and thereby, increase
total export turnover from leather footwear sustainably.
1.3.1.2. Contributing to promote industry development
In the effort to overcome stringent technical barriers of the EU market,
Vietnam leather footwear sector needs to implement projects to renew production
system and develop supporting industries. In details, Vietnam needs to increase
localization rate and reduce dependence on imported materials in order to better
control the quality of finished products. In addition, the need to overcome technical
barriers will encourage the development of infrastructure for leather footwear sector
as well as supporting industries. It will also provide an incentive for technology
modernization in each enterprise and the whole sector. New standards in production
will be likely to be applied in accordance with international standards. High
technical standards and strict regulations will also bring the need of establishing
industrial zones for large-scale expansion and benefits from economies of scale in
building facilities. Those factors will contribute to sustainable development of
industries, which will benefit Vietnam economy in the long run.
1.3.1.3. Contributing to create jobs and enhance quality of human resources
Leather footwear industry implies a great potential for employment,
18
especially for free and unskilled labors from rural areas of Vietnam. According to
LEFASO, leather footwear sector is employing 670.000 workers (plus 500.000
workers in supporting industries) (Van Nam, 2014). The success in overcoming
technical barriers of a major market like the EU will help the sector to further
develop business, maintain stable market share and receive new orders, which will
contributing to increasing the need of labors. Therefore, it will facilitate job creation
and partly raise income of the labor force.
In addition, meeting high technical standards of the EU requires well-trained
and skilled labors to operate modern machinery and control the quality of products.
There is also a need to increase the expertise of managers and engineers to
implement and control system renewal. It will encourage investment in training
labor force, and thereby enhance the quality of human resources sustainably.
1.3.1.4. Enhancing trade between Vietnam and the EU
During the last two decades, trade relations between Vietnam and the EU
reached a high level of development. The EU is second largest trading partner and
biggest export market of Vietnam while Vietnam is fifth most important trading
partner of the EU in ASEAN. In 2012, bilateral turnover reached 29.1 billion USD,
in which exports to the EU reached 20.3 billion USD and imports from the EU
reached 8.8 billion USD (Department of multilateral trade policy, 2013).
The EU is the largest export market of Vietnam leather footwear, accounting
for 34.76% of total leather footwear export turnover in 2013. Overcoming technical
barriers will promote the exports of leather footwear into the EU market, which will
contribute to the total growth of Vietnam exports to the EU. If exports grow in a
large market like the EU, the foreign exchange earnings can be invested in
purchasing machinery and modern technology of the EU. It will contribute to
improving trade balance as well as further strengthen bilateral trade relations
between Vietnam and the EU.
1.3.2. For Vietnam enterprises
1.3.2.1. Contributing to enhance the prestige of Vietnam leather footwear in
international markets
The EU is considered the market with the most complicated and strictest
19
regulations as well as high standards of quality in its technical barrier system. The
success in overcoming technical barriers of the EU can strongly prove that Vietnam
leather footwear products can meet high international quality standards from any
other markets. Therefore, by overcoming EU technical barriers, Vietnam leather
footwear can gradually establish and maintain the prestige of being safe and
friendly with the environment as well as having quality that is up to international
standards. The procedure of complying with technical regulations and meeting
standards of the EU is also the process of building trust with not only EU customers
but also international partners and customers of other export markets. It will prove
that Vietnam companies do pay attention to sustainable development,
environmental protection and social responsibility.
Thanks to that recognition, Vietnam companies can promote production and
exports to the EU as well as other countries in order to expand market share and
gain more profit. In addition, that prestige will be valuable asset in the marketing
strategy and the process of building brand name for Vietnam leather footwear,
which will support the long-term increase in added value of the industry.
1.3.2.2. Stimulating Vietnam leather footwear industry to improve capacity
Complicated and rigorous technical regulations of the EU have been forces
and stimulations for Vietnamese leather footwear businesses to consistently strive
for system adjustment and capacity enhancement to satisfy this difficult market. EU
end users are considered difficult consumers in making purchasing decisions. Not
only do they require high standard of quality and design, but they also demand to be
ensured that products must guarantee complete safety to their health and the
environment. In addition, they also have requirements about sustainability and
working conditions of labor force. Therefore, without technical barriers, it would be
easier for Vietnam leather footwear products to penetrate the EU market but still
difficult to satisfy and win the trust of EU customers. Technical barriers have been
giving Vietnam leather footwear industry the foundation to build the brand ―Made
in Vietnam‖ in the EU market. For instance, if Vietnam leather footwear complies
with strict regulation of chemical usage under REACH which already ensures safety
of products, obtain other certificates such as SA8000, ISO 9001 and ISO 14000, and
20
meet all requirements of EU importers, Vietnam products have already passed the
test of EU consumers about quality, sustainability, safety to human health and
environment as well as working condition of laborers. That is the foundation for
Vietnam businesses to build the brand for Vietnam leather footwear, and continue to
increase export turnover and develop stably.
One of the purposes of technical barriers is actually to protect domestic
production from exports, but the standard of quality required is necessary and
reasonable. By putting effort in capacity enhancement to satisfy those high
standards, Vietnam leather footwear sector has strong motivation to improve
weaknesses in production system, human resources, infrastructure, technology and
supporting industries to further strengthen the ability of overcoming technical
barriers. All of those elements will increase the overall capacity of the industry in
all aspects for long-term sustainable development.
1.4. Experience of China in overcoming technical barriers of the EU to leather
footwear and lessons for Vietnam
1.4.1. Reasons for choosing China
China is the largest leather footwear producers and exporters of the world. In
2012, China ranks first in top footwear exporters of the world with 40.4% of total
market share (World Footwear Yearbook, 2012). In the EU market, China confirms
the continuity of leadership in market share, while Vietnam remains the second
rank. In recent years, despite negative effect of economic downturn, China still
maintains its number one position in leather footwear production and exports of the
world. Even though leather footwear products of China have been encountering
several difficulties due to stringent technical barriers from the EU, China has been
implementing several effective solutions to deal with them and keep their exports
stably in quality and turnover.
Leather footwear industry of China and Vietnam once share many common
features in production conditions as well as difficulties such as cheap labor, labor
intense, low technological level, etc. With the right orientations and prompt actions
to cope with difficulties and improve competency, China remains the stable position
of the largest exporter of leather footwear to the EU. Current improvement and
21
growth of China as well as effective measures to cope with technical barriers of the
EU in similar situation with Vietnam needs to receive thorough consideration in
order for Vietnam leather footwear industry to obtain valuable lessons.
1.4.2. Experience of China to overcome technical barriers to leather footwear
exported to the EU
Controlling the quality of input materials is one of the priorities of China
manufacturers to ensure that their products comply with raising standards from the
EU. Therefore, China pays special attention to developing supporting industries, in
which tanning is the most important. Special emphasis has been paid on well-
planned development that aims at optimum utilization of domestic raw materials
and skilled labor for maximizing the returns and innovation of the industry in order
to meet demands of high-quality leather to produce footwear for exports. China has
detailed plan to control the quality of leather by developing castle breeding
specifically for tannery industry. The industry reports reveal that the annual
production of leather in China is around 7.7 billion square feet accounting for over
20% of total global. From January 1, 2006, the Government prohibited importing
raw hides for processing into leather for exports, in the effort to reduce low value
added processing in China. In September 2006, the Government continued to ban
importing skins and hides for processing trade, but allowed processing of imported
hides for exporting finished products like leather footwear. In addition, there is
quota restriction on the import of raw hides and skins for processing trade. The
processing trade is only allowed in Export Processing Zones under strict supervision
of Customs Administration in China (General Consulate of Pakistan in China, 2011)
Specialized industrial cluster has enabled Chinese companies to produce and
large volumes of footwear per order in the most cost efficient way. The close
location of similar producers in the cluster enhances efficient handling of
production and delivery, sharing of investment cost of building facilities and other
infrastructure like wastewater treatment plans.
Despite still being labor-intensive, leather footwear industry is not only
expanding but also modernizing while tacking with environmental problems to meet
standards of developed markets. In order to further enforce compliance with
22
environmental regulations, 12th National Five Year Plan of China has compelled
leather footwear enterprises to carry out an energy saving method of production and
to reduce the level of contamination. In 2011, 183 enterprises were shut down in
2011 because their products generated high contaminations (General Consulate of
Pakistan in China, 2011). This rigorous enforcement motivates existing producers to
maintain sound production standards and upgrade their production lines with
environmental friendly materials and technologies. During five-year period, all
industrial sectors will focus on upgrading their technologies and products.
Upgrading technological level not only helps enhance the quality of China footwear
to meet high standards of the EU but also reduce costs in the long run, especially in
the current increase of labor cost, which will further strengthens price competitive
advantage of China leather footwear.
New standards according to international standards are started to apply in
order to make China footwear products approach required quality of developed
markets, including the EU, which will be a considerable advantage to overcome
technical barriers. In order to construct an updated system of standard for all
industrial sectors in China, in 2011, Ministry of Industry and Information
Technology of China introduced a system of newly approved standards for 359
industrial sectors, including 4 groups of standards for leather footwear industry in
China (General Consulate of Pakistan in China, 2011)
The China Association of Leather Footwear Industry has also set up an
industry early-warning system for making proactive responses to the technical trade
barriers and support enterprises in the industry with information for better
preparation to meet standards and regulations of foreign markets.
After 7 years of preparation, the executive plan of genuine leather mark and
eco – leather was put into operation on July 1, 2002. Genuine leather mark and eco-
leather refer to the different kinds of finished leather qualified for the certification
trademark "genuine leather mark". Such finished leather has to meet the
requirements and relevant provisions of specification for genuine leather mark and
eco-leather products in addition to satisfying corresponding present state and
industry standards (General Consulate of Pakistan in China, 2011). The trademark
23
can be used as a signal of quality, creating an advantage for China footwear
products in international markets.
1.4.3. Lessons for Vietnam
From measures that China has been taking to cope with technical barriers of
the EU and more importantly, develop their leather footwear industry sustainably,
Vietnam can have valuable lessons and experience for future orientation. In details,
Vietnam should concentrate on the following issues:
Firstly, Vietnam needs to lay special emphasis on developing supporting
industries to increase localization rate and reduce heavy dependence on imported
input materials for better controlling the quality of finished products.
Secondly, in the long run, to meet increasing standards and regulations
required by the EU market, technology modernization is crucial. Vietnam leather
footwear companies should consider upgrading their production lines according to
EU standards and Vietnam Government should adopt policies to encourage and
support technology innovation of enterprises.
Thirdly, there should be specialized industrial cluster for the industry to take
advantage of economies of scales for cost reduction in building required facilities
for better compliance with technical and environmental regulations.
Fourthly, Vietnam should build new standards according to international
standards to give domestic companies the motivation to manufacturing in
conformity to standards of key export markets.
Finally, Vietnam should invest in enhancing the effectiveness of early-
warning system so that exporters can obtain full and updated information in order to
better prepare and find solutions to deal with technical barriers.
SUMMARY OF CHAPTER 1
Chapter 1 provides general knowledge of technical barriers and indicates
main regulations and requirements of the EU market to imported leather footwear
products from Vietnam. In addition, it points out the importance of researching
these technical barriers for Vietnam economy and businesses. Finally, it introduces
valuable experience of China in overcoming these barriers to draw practical lessons
for Vietnam leather footwear industry.
24
Chapter 2: CURRENT SITUATION OF VIETNAM LEATHER FOOTWEAR
EXPORTS TO THE EU MARKET AND OVERCOMING TECHNICAL
BARRIERS TO LEATHER FOOTWEAR EXPORTED TO THE EU
MARKET FROM 2008 TO 2013
2.1. Exporting Vietnam leather footwear to the EU market from 2008 to 2013
2.1.1. Export turnover
Overall, total export turnover from leather footwear of Vietnam went up by
178.49% from 4,776.22 million USD in 2008 to 8,525.41 million USD in 2013. In
2009, export turnover bottomed out in the period with a decrease of 16.11%
compared to 2008 due to the negative effects of economic downturn. It is followed
by a dramatic recovery in 2010 with an increase of 30.09%, from 4,006.76 million
USD in 2009 to 5,212.25 million USD in 2010, which is the biggest growth rate
from 2008 to 2013. The figure of export turnover has been increasing continuously
from 2010 to 2013 and reached the peak at the end of the period.
Chart 2.1: Total export turnover of Vietnam leather footwear exported to the
EU and other countries from 2008 to 2013
Measurement units: million USD
Source: Author’s collection from statistics of LEFASO
The figure of export turnover from the EU of Vietnam leather footwear
follows a similar trend with the movements of total export turnover, which are a
decline in 2009 compared to 2008 and continuous growth from 2009 to 2013.
0
2,000
4,000
6,000
8,000
10,000
12,000
2008 2009 2010 2011 2012 2013
Total leather footwear exports to the EU Total leather footwear exports
25
Table 2.1: Total export turnover and export turnover to the EU of Vietnam
leather footwear from 2008 to 2013
Year
Total Vietnam leather
footwear exports
Vietnam leather footwear exported
to the EU
Turnover
(million USD)
Growth
rate (%)
Turnover
(million USD)
Growth
rate (%)
% of total
exports
2008 4,776.22 11.96 2,484.72 14.14 52.02
2009 4,006.76 -16.11 2,007.27 -19.22 50.10
2010 5,212.25 30.09 2,403.57 19.74 46.11
2011 6,549.05 25.65 2,609.23 8.42 39.84
2012 7,262.32 10.89 2,650.19 1.57 36.49
2013 8,525.41 17.35 2,963.58 11.83 34.76
Source: LEFASO
In 2008, although global economic crisis started to show negative effects,
Vietnam leather footwear industry managed to keep business with the EU market
stable, which results in an increase of 14.14% in export turnover compared to 2007.
From January 1, 2009, EU removed Vietnam from the list of countries that can
enjoy generalized Scheme of Tariff Preferences (GSP - preferential tariff for poor
countries), which put a great pressure on domestic producers and exporters. The
loss of GSP status averagely increased import duties in the EU market by 3.5% to
5.5%, making duties on Vietnam leather footwear products surged to 8%. In
addition, the global economic crisis caused strong impacts on Vietnamese economy
in general and the leather footwear sector in particular. EU also suffered the effects
of the crisis, which reduced the consumption of footwear by 11.10%, according to
statistics of Eurostat. Export markets were more narrowed and the competition got
tenser. As a result, Vietnam’s leather shoes industry had to face many difficulties,
leading to a decrease of 16.11% compared to 2008.
In 2010, export revenue from the EU market of Vietnam leather footwear
amounted to 2,403.57 million USD, showing a relevant increase of 19.74 %
compared to 2009. The main reason for that stunning growth was the removal of EU
26
anti-dumping duties imposed on the Vietnamese leather-capped shoes by the EC
from April 1. The lifting of the anti-dumping tariff on leather-capped shoes
produced in Vietnam was an advantage to expand exports in the EU market for
Vietnamese exporters, as they were no longer burdened with a 10% tax. Vietnam
leather footwear producers could then compete with competitors from India,
Indonesia, Bangladesh, Sri Lanka, Pakistan and Cambodia. The removal of the anti-
dumping duties opened opportunities to boost exports in the 27-nation market for
Vietnam exporters while exposed it to strong competition at the same time.
The growth rate in 2011 slowed down with an increase of 8.42% compared
to 2010. Vietnam producers were confronting fierce competition from Chinese
leather footwear exporters who no longer suffered the tariff of 16.5%. With most
EU nations facing financial crisis in addition to rising competition in prices from
Chinese products, Vietnam’s leather footwear sector grew sluggishly during the
2012 as compared to 2011, and achieved a growth of only 1.57%.
Vietnam's footwear export turnover in the EU market hit a record high of
2.963,68 million USD in 2013, up 11.83% year-on-year. The export turnover of
leather footwear reached a relatively high growth rate due to the gradual recovery of
the EU market. Vietnam also benefits a lot from the information of GSP of EU.
From 2014, under the new regulations of GSP provided to developing countries
including Vietnam, the leather and footwear industry is taken out of the maturity list
of the EU and GSP within three years, from January 1, 2014 to December 31, 2016.
The tax rate applied on Vietnamese leather footwear exports to the EU will be
reduced from 13 - 14% to 3 - 4%. EU importers start to take advantage of the
upcoming preferential level of tariff by increasingly moving orders and production
from China to Vietnam. Domestic leather footwear companies are preparing to
catch new opportunities from GSP to increase exports to the EU. Therefore, in
2014, export turnover from the EU market of Vietnam leather footwear products is
expected to be further promoted.
The EU has retained the position as the biggest market for Vietnam leather
footwear from 2008 to 2013. However, the dependence of Vietnam leather footwear
on this export market has gradually decreased.
27
Chart 2.2: Turnover ratio of three main export markets for leather footwear of
Vietnam from 2008 to 2013
Source: Author’s collection from data of LEFASO
As can be seen from Chart 2.2, there is a continuous decrease in the
proportion of export turnover from the EU compared with that from two other main
markets of Vietnam leather footwear, which are the US and Japan. The proportion
of exports to the EU out of total exports turnover of leather footwear has been
declining continuously from 52.02% in 2008 to 34.76% in 2013. The proportion of
export turnover from the EU out of total exports turnover from the EU, the US and
Japan of leather footwear also decreases from 63.5% in 2008 to 56.8% in 2013. This
is the result of the efforts to increase diversification of markets of leather footwear
sector. It confirmed Vietnam’s success in diversifying its exports to the EU and
reducing over-dependency on single commodities. One of the motivations for that is
the increasing complication and strictness of technical standards and regulations of
the EU, which poses considerable challenges to expand business in this market as
well as incurs additional costs for Vietnam leather footwear companies to adjust
production system for overcoming those stringent barriers. It leads to a change in
strategy of exporters to reduce focus on the EU market and develop exports in other
countries with lower technical barriers than the EU.
2.1.2. Market structure
Among EU Member States, Germany, The UK, Belgium, France and Italy
are main importers of Vietnam leather footwear with the largest export turnovers.
Overall, Vietnam leather footwear exported to the mentioned markets accounted for
0% 20% 40% 60% 80% 100%
2008
2009
2010
2011
2012
2013
The EU The US Japan
28
54% to 65% of total export turnover from the EU market between 2008 and 2013.
Table 2.2: Vietnam leather footwear export turnover from the 5 main markets
in the EU from 2008 to 2013
Measurement units: million USD
Source: ITC Trademap
Export turnover from all five major markets decreased in 2009 due to the
negative impact of economic crisis in the EU. From 2009 to 2013, export turnover
from Germany, France and Belgium went up stably, while the UK and Italy market
shows slight decrease year-on-year.
Chart 2.3: Export turnover of Vietnam leather footwear to 5 major export
markets in the EU from 2008 to 2013
Measurement units: percentage
Source: Author’s collection from statistis of ITC Trademap
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2008 2009 2010 2011 2012 2013
Germany UK Belgium France Italy Other EU countries
2008 2009 2010 2011 2012 2013
Germany 515,037 372,414 408,115 500,447 500,705 553,578
The UK 448,636 377,389 375,949 349,254 305,822 307,216
Belgium 230,027 186,997 202,389 224,212 250,021 270,343
France 263,783 242,719 250,811 288,171 286,760 302,818
Italy 150,140 125,674 138,660 126,724 126,216 144,325
% of turnover from EU 64.75 63.50 57.24 57.06 55.45 53.25
29
The five largest import destinations in the EU for leather footwear products
from all countries are The UK, Germany, Italy, France and Spain (CBI, 2012). The
UK, Germany, Italy and France are also four largest markets in the EU for Vietnam
leather footwear exports and has stably maintained this position from 2008 to 2013.
Although Belgium is not in the list of five largest EU imports for the leather
footwear, it remains the third main market for Vietnam products, partly due to long-
term trade relationship between Belgium and Vietnam.
The EU market for footwear is large and diversified. EU countries that are
particularly interesting for producers from developing countries are Germany, UK
and Denmark, as well as some of Eastern EU countries. Germany and UK are also
two largest export markets of Vietnam. However, in Western Europe countries,
there is growing preference of a part of consumers for products with origin marking
on a label such as ―Made in Italy‖ or ―Made in France‖, which have a higher
perceived value than products made elsewhere (CBI, 2012). It can be the reason for
decreasing proportion in total Vietnam leather footwear export turnover from the
EU of 5 main markets from 64.75% in 2008 to 53.25% in 2013, while turnover
from other countries, including Eastern EU markets have been keeping increasing.
2.1.3. Export structure
Chart 2.4: Export turnover of Vietnam leather footwear exported to the EU in
3 categories from 2008 to 2013
Source: Author’s collection from statistics of LEFASO
As shown in Chart 2.4, structure of Vietnam leather footwear exports to the
EU remains relatively stable. From 2008 to 2013, women shoes accounts for the
0%
20%
40%
60%
80%
100%
2008 2009 2010 2011 2012 2013
Others
Sandals
Men shoes
Women shoes
30
largest proportion in export turnover from the EU, followed by men shoes and
sandals. In the EU, women shoes are the largest segment for leather footwear.
The proportion of export turnover from women shoes increased from 45.2%
in 2008 to 58.9% in 2013. It can be explained by the increasing ratio of working
women, which is the most important segment for leather footwear in the EU, from
53.5% to 59.1% between 2008 and 2013, according to Eurostat. The proportion of
turnover from men shoes exports decreases continuously from 38.4% in 2008 to
31.7% in 2013, relatively to the raising turnover from women shoes and also due to
stronger tendency of men to cut down on leather shoes, which can be considered
non-essential commodity to them, in financial difficulties.
2.2. Overcoming technical barriers to Vietnam leather footwear exported to
the EU market from 2008 to 2013
For the purpose of collecting primary data and information about the actual
situation of overcoming technical barriers to Vietnam leather footwear exported to
the EU market of Vietnam companies to analyze the strengths and weaknesses,
author conducted a survey. The author contacted by phone and sent email to 230
leather footwear companies in Vietnam in order to request them to complete
questionnaire from 10 March 2013 to 15 April 2013. A total of 72 responses were
received, in which 67 responses are valid, constituting a representative sample of
the population. In 67 companies with valid responses, 51 companies export leather
footwear to the EU. The result of the survey is processed by Microsoft Excel.
2.2.1. Meeting REACH
Vietnam leather footwear exporters play a critical role in the supply chain in
regards to the process of REACH compliance. In order to carry out registration and
notification with ECHA, EU leather footwear importers need to identify substances
in their products by obtaining information from their non-EU suppliers. If a
Vietnam leather footwear company is unable to provide information and
certifications required by EU importers leading to their failure in registration and
notification, their products will not be placed in the EU market and their EU
partners will be forced to look for new exporters.
In order to provide required information for EU importers, Vietnam leather
31
footwear exporters need to identify the answers for the following questions:
- What chemical substances are included in their products?
- What chemical substances are intended to be released from products? If
there are, does the total amount exceed one tonne per year?
- What Substances of Very High Concerns (SVHCs) and Restricted
Substances (Azo dyes are often used in the coloring process of several leather
products. Their use is restricted in products marketed in the EU under REACH) are
contained in the products?
To obtain the above information, Vietnam companies need to set up a
chemicals management system (CMS) to collect, manage and report the presence of
substances in products from the first step of purchasing raw materials to the final
step after finishing leather footwear products. CMS reflects the ability of companies
to fulfill its obligation under REACH (Nguyen Xuan Vinh, 2011).
Chart 2.5: Evaluation of Vietnam leather footwear companies of their
chemicals management system
Measurement: Percentage of companies
Source: Survey result
According to survey results, 27.44% of producers are confident that they
have good and very good CMS. It demonstrates results of investment and taken
measures of these companies in building and enhancing their CMS for REACH
compliance. An effective CMS will optimize process and save time while all
chemical substances are well controlled and reported. Therefore, nearly a third of
companies can better ensure the fulfillment of their obligations under REACH.
However, it is notable that 21.58% of companies admit that their CMS is not good
and CMS of more than half of companies remains at average level. It shows that
3.92
23.52
50.98
21.58
0 0
10
20
30
40
50
60
Very good Good Average Not good Not at all good
32
there are still difficulties in chemicals management process of a majority of
Vietnam leather footwear companies, which poses risks to meeting their obligations
required by EU importers for REACH compliance.
The effectiveness of CMS, and thereby the obligation’s fulfillment under
REACH, is decided by three stages, which are purchasing and controlling input
materials, production and inspection of finished products.
Production for direct export contracts will be affected more by REACH than
manufacturing as processors. In 2012, according to General Department of Vietnam
Customs, 52.7% of export turnover of leather footwear is from processing for
foreign importers. Survey result shows that 45.10% of companies have direct export
contracts with EU importers, while 54.90% manufacture completely as processors.
Under processing contracts, EU buyers provide materials or demand Vietnam
producers to use material of prestigious suppliers appointed by them. EU buyers
then obtain information about chemical substances intended to be released and
SVHCs from these suppliers. Vietnam producers undertake less responsibility by
managing chemicals used in production and inspecting finished products. In direct
export contracts, Vietnam companies have to source and purchase all materials.
Domestic producers still heavily rely on material imports, as quality supplies in the
nation are not adequate to meet standards of the EU. Localization rate in 2013 is
45% and domestic tanneries can only supply for about 20% to 30% of total leather
demand for footwear production (Duy Phuong, 2014). Importing raw materials from
diverse and unsystematic sources reduces the level of engagement of Vietnam
companies with their suppliers in relation to REACH compliance. Therefore, it is
more difficult, time-consuming and complicated for Vietnam leather footwear
producers to obtain information about chemical substances in raw materials.
In production stage, a significant part of companies has implemented quality
management system according to ISO 9001, which further ensure the capability of
their system in manufacturing products that conform to required standards of EU
importers. Therefore, it is an advantage to enhance the effectiveness of CMS.
However, existing weaknesses in production system like outdated technology and
low skills of labor are still hindrances to the process of managing chemicals.
33
In inspection of products, a substantial majority of companies (70.59%,
according to survey result) does not have laboratories to check chemical content of
raw materials and finished products. It is common practice to perform chemical
analyses of materials used for production or of final products, which can serve to
obtain information needed for compliance with REACH. The lack of internal
laboratories will result in insufficient control of chemicals in testing and inspection
not only of finished products, but also of raw materials and during production.
Chart 2.6: Percentage of companies that have decreased revenue from the EU
market due to REACH from 2008 to 2013
Measurement: Percentage of companies
Source: Survey result
As shown in chart 2.6, from 2008 to 2013, a majority of companies consider
REACH as one of the causes for the decrease in their revenues from the EU market.
In compliance with REACH, Vietnam companies have to modernize technology, set
up new systems or modify and enhance internal business processes. In addition,
they have to increase investment in human resources training to operate new
machinery and systems as well as in-house quality control and quality assurance to
intensify checks of chemical content. Price of raw materials also goes up since
suppliers have to incur additional costs due to REACH compliance, including the
cost to experiment and use new chemicals to substitute chemicals in Restricted
Substances List of REACH. All of them lead to substantial increase in cost.
Cost of initial investment and lack of awareness and preparation in the
beginning makes REACH become one of the reasons for the decrease in revenue of
100% companies in 2008 and 86.29% of companies in 2009. The percentage of
0
20
40
60
80
100
2008 2009 2010 2011 2012 2013
100 86.49
75 70 61.54
55.56
34
companies with reduced revenue due to REACH continually decreased from 100%
in 2008 to 55.56% in 2013, which demonstrates the raising effectiveness of
measures leather footwear companies have taken to fulfill their obligations.
REACH compliance compels manufacturers to budget for chemical testing.
Leather is a chemical-intensive material that contains about 17 in 73 SVHCs in the
Candidate List of ECHA (Nguyen Xuan Sinh, 2011). Vietnam leather footwear
exporters may need to send products to test centers or laboratories for toxicological
or eco-toxicological tests and analyses in order to obtain the information needed for
chemicals to be registered and notified. New tests and analyses must be executed
according the prescribed guidelines and must comply with Good Laboratory
Practice (GLP) or other international standards recognized by the EC or ECHA. The
inspection and certification are typically conducted in Hong Kong or Singapore as
qualified certification bodies are not available locally, making costs surge.
Due to the complication of REACH that requires considerable system
renewal and additional cost, REACH can increase the number of Vietnam leather
footwear companies that reduce exports to the EU and focus on other markets with
less strict regulation, especially SMEs. It will also hinder the development of direct
exporting to the EU. Leather footwear exporters will be likely to continue
subcontracting to avoid having to control chemicals in raw materials.
2.2.2. Meeting labeling requirements
Chart 2.7: Evaluation of Vietnam leather footwear companies of their
compliance to labeling requirements from 2008 to 2013
Measurement: Percentage of companies
Source: Survey result
17.64
56.86
25.49
0
0
0 10 20 30 40 50 60
Very good
Good
Average
Not good
Totally not good
35
It can be seen from Chart 2.7 that overall, Vietnam leather footwear
companies have complied relatively well with footwear labeling requirements of the
EU market. A majority of companies (74.5%) have good and very good results in
adhering to the requirements while the level of compliance of the rest is average.
There are no companies evaluating that their results in conforming to footwear
labeling requirements are not good or totally not good.
Since a large number of Vietnam leather footwear companies produce and
export to the EU as processors, EU importers commonly provide full package of
information required on label, designs of label and instruction for Vietnam
exporters to follow. In cases of direct exports, companies already gain adequate
experience in meeting labeling requirements from processing for EU importers. In
addition, directive of EC covering footwear labeling came into force in 1994 with
only some minor adjustments in 2006 so Vietnam companies are well familiar with
the requirements. All of them are reasons for positive results of leather footwear
companies in complying with labeling requirements of the EU from 2008 to 2013.
2.2.3. Meeting ISO 9001
Table 2.3: Number of ISO 9001 certificates given to Vietnam
from 2008 to 2012
Year 2008 2009 2010 2011 2012
Number of certificates 3971 7333 2036 4779 6144
Growth rate (%) 84.67 -72.23 134.72 28.56
Source: ISO survey
ISO 9001 can be considered the most used and well-known standard for
QMS in Vietnam. Despite fluctuations from year to year, the number of certificates
given to Vietnam from 2008 to 2012 remains at relatively high level. There is a
dramatic increase in 2009 partly due to the tendency of companies to request
external audit from an accredited certification body after the publication of version
2008 in order to obtain an updated certification. It, along with the effect of
economic crisis, leads to a relevant decrease of 72.23% in 2010. From 2010, that
figure increases stably year-on-year and reached a peak of 6144 certificates in 2012.
According to survey result, only 11.76% of asked leather footwear
36
companies are not preparing QMS with the seek for ISO 9001 certification. A
significant majority are choosing to adopt the ISO 9001, in which 37.26% of them
obtained certification and 50.98% are preparing and implementing required QMS of
ISO 9001. The figures demonstrate the widespread implementation of ISO 9001 in
the industry. The main motivation for adopting ISO 9001 is the requirement of
many EU importers. The most common benefits experienced by adopter of ISO
9001 management systems include higher conformity and reliability of products,
reduction of error rate and nonconformities (ITC, 2011). Therefore, EU importers
require ISO 9001 to ensure that leather footwear products manufactured by Vietnam
companies effectively comply with standards in quality.
Chart 2.8: The implementation of ISO 9001 of Vietnam leather footwear
exporters to the EU market
Measurement: Percentage
Source: Survey result
Besides improving conformity and reliability, QMS required by ISO 9001
has been acknowledged as enabling companies to standardize procedures and
technologies to control quality and process efficiency (ITC, 2011). Therefore, it
enhances the competency of Vietnam leather footwear producers in meeting other
technical standards and regulations of the EU. In addition, ISO 9001 certifications
help to overcome reputation problems of developing countries like Vietnam. ISO
9001 support entry in the EU market by signaling compliance with international
management rules for assurance of product quality, especially in industries with low
labor productivity like leather footwear. Pham Thu Huong - Director of Thuy Khue
Shoes Co. Ltd shared that thanks to the application of QMS ISO 9001, management
37.26
50.98
11.76 Obtained certification
Implementing required
QMS for certification
Not preparing to obtain
certification
37
and production capacity of the company had shown remarkable improvement, the
ability to overcome strict technical barriers of export markets had been enhanced
and their leather footwear products received increasing recognition of importers.
The company progressed from completely processing for foreign partners to direct
exports to more than 20 countries, including the EU market.
2.2.4. Meeting ISO 14001
Table 2.4: Number of ISO 14001 certificates given to Vietnam
from 2008 to 2012
Year 2008 2009 2010 2011 2012
Number of certificates 325 541 306 500 775
Growth rate (%) 66.46 -43.43 63.40 55.00
Source: ISO Survey
Despite moderate level of ISO 14001 certificates given to Vietnam each year
from 2008 to 2012, the economic importance of ISO 14001 is gradually increasing.
The number of ISO 14001 certificates obtained in 2012 is more than double than
that in 2008. In 2010, due to difficult financial situation of Vietnam companies,
there was a sharp decline of 43.43% in the number of certificates. However, the
figure recovered impressively in 2011 reached a peak of 775 certificates in 2012.
Chart 2.9: The implementation of ISO 14001 of Vietnam leather footwear
exporters to the EU market
Measurement: Percentage
Source: Survey result
As can be seen from Chart 2.6, a majority (60.78%) of responding leather
footwear companies are not preparing their environmental management system
9.8
29.42
60.78
Obtained certification
Implementing required
EMS for certification
Not preparing to obtain
certification
38
(EMS) according to ISO 14001 standard. Only 9.8% obtained certification, which
represents limited popularity of ISO 14001, and 29.42% are implementing required
EMS, which shows moderate enthusiasm to ISO 14001 among Vietnam leather
footwear companies. In general, Vietnam leather footwear companies mainly pay
attention to one immediate benefit, which is the possibility of signing contracts with
EU importers that require an ISO 14001 certification from importers. For big EU
importers, ISO 14001 certification appears to imply that an exporter is managing its
business well and showing environmental responsibility (ITC, 2011). The fact that a
Vietnam leather exporter was given the ISO 14001 by an independent entity
enhances perceived reliability. Therefore, EU importers feel more confident
engaging a new exporter, saving time and effort associated with clarification and
research prior to signing contracts with Vietnam leather footwear exporters. In
addition, EU consumers are increasingly interested in the environmental conditions
under which products are manufactured. The more that an importer believes that EU
consumers are environmentally conscious, the greater the likelihood that they will
choose ISO 14001 certified companies as exporters.
The number of ISO 14001 certification is projected to continue increasing
but not likely to show remarkable growth despite the increasing preference and
requirement of ISO 14001 from EU importers. Vietnam Government, Ministry of
Natural Resources and Environment and competent agencies have not adopted
practical policies to support Vietnam companies, including leather footwear
producers, in implementing EMS ISO 14001. In addition, low effectiveness in the
enforcement of national environmental regulations is a daunting deterrent to
companies that invest in environment management. Despite the above-mentioned
benefits, the costs of ISO 14001 certification to be sure are not trivial, and the
process is not easy. The cost - benefit analysis here shows that the returns of
investment are not attractive enough (ISO Vietnam, 2010). Since ISO 14001 is
generally a voluntary standard, except for mandatory requirements of importers,
Vietnam leather footwear companies are not willing to invest in ISO 1400.
2.2.5. Meeting SA 8000
According to statistics of SAI, as of June 2013, 79 Vietnamese companies
39
are certified to SA 8000. Currently, there are more than 650 leather footwear
companies in Vietnam but only four of them have SA 8000 certifications, including
Dong Hung Industrial Joint Stock company, Hung Huy Co. Ltd, Vinh Thong
Manufacture – Trading – Service Co. Ltd and Dae Woo Vietnam Co., Ltd. The
number of SA 8000 certified leather footwear companies of Vietnam is too small in
comparison to the total number of leather footwear companies, especially with the
current favorable conditions to implement SA 8000 in Vietnam.
There are several similarities between SA 8000 standards and policies
relating to protecting labor right of Vietnam. For example, Ministry of Labor,
Invalids and Social Affairs (MOLISA) of Vietnam prohibits discriminating, abusing
and forcing labors; and controls the number of overtime working hours to the limit
of not more than 4 hours per day and 200 hours per year. SA 8000 regulates
standard number of working hours to be 8 hours per day or 48 hours per week.
Policies about labor disciplines and wages of MOLISA are also similar to SA 8000
standards. Therefore, if Vietnam companies comply well with regulations of
MOLISA and Vietnam State, they already meet a majority of SA 8000 standards.
Despite the above-mentioned favorable conditions to get SA 8000, Vietnam
leather footwear companies currently do not decide to apply SA 8000 certification
since it is only a voluntary certification, not strictly required by EU importers and
potential benefits do not outweigh the high cost to obtain certificate. In details, cost
of making an application to be SA 8000 certified is approximately 15.000 USD and
the enterprises have to re-apply every three year (SAI, 2012). However, the
increasing concerns of EU consumers about working conditions and labor policies
of factories in developing countries will be likely to stimulate more EU importers to
require SA 8000 in order to create a competitive advantage in this difficult market.
2.3. Comments
2.3.1. Strengths
2.3.1.1. Increasing export turnover
Export turnover of Vietnam leather from the EU market has increased by
19.27% from 2,484.72 million USD from 2008 to 2,963.58 million USD in 2013.
Despite a decline in 2009 due to the strong negative influence of economic crisis,
40
positive growth rate was maintained in the period. From 2008 to 2013, the EU
retained the position as the largest market of Vietnam leather footwear products,
being ahead of the US and Japan. A factor contributing to the steady development
of Vietnam leather footwear in the EU market is the efforts of Vietnam companies
to overcome increasing technical barriers of the EU. If Vietnam producers and
exporters fail to comply with required regulations or meet set standards, their
products will not be accepted by the EU market, which will certainly hurt the
revenue of each company and thereby, the export turnover of Vietnam leather
footwear. To a certain extent, sustaining growth rate demonstrates the effectiveness
of the measures the Government, LEFASO and enterprises have been implementing
to overcome technical barriers to Vietnam leather footwear exported to the EU.
2.3.1.2. Growing number of companies meeting EU standards and regulations
It can be seen from the survey result that there is an encouraging
improvement of Vietnam leather footwear companies in satisfying standards and
complying with regulations required by the EU market. In details, the negative
impact of REACH on export revenue of companies gradually decreased from 2008
to 2013, 74.5% of companies comply well with labeling requirements, a majority of
companies is implementing QMS ISO 9001 while 37.26% obtained certificate,
29.42% of companies are implementing EMS ISO 14001 and 9.8% are certified.
These positive results can be explained by measures taken by Vietnam
companies to enhance their ability of overcoming technical barriers. For example, in
order to comply with REACH, Vietnam producers need to set up an effective
chemical management system. To obtain ISO 9001 and ISO 14001 certification,
companies have to invest in upgrading infrastructure, modernizing machinery,
strengthening the efficiency of human resources, optimizing work procedures, etc.
In addition, Vietnam exporters through many lessons learned in the difficult process
of meeting strict standards and regulations of the EU market are becoming more
mature and experienced with broadened knowledge of international trade.
2.3.1.3. Supporting policies from the Government
The Government has introduced policies to promote the expansion of leather
footwear sector as well as support the sector in overcoming technical barriers of
41
export markets. In details, policies are formulated to develop supporting industries
in order to raise localization rate and increase independence of raw materials.
Leather footwear sector has six prioritized products of supporting industries for
development including leather, artificial leather, tanning chemicals, salted leather
and sewing threads. As a large number of domestic leather footwear companies are
SMEs, support for SMEs by Decree 56/2009/NĐ-CP from the government is
essential. In addition, the Government established a specialized channel providing
information about technical barriers for Vietnam exporters. Overall, for systematic
and sustainable development of leather footwear industry, MOIT devises master
plan for each 10-year-period to determine orientation and goals for the sector.
Table 2.5: Legal documents relating to supporting Leather and Footwear
industry to overcome technical barriers
Number Published date Description
36/2007/QĐ-
BCN
August 6, 2007 Decision on the approval of Master Plan to
develop Leather and Footwear Sector to 2010
6209/QĐ-
BCT
November
25, 2010
Decision on the approval of the Master Plan to
develop Leather and Footwear Sector to 2020,
vision 2025
114/2005/QĐ
-TTg
May 26, 2005 Decision on the establishment of Vietnam’s
network of Notification Authorities and
Enquiry Points on Technical Barriers to Trade
and promulgate the Regulation on organization
and operation of the network
34/2007/QĐ-
BCN
July 31, 2007 The approval of the Plan to develop supporting
industries to 2010, vision 2020
1483/QĐ-
TTg
August 26,
2011
Decision on promulgating the list of products of
support industries prioritized for development
56/2009/NĐ-
CP
June 30, 2009 Decree on support for development of small
and medium sized enterprises
Source: Author’s collection from vanban.chinhphu.vn
Additionally, leather footwear sector of Vietnam is one of the beneficiaries
42
of supporting projects from the EU such as MUTRAP Trade Assistance Program III
with a fund of 1.7 billion EUR, Unido and Switch - Asia (Thuy Ngoc, 2013).
2.3.2. Weaknesses
2.3.2.1. Underdevelopment of supporting industries and heavy dependence on
imported materials
Inferior capability of supporting industries leads to continuing dependence of
Vietnam manufacturers on imported materials, which is a major cause for
difficulties of leather footwear products in meeting strict standard and stringent
regulations of the EU. According to economic experts, the impact of the Plan to
develop supporting industries to 2010, vision 2020 is still limited (Tri An, 2013).
Especially, incentives for enterprises in supporting industries in Decision
34/2007/QĐ-BCN are not detailed and very similar to incentives for SMEs
stipulated in Decree 56/2009/NĐ-CP. Primary supporting industries for the sector
include tanning, leather chemicals and production of artificial leather and auxiliary
materials, all of which are experiencing slow development. Imports from a broad
variety of sources create obstacles in controlling quality of finished products and in
conformity assessment procedure to overcome technical barriers.
Chart 2.10: Evaluation of Vietnam leather footwear companies about the
importance of input material quality to overcoming technical barriers
Measurement: Percentage of companies
Source: Survey result
According to survey result, 54.9% of companies consider that quality of
input materials is an important factor contributing to the process of overcoming
technical barriers while 41.18% consider it as a very important factor. Regarding
41.18
54.9
3.92
0
0
0 10 20 30 40 50 60
Very important
Important
Neutral
Not important
Totally not important
43
their attention to and investment in this factor, 40% of companies pay special
attention and make considerable investment while 52% pay adequate attention and
make investment though not considerable. The figures show that a significant part
of companies is well aware of the importance of raw material quality and willing to
make investment, but domestic sources cannot meet their demands.
There is strong evidence that domestic production of finished leather is
inadequate to supply for Vietnam leather footwear industry, especially for export
orientation. The total production capacity of domestic finished leather in 2013 is
350 mill sq feet per year, 3 times higher than that in 2006. Approximately 60% of
them are supplied to produce footwear for exports but can only meet 30% of total
demand. Each year, the sector has to spend 80 to 100 million USD to import leather
and 180 to 200 million USD to import artificial leather. In the period 2009 - 2013,
leather imports increased by 114% (Duy Phuong, 2014). In 2013, 97.3% of export
turnover of footwear are from footwear produced by imported raw materials, in
which 44.6% are from processing for foreign partners.
Chart 2.11: Proportion of three types of exports in total footwear export
turnover of Vietnam in 2013
Measurement: Percentage
Source: General department of Vietnam customs
Due to the lack of modern machinery and quality management system,
domestic tanneries encounter several difficulties in production to conform to export
quality standards required by leather footwear producers. Currently, there are only
35 tannery companies; most of them are operating in medium and small scale (Thu
Phuong, 2014). Outdated technique and limited scale result in inconsistent quality
52.7 44.6
3.7
Processing for foreign
partners
Produce by imported
materials and export
Produce by domestic
materials and export
44
of leather, which is likely to hamper the ability of finished footwear product to
satisfy specifications of EU importers. Therefore, despite certain disadvantages,
importing leather appears the optimal choice for Vietnam leather footwear
manufacturers for the sake of quality, time and convenience.
Unplanned livestock development is one of the factors inhibiting the
movement towards dependence of materials of Vietnam leather footwear. There is a
substantial disparity between the livestock population and output of hides and skins
due to the lack of well-planned castle breeding for the specific purpose of supplying
materials for tannery. Hides and skins are mostly by-products, taken from cows and
buffalos whose functions are plowing and providing meat and dairy.
The quality of finished leather is determined from two phases in production,
which are livestock-to-slaughter phase and leather processing phase. In Vietnam
where a majority of producers practices extensive livestock rearing, livestock
producers commonly let the animals roam freely to search for food, causing skin
scratches or wounds due to insect bites or objects like tree branches or bushes. In
the slaughter house where the hides are removed from the carcasses, bad execution
processes of the livestock create muscle and arterial stress. Depression of the
animals before slaughtering causes marks and scars on the hides or skins. If the
slaughterhouses use a manual cutting process instead of pulling machines, it can
cause holes on skins or hides and jagged flesh cuts. In the second phase that is
leather processing, the use of improper leather chemicals, such as expired chemicals
or chemicals mixed with other substance to expand the volume, also affects quality.
Finished leather is used in the third phase to produce footwear. The improper use
and lack of control of chemicals content in tanning leads to considerable difficulties
for footwear producers in obtaining information about chemical substances and
their quantity in finished products in order to provide reports for EU importers.
2.2.2.3. Limitation in infrastructure for the sector
Currently, there is no centralized industrial zone for leather footwear sector.
Vietnam leather footwear companies are in the lack of infrastructure foundation to
implement systematic measures to meet standards in quality and environment of
export markets, including the EU. For example, while there is growing pressure to
45
apply clean technologies emanating from environmental regulations of Vietnam and
export markets, medium and small scales of separate factories result in
infrastructural constraints, leading to the burden of enormous investment in building
and adopting modern waste and effluent treatment on Vietnam manufacturers. In
addition, no production concentration puts companies in a disadvantage of high
cost-benefit ratios in the construction of modern facilities, which can be
significantly reduced by economies of scale thanks to specialized industrial clusters.
2.3.2.2. Lack of capital investment
Insufficient capital for investment in the development of infrastructure,
supporting industries and system adjustment impedes strategic development of the
sector, including large-scale expansion and shift of value along the value chain.
Therefore, it adversely affects the implementation of long-term measures to
improve production system for meeting standards and regulations of the EU market.
Chart 2.12: Evaluation of Vietnam leather footwear companies about capital
support policy of the Government
Measurement: Percentage of companies
Source: Survey result
In order to strengthen the ability to overcome technical barriers, companies
need capital to invest in upgrading technology, building infrastructure and training
human resources. However, a majority of companies have difficulty approaching
capital since 54.9% evaluate the capital support policy of the Government as
average while 43.14% think it is not good or totally not good.
Due to inadequate investment capital, leather footwear sector could not
achieve several principal targets determined in its development schemes. In the
0
1.96
54.9
37.25
5.89
0 10 20 30 40 50 60
Very good
Good
Average
Not good
Totally not good
46
Master plan for Leather and Footwear sector development to 2010, the sector aimed
at attracting investment for building new modern tanning factories, auxiliary
material production centers and specialized industrial zones for leather footwear
production, which are facilities that can increase the capability to overcome
technical barriers of the industry. Total planned capital investment was 9,153.50
billion VND (1,844.20 billion VND for intensive investment and 604 billion VND
for tanning industry), in which contribution of domestic capital was 39% and of
foreign capital was 61%. However, in the context of economic crisis, high inflation
rate, adoption of policies to reduce investment of several economic sectors and
continuing decline of FDI, attracting capital was a huge challenge. Consequently,
the sector could not attain the set investment level to take off those projects.
Lack of capital for investment is the primary cause of heavy dependence on
imported materials as well as weak quality and environment management systems,
which considerably undermines the ability to overcome technical barriers.
Investment in production of raw materials is still limited since both domestic and
foreign investors are not willing to put such a large amount of capital in supporting
industries. Prospective investors would also be discouraged by the fact that they
would get into considerable difficulties to sell products in a market dominated by
cheap products from China. Not only do domestic enterprises refuse to invest in
supporting industries but FDI enterprises also put greater focus on investment in
footwear production due to the advantage of low required capital and shorter time
for capital recovery. For example, an investment of only from 1 to 1.5 million USD
in a production line can gain a capacity of 500,000 to 600,000 pairs per year (The
Hai, 2012). They pay less attention to investment in supporting industries that
require high investment capital and poor prospect of a quick return on investment.
Additionally, since the demand for using local raw materials is large, a number of
domestic leather footwear companies want to expand investment to producing
materials. However, the policies of the Government only encourage new investment
so leather footwear companies who invest in production of raw materials are not
eligible to benefit from preferential incentives. Concerning the establishment of
specialized industrial clusters, investors show hesitation due to enormous required
47
funds while the plan is not detailed and convincing with various potential risks.
2.3.2.2. Low technological level
Despite remarkable development of Vietnam leather footwear in terms of
export turnover in the past 10 years, outdated machinery and low manufacturing
technology has weakened the competency of this sector to constantly meet criteria
and standards in quality and environment management system required by the EU.
Manufacturing technology of Vietnam leather footwear largely stays at low
and average level. New production process is being mechanized but not automated
and labor content remains high. Technology plays a decisive role in the capability
of producers in making products conforming to high standard of the EU and it is
also a key criterion in the QMS required by ISO. Therefore, outdated technology
places a negative impact on the ability to overcome technical barriers of leather
footwear companies. Peter T. Mangione, former President of Footwear Distributors
and Retailers of America (2012) commented after his visits to several leather
footwear manufacturing facilities in Ho Chi Minh City that a substantial part of
Vietnam leather footwear companies were still adopting obsolete manufacturing
technology that are highly fuel-consuming and labor-intensive. These production
lines had been adopted in Taiwan 20 years ago and were no longer employed in
many countries. Furthermore, despite abundant labor force, production capacity of
the sector remains low. A typical production line with 450 line workers reaches an
output of 500.000 to 600.000 pairs / year, which is only 1/35 of Japanese, 1/30 of
Thailand, 1/20 of Malaysia and 1/10 of Indonesia labor productivity (Anh Tuan,
2012). As standards in quality of leather footwear required by the EU market keeps
increasing with rising requirements in walking comfort, new designs and durability
of EU consumers, capacity of outdated machinery cannot ensure conformity of
products with updated specifications of EU importers.
Survey result shows that all companies evaluate technology as an important
or very important factor contributing to overcoming technical barriers but only
9.8% make considerable investment while the rest make no investment (43.14%) or
inconsiderable investment (47.06%). The reasons can be attributed to the lack of
investment capital and weak R&D capacity.
48
Chart 2.13: Evaluation of leather footwear companies of their attention to and
investment in upgrading technology
Measurement: Percentage of companies
Source: Survey result
There is a notable lack of investment in science and technology of the sector
in recent years. A majority of companies do not have R&D division. R&D is
commonly implemented by foreign experts due to limited competency of Vietnam
staff. Concerning supporting industries, there is limited technology upgradation
fund scheme. In addition, there is insufficient conduct of national research with high
application to practical production of companies.
2.3.2.4. Exporting enterprises’ lack of information and awareness of technical
barriers from the EU
Information about technical barriers sets the foundation for Vietnam
businesses to embark on their journey into the EU market in order to act – rather
than react – to the challenges and risks encountered. The complex maze of technical
barrier system of the EU with high-level complication requires rigorous preparation
from industries of developing countries like Vietnam. This system is also subject to
frequent update and revision. It is critical for Vietnam exporters to equip themselves
with a complete, detailed and updated system of information to have a clear
direction for short-term and long-term planning in overcoming technical barriers.
However, there are several shortcomings in the understanding about
technical barriers of the EU of Vietnam enterprises. A significant part of export
enterprises is passive when complying with these regulations; they do not actively
43.14 47.06
9.8 0
10
20
30
40
50
No attention Limited
attention
Adequate
attention but no
investment
Adequate
attention but
inconsiderable
investment
Special attention
and considerable
investment
49
take measures to obtain information for better preparation. They tend to wait for
instruction of technical specifications and regulations provided by EU importers.
That inactive attitude hinders the success in implementing direct export contracts,
in which Vietnam companies take full responsibility of the whole process, making
it difficult to reduce the proportion of subcontracts in their total exports.
Vietnam enterprises have two main channels to access information about
technical barriers of the EU market that are domestic ones and international ones.
Regarding domestic ones, the overall effectiveness of information channel provided
by the Government and LEFASO is average according to the evaluation of 66.67%
of leather footwear companies. Only 9.8% recognize that the support is good, and
evaluation of the rest is not good.
Chart 2.14: Evaluation of Vietnam leather footwear companies about the
support of information from the Government and LEFASO
Measurement: Percentage of companies
Source: Survey result
An important domestic channel is Vietnam’s network of Notification
Authorities and Enquiry Points on TBT. The network is composed of Vietnam’s
TBT Office and Enquiry Point, Ministerial-level TBT Notification Authorities and
Enquiry Point and Provincial/municipal TBT Notification Authorities and Enquiry
Points. The function of the network is to provide information, notification and
support for enquiries of Vietnam businesses about TBT. Online TBT network
(www.tbtvn.org) and question-and-answer activities of enquiry points can be
considered the easiest available channels to approach TBT information for Vietnam
enterprises. However, online TBT network shows certain shortcomings.
23.53
66.67
9.8
Not good
Average
Good
50
Firstly, the category of information on TBT online network of Vietnam is not
logical, systematic and easy to look up. Information and notification of TBT of the
EU market to Vietnam leather footwear is not gathered and classified into a specific
folder but mixed with technical regulations of other markets applied to a variety of
products. Leather footwear companies in need of searching knowledge about TBT
of the EU have to collect and re-systematize from different categories. Therefore, it
is time-consuming and inconvenient to have an overall view of TBT in order to
compare the requirement and importance of regulations and standards.
Secondly, the network does not offer sufficient instruction to comply with
technical regulations. It collects website links of agencies responsible for technical
standards and regulations of the EU but does not provide translated documents and
documents that guide the procedure for compliance, how to avoid and deal with
possible obstacles, as well as practical experience for Vietnam companies to apply.
Thirdly, there are no customized tracking and in-time reports on updated
information about TBT for key export commodities, including leather footwear. It
is inevitable that Vietnam companies have to turn to updated notification from other
sources or by directly contacting EU partners.
The above-mentioned weaknesses considerably reduce the effectiveness of
Vietnam TBT network in performing its function of information supporting about
TBT. Currently, international information channels, especially instruction provided
by EU importers, play the most essential role to Vietnam businesses. This source of
information is not only highly specialized with direct focus on requirements to
leather footwear products but also complete and updated. Nevertheless, since the
number of EU partners of each company is limited and each company has trade
relationships with different importers; this source of information is not unified and
general. In addition, Vietnam leather footwear businesses have the option to learn
about specific technical barrier of the EU in the website of EC and other related
responsible agencies such as SAI, ECHA, etc. or the website of WTO. This channel
meets all criteria of being detailed, complete and updated but language barriers
make it difficult for some Vietnam companies to fully approach. Additionally, each
website commonly provides certain technical standards or regulations, for example,
51
echa.europa.eu only offers information about REACH.
2.3.2.3. Lack of human resources capacity and competency
The sector has been facing the lack of unskilled labor. In 2014, it is predicted
that the orders from EU importers will dramatically increase thanks to reduced tariff
under reformed GSP. Shortage of unskilled labors will put a pressure on production
system, hindering the ability of companies to overcome EU technical barriers. In
2008, there were approximately 750.000 employees working in about 516
enterprises of leather footwear industry. However, in 2013, despite the increase in
number of companies to more than 650, there is a decline in the number of
employees, to 670.000 workers. The main reason for workers giving up working in
the industry is low income; estimated average wage of leather footwear sector is
below 4 million VND (Van Nam, 2013). The sector remains among the most labor-
intensive industries, despite advances in technology and workplace practices
(International Labor Organization). As the nature of the sector is the predominant
composition of unskilled workers, the movement of labor to other sectors poses
significant threat to production capacity.
Skills and knowledge of human resources is a critical factor to successful
implementation of technology and system upgradation for the purpose of meeting
standards and complying with technical regulations. However, currently, there is no
specialized training center for the sector. There are only 8 universities and colleges
offering education and training in leather and footwear technology but investment in
infrastructure for training is limited. Therefore, there is a lack of skilled managers,
officers and technicians, who will manage and control production system to ensure
adherence to technical standards and regulations. Officers and technicians
commonly only graduate from relating majors and have to take additional courses
as well as spend a long period of on-the-job training before taking responsibilities.
In addition, a majority of leather footwear companies do not invest in marketing
division that can conduct market research and provide early-warning information
about technical barriers of the EU as well as other export markets.
According to survey result, despite the widespread awareness of the role of
labor force quality to overcoming technical barriers with 45.10% of leather
52
footwear companies consider it as an important factor and 25.49% think it is a very
important factor, only 22% make considerable investment while the rest make
investment but not considerable.
2.3.2.5. Limitations in testing and inspection activities
One of the major advantages in the procedure of overcoming technical
barriers of the EU for Vietnam leather footwear is in the final stage, which is
conformity assessment procedures designed to test compliance of products to
mandatory regulations or voluntary standards. There is a serious lack of certified
laboratories for quality inspection of leather footwear products in Vietnam.
Laboratories of Vietnam accredited by Bureau of Accreditation can provide
conformity assessment services for a certain range of standards, but these labs
commonly do not operate in large scale with high capacity, so cannot fully meet
demands of Vietnam exporters. One lab usually provides services for a wide range
of products, prolonging waiting time to obtain certificates. Concerning standards of
chemicals, leather footwear products must be tested by laboratories of foreign-
owned companies or sent to certified labs abroad that comply with Good Laboratory
Practice. Only five laboratories are certified to perform conformity assessment test
for REACH, including labs of SGS Vietnam, Bureau Veritas Vietnam, TUV
Rheinland Vietnam, Intertek Vietnam and SUD PSB Vietnam. Several importers
compel Vietnam exporters to have their products tested and inspected by foreign
certification bodies in Hong Kong or Singapore, which incur considerable cost.
Although 58.8% of companies consider laboratories are important in meeting
EU standards and regulations, a substantial majority of leather footwear companies
(70.59%) do not have their own laboratories to control quality of raw materials and
ensure quality of finished products. In addition, Vietnam system of standards is too
outdated compared to current standards of EU, which means the compliance to
national standards of Vietnam companies is not recognized by EU importers. There
are 178 standards of Vietnam (TCVN) for leather footwear products but most of
them are about test methods. (Nguyen Xuan Vinh, 2011).
2.3.2.7. Lack of connections between leather footwear exporters
Doan Duy Khuong, Vice President of VCCI, President of ASEAN Business
53
Advisory Council (2011) stated that the awareness of a majority of Vietnam
companies about the importance of business connections is still limited, especially
SMEs. Leather footwear companies are no exception. Overall degree of connections
between enterprises in the industry is relatively low with 60.78% of companies
evaluate that it is average while 31.38% think it is not good.
Chart 2.15: Evaluation of Vietnam leather footwear companies about
connection between enterprises in the industry
Measurement: Percentage of companies
Source: Survey result
In coping with technical barriers from the EU market, leather footwear
companies tend to implement solutions to overcome on their own, resulting in the
lack of experience and information that can be gained through cooperation and
mutual learning between enterprises in the industry. It is considerable disadvantage,
diminishing their ability to meet technical standards and regulations as well as
further enhance competitiveness in foreign markets. Apparently, if linkages between
leather footwear enterprises is strengthened, they can together find and carry out
effective solutions to overcome technical barriers of the EU market.
SUMMARY OF CHAPTER 2
From basic knowledge of chapter 1, this chapter analyzes current situation of
exporting Vietnam leather footwear to the EU and overcoming technical barriers of
this market. The analysis is conducted based on primary data from survey on 51
companies exporting leather footwear to the EU and secondary data from
prestigious agencies. Strengths and weaknesses are analyzed, which is the
foundation for author to provide recommendations in the final chapter.
31.38
60.78
7.84
Not good
Average
Good
54
Chapter 3: ORIENTED DEVELOPMENT AND RECOMMENDATIONS TO
OVERCOMING TECHNICAL BARRIERS TO VIETNAM LEATHER
FOOTWEAR EXPORTED TO THE EU MARKET FROM 2014 TO 2020
3.1. Trends of leather footwear consumption in the EU market
The EU is the largest market for footwear in general and for Vietnam leather
footwear in particular. In 2012, according to Eurostat, footwear consumption of the
EU was 72 billion USD (2.87 billion pairs) with an average per capita expenditure
of 143.9 USD or 5.5 pairs. The market was dominated by five countries, which
accounted for 71% of total footwear consumption of the EU. These markets were
Germany, France, the UK, Italy and Spain.
Table 3.1: Production, consumption and external trade of footwear
of the EU market from 2008 to 2012
Measurement units: 1000 pairs
2008 2009 2010 2011 2012 % growth
2008 -
2012
Production 560,231 470,551 491,006 505,304 511,365 -8.72
Exports 172,369 153,292 168,402 191,500 201,267 16.77
Imports 2,428,402 2,247,836 2,521,994 2,550,505 2,568,255 10
Consumption 2,816,264 2,565,095 2,844,597 2,864,309 2,873,323 5.76
Imports/
Consumption
Ratio (%)
86.23 8.63 88.66 89.04 89.38
Source: Eurostat
Since 2004, sales of footwear in most EU countries increased quite rapidly.
In 2008 and 2009, footwear sales dropped in most EU countries due to the tendency
to cut expenditure on footwear of EU consumers. They were increasingly looking
for footwear at the low price range. The decrease in footwear consumption of the
EU market can be attributed to a sluggish economic performance leading to higher
unemployment rate and lower income, which reduced the demand for footwear,
particularly after 2007. As a result of the recession, market volume of imported
55
footwear at cheap price has grown. Cheap imports were mainly mass produced
footwear from developing countries like China, Vietnam, and India.
After a period of decline and uneven recovery, this market grows again from
2010 and keeps growing until now. The consumption of footwear in the EU market
is predicted to continue developing but at a lower rate due to unstable economic
condition. The major stimulants are the changes in fashion trend, new footwear
styles as well as technological innovations in comfortable footwear. The market was
driven by footwear with good design, fashion and enhanced walking comfort. In
Eastern EU countries, formal leather footwear performed well along with the
growing middle class and a rapid expansion of shopping centers. On the long term,
besides developed big markets in Western EU Member States, there will be
continued opportunities offered by emerging middle classes, higher aspirations, and
disposable incomes in many Eastern EU countries (CBI, 2012).
The EU is the largest footwear importer of the world and the need for
imports has been increasing. As can be seen from table 3.1, in the period 2008 –
2012, more than 85% of footwear consumed in the EU comes from imports. The
percentage of imported footwear out of total consumption continuously increase
from 2008 to 2012 and is predicted to keep rising. Main exporters for EU footwear
consumption are from developing countries like China, Vietnam, Indonesia and
India. As the EU footwear industry strives to find strategy to cut cost and innovate,
there will continue to be opportunities for producers of developing countries to form
partnerships with EU companies who plan to keep control of their businesses but
would be prepared to save cost by outsourcing production to a lower cost country.
Even if the EU is not expected to experience considerable growth in the
coming years, it is predicted to be contrary movement of a part of consumers
towards cheap imported footwear from Asia. This implies a grading up to higher
value footwear in terms of design, comfort, technology, safety and friendliness to
the environment. Eco-fashion has become a segment in its own right within the
fashion industry. An increasing number of EU consumers, particularly in Western
and Northern Member States of the EU, have become more interested in the
material of footwear and conditions under which footwear are produced. Footwear
56
designers and manufacturers are now being increasingly required to build some
form of sustainability or recycling into the material used. Even though EU
consumers are becoming more conscious of their expenditure, in particular their
non-essential expenditure, which is favorable for consumption of cheaper products;
exporters from developing countries like Vietnam should conduct frequent market
research in order to fully understand the latest trends in customer behavior for
planning of solutions to meet the requirements of EU buyers.
3.2. Trends of application of technical barriers to leather footwear in the EU
market
In a developed market where consumers have high living standard like the
EU, the primary concern is the health and safety of citizens and environmental
protection. The focus on sustainability and security leads to higher standards in
quality, safety and environmental friendliness of imported goods. Therefore, the
complication and rigorousness of regulations in technical barriers are likely to
increase, as well as the standards required will be higher and stricter.
There is a growing concern for environmental issues and the associated
barriers to international trade in products coming from industrial sectors located in
developing countries that could be affecting the environment, including leather
footwear industry. The leather footwear sector can potentially have a heavy impact
on the environment due to a number of chemical substances used in the treatment of
hides and skins into processed leather. In addition, footwear consumers worldwide
are becoming more aware of environmental and health effects of chemical
substances used in leather processing. This has led to a more effective monitoring of
environmental effects of developed countries to imported leather footwear products,
and the EU is no exception. Except for mandatory REACH, other environment
management certification like ISO 14001 and EMAS are currently not widely
required by EU importers. However, with the rising concerns of leather footwear
consumers about environmental issues, the number of EU importers requiring these
certificates from suppliers in developing countries will be likely to go up.
The use of chemicals in Europe has become considerably safer since the
REACH regulation entered into force (EC, 2013). More readily available
57
information about chemical substances on the market and better targeted risk
management measures mean that risks from substances registered under REACH
have significantly decreased. The trend is expected to continue, as industries are
continuously working towards finding substitutes for the most hazardous chemicals.
List of SVHCs and restricted substances will continue to be added by ECHA along
with stricter control in the procedure of registering and evaluating chemicals.
3.3. Basic orientations and goals to overcoming technical barriers to Vietnam
leather footwear exported to the EU from 2014 to 2020
3.3.1. Basic orientations
In the Master Plan for Leather and Footwear sector development towards
2020, vision 2025 approved by Ministry of Trade and Commerce in 2020, the
following basic orientations are determined.
- Developing Leather and Footwear sector in accordance with national socio-
economic development plan and industry development plan, local socio-economic
development plans and roadmap for international integration of Vietnam.
- Mobilizing all economic sectors, domestic resources and attract foreign
capital to invest in building and developing the Leather and Footwear sector
towards production for exportation and domestic consumption, increase foreign
currency revenue for Vietnam, create more jobs, increase income and improving
living standards of labor force.
- Focusing on developing production of input materials and supporting
industries for Leather and Footwear sector in order to decrease deficit, further
participate in added value chain of international leather and footwear market;
Encouraging the concentration of resources to actively orient for exports and
enhance future added value chain of Leather and Footwear products. In details,
priority is put on expanding three fields: product designing, material production and
product testing and authentication in order to increase value and enhance
competitive advantage of Vietnam leather and footwear products, actively balance
domestic and imported input materials, save costs, control origins of products
through high localization rate.
- Developing Leather and Footwear sector quickly, stably and sustainably
58
with a focus on specialization and modernization; applying new technology with
modern and environmental-friendly equipment to create high production capacity
and economic efficiency; active in regional and international integration, gradually
change production methods from processing to taking in charge of whole process.
- Implementing the rapid development of production scale along with
focusing on expanding export markets and domestic market; conduct science and
technology research and develop well-trained human resources, especially poor
laborer and labor forces that are carrying out transition in economic sectors from
agriculture to industry. Developing production on the foundation of corporate
responsibilities and environment protection.
- Enhancing the competency in designing and developing new products,
prioritizing the application of automatic technology in production and management.
3.3.2. Goals
3.3.2.1. General goals
The determined general goals of Leather and Footwear sector to 2020 are to
become a key and spearhead export industry of the national economy; continue to
uphold the position in the leading groups of leather and footwear producing and
exporting countries of the world; create more jobs for the society and increase
income of labor force; improve the implementation of corporate responsibilities and
increase the number of well-trained laborers.
3.3.2.2. Detailed goals
- Targeted growth rate of industrial production value of leather footwear
sector is 9,4% / year for the period 2011 – 2015, 8.8 % / year for the period 2016 –
2020, 8.2% / year for the period 2020 – 2025.
- Targeted export turnover is 9.1 billion USD in 2015; 14.5 billion USD in
2020 and 21 billion USD in 2025. Average growth rate of export turnover is
targeted to be 10.9% / year for the period 2011 – 2015, 9.7% / year for the period
2016 – 2020 and 7.6% / year for the period 2021 – 2025.
- Gradually increasing localization rate. Targeted localization rate is 60 –
65% in 2015, 75 – 80% in 2020 and 80 – 85% in 2025.
- Coordinating with Garment and Textile sector as well as other related
59
sectors to be pillars of Vietnam Fashion industry.
- Building and establishing specialized industrial zones for Leather and
Footwear sector, producing input materials and implement management treatment
on the foundation of favorable conditions brought by infrastructure and labor in
order to actively provide materials for production and enhance competitive
advantage for the sectors.
- Establish and develop new training centers, science and technology
research institutes, inspection and certification centers, supporting services and
Trade Promotion centers, Fashion centers at home and abroad.
3.4. Recommendations for overcoming technical barriers to Vietnam leather
footwear exported to the EU market from 2014 to 2020
3.4.1. Recommendations for the Government
3.4.1.1. Facilitating the development of supporting industries
Importance of recommendation: The underdevelopment of supporting
industries leads to dependence on imported materials for production, high cost and
less control of quality of finished products, which are disadvantages in meeting EU
technical standards. Therefore, policies to develop supporting industries are critical.
Execution
Firstly, Ministry of Agriculture and Rural Development (MARD) should
develop planned castle breeding for leather in concentrated livestock farms with
suitable caring techniques in order to ensure the quality of hides and skins are not
affected by scratches and wounds due to free roaming of animals.
Secondly, to increase the current level of quality of hides, skins and finished
leather, MARD and Vietnam Leather and Shoes Research Institute should:
- Provide proper education to farmers about methods to treat the livestock to
obtain better quality of skins and hides.
- Provide proper training to the slaughterhouse by introducing and
implementing more advanced technology and awareness that the hides and skins are
not secondary products but products with high value.
- Support the establishment a pre-tanning association that organize all
business units from slaughterhouses to raw hide collectors as well as train and
60
develop better methods of slaughtering, hanging, fleshing, curing, collecting and
transporting to tanning factories.
- Facilitate technical seminar to educate tanners on the importance of product
research, development, testing and certification.
Thirdly, the Government should support the sector to establish:
- Two leather and auxiliary material supply centers (one in the North and one
in the South) to promote the use of domestic materials.
- Two industrial clusters for tannery to produce finished leather (one in the
North and one in the South) with centralized waste and effluent treatment system to
meet the demands for high-quality leather of domestic consumption and exports,
and increase localization rate.
Fourthly, the Government should adopt policies to support enterprises in
supporting industries of leather footwear sector with tax preference, land, and
especially capital since financial capability of a majority of domestic companies in
limited while this field requires large investment. The Government can establish a
financial fund from ODA to develop supporting industries of sectors listed in
Decision 34/2007/QĐ-BCN, including leather and footwear sector, and specify
clearly scope of priority to ensure transparency in budgeting. This transparency can
help enterprises attract more investment. VDB should provide preferential loans for
SMEs in supporting industries.
Expected benefits: Development of supporting industries will increase
localization rate and reduce the dependence of leather footwear sector on imported
materials, which will gradually enable producers to gain greater control in
production, increase direct export and added value. Domestic sources of materials
with high quality can help companies save the cost of sourcing and transportation,
obtain information about specifications and safety of materials more easily to ensure
compliance with EU standards and regulations.
3.4.1.2. Developing specialized industrial zones for leather footwear production
and materials production
Importance of recommendation: No centralized industrial cluster results in
infrastructure constraints, lack of linkages between producers in the industry as well
61
as high cost and difficulties in installing effluent treatment system and other modern
facilities due to no economies of scale, which hinders the ability of the industry to
meet EU standards and regulations. Therefore, it is essential to develop specialized
industrial zones for footwear production and tannery.
Execution
Firstly, Ministry of Planning and Investment (MPI) should make plans for
the projects of building:
- Two industrial clusters designated for leather footwear production that may
host production units of all segments namely footwear, footwear components,
leather goods, leather garments, one in the North and one in the South.
- Two industrial clusters for tannery industry to produce finished leather, one
in the North and one in the South, one in the North and one in the South.
There should be plan to ensure that all supporting industries are co-located in
nearby areas of industrial clusters for leather and footwear production, ensuring
rapid product development and lower freight costs. The industrial zone should
comprise of core infrastructure, social infrastructure, human resources development
infrastructure and R&D Infrastructure for facilitating sustainable development in all
aspects of leather footwear sector.
Secondly, considering the low risk-taking capacity of the existing investors
due to economic downturn while the investment required for building industrial
clusters is huge, the Government should adopt policies to attract investment from
both domestic and foreign investors. Some recommendations include:
- MPI can add the projects to encouraged category and provide investors
with incentives of preferential tax, land use fees and import tariff. For example,
corporate tax incentives with preferential tax rates like before Decree 124/008/ND-
CP of the Government should be applied such as a concessional 10% tax rate for the
duration of the project and a reduced level of withholding tax on the remittance of
profit overseas. Assets that form part of the capitalization of the investment are
exempted from import duties according to Decree 149/2005/NĐ-CP on detailed
provisions for the implementation of Law on Import and Export Duty. Land use
fees are reduced and stabilized for a long period of time, for example, 10 years.
62
- The government should use ODA capital to sponsor for a part of capital
required to build certain facilities such as waste and effluent treatment plants.
- Another option is allow the projects to be eligible for public-private
partnership (PPP), which establishes a long-term contractual relationship between
the Government and a private sector party for the design and construction of the
leather footwear industrial clusters by the private sector, with payments made over
the life of the contract through services fees paid by the leather footwear companies
operating in the built industrial clusters to the private sector party for the use of the
infrastructure delivered.
Expected benefits: Exclusive industrial clusters for leather footwear
production and tannery help Vietnam producers achieve significant benefits through
economies of scale and specialization in production. Industrial zones also foster the
development of supporting industries, a high degree of inter-firm interconnections
that encourage knowledge and technology spillovers, thus stimulating productivity
and innovation. Therefore, they will facilitate the development of production
capacity, QMS and EMS, which enhance the ability to overcome technical barriers.
3.4.1.3. Implementing financial support policies
Importance of recommendation: Financial support policies from the
Government are essential to help leather footwear enterprises, especially SMEs,
solve the problem of lacking capital to invest in system adjustment for compliance
with technical standards and regulations of the EU market.
Execution
Firstly, Vietnam Development Bank (VDB) should adopt policies to support
SMEs in leather footwear sector, which is a key export industry of Vietnam. VDB
should provide credits and loans with preferential interest rates, raise credit limit,
extend loan term for feasible projects to build infrastructure, expand production,
upgrade machinery for exports, on condition that SMEs submit detailed financial,
and loan repayment plans.
Secondly, the Government should provide large-scale projects with
preferential access to ODA capital, for example, projects to build centralized
industrial cluster for the sector.
63
Thirdly, Provincial Government of provinces where leather footwear is a
spearhead industry should encourage local banks to provide loans for leather
footwear SMEs with good business performance, provide guarantee for companies
to obtain loans from banks to carry out large-scale projects with high feasibility and
use Investment and Development Funds to support SMEs with low interest rate.
Fourthly, VDB should cooperate with environmental funds to provide
preferential loans for projects to build effluent treatment system, which will enable
companies to upgrade environment management system to meet EU standards.
Expected benefits: Leather footwear enterprises will have capital to invest
in the upgradation of infrastructure, technology, laboratories, quality and
environmental management system in order to enhance the ability to overcome
technical barriers of the EU market.
3.4.1.4. Implementing policies to support modernization of technology
Importance of recommendation: Low technological level of the industry
brings several difficulties in overcoming technical barriers due to the limited
capability to manufacture products that conform to standards of the EU. Therefore,
The Government should adopt policies to support the modernization of technology.
Execution
Firstly, the Government needs to carry out policies aimed at supporting
enterprises in importing modern machinery and equipment from countries with
developed leather and footwear industry such as Korea, Japan or the EU. Some
measures include reducing import duty and taxes as well as gradually simplifying
custom procedure for the importation of equipment and spare parts. In addition, the
Government should provide special incentives for enterprises to import machinery
and equipment for activities that contribute to increase added value of the sector like
designing, R&D and inspection.
Secondly, the Government should encourage and facilitate the cooperation of
Vietnam businesses with foreign companies in leather and footwear industry,
especially large-scale and transnational ones from the EU Member States. Vietnam
companies can thereby benefit from transfer of technology and know-how as well
as expertise that can enhance domestic production capacity according to EU
64
standards. Additionally, effective policies to attract FDI should be strengthened
since FDI can foster positive technology spillovers.
Thirdly, the Government needs to carry out projects to enhance expertise in
consultation, science research, technology transfer of LEFASO and Vietnam
Leather and Shoe Research Institutes by intensive training provided by foreign
experts or giving scholarship for top specialists to attend courses overseas. The
efficiency of LEFASO in supporting leather footwear businesses in choosing
technology will be strengthened.
Fourthly, National Scientific and Technological Development Fund (and
other funds related to scientific and technological activities) should provide fund to
cover expenses arising from R&D and innovation activities of research institutes.
Expected benefits: These measures will stimulate companies to upgrade
technology of enterprises by importing new machinery. Companies will benefit
from enhanced expertise in consultation about technology of LEFASO. R&D and
innovation activities will have financial foundation to develop. As a result, they
contribute to increase technological level of leather footwear companies and
thereby, increase product quality, effectiveness of QMS and EMS.
3.4.1.5. Implementing information support policies
Importance of recommendation: The Government should improve the
effectiveness of early warning system for better support the preparation of
companies in coping with technical barriers of the EU market.
Execution
Firstly, MOST should improve the structure of TBT Vietnam online
network. The website should categorize information about standards, regulations,
technical specifications and detailed guidance on compliance procedure into
specific markets and commodities. Then, the website should offer Navigator tool to
enable exporters to search for technical barriers applied to specific goods of the
market to which they are exporting.
Secondly, provincial TBT enquiry points should enhance the effectiveness
of handling and responding enquiries on technical barriers. MOST should provide
intensive training for consultant of provincial TBT enquiry points about knowledge
65
on TBT as well as customer service. Each enquiry point should recruit adequate
number of consultants to meet the demands of companies in the shortest time.
Thirdly, the State should strengthen the role of providing information of
Vietnam Embassy and Trade Offices in EU countries, who have closest access to
information about TBT of the EU. The State should implement policies to
encourage Embassy to provide and update information about changes in import
policies as well as technical standards and regulations applied to Vietnam exports,
in general and leather footwear products, in particular. In addition, Embassy and
Commercial Services should improve competency as representatives for Vietnam
exporters in settling trade disputes in the EU.
Expected benefits: Leather footwear export enterprises can benefit from
official sources of information and direct consultation in Vietnamese from the
governmental agencies with easy access, especially for SMEs, which will help them
prepare well for the procedure of complying with technical regulations and
adjusting systems to meet required standards.
3.4.1.6. Implementing policies to support human resources development
Importance of recommendation: The Government should support the
sector to improve the lack of specialized training centers to serve the need of
enhancing human resource quality, which is a critical factor in the process of
improving competency to overcome technical barriers of the EU.
Execution
Firstly, the Government should establish national training centers
specializing at Leather and Footwear. Ministry of Education and Training (MOET)
and LEFASO should coordinate with School of Textile, Leather Footwear and
Fashion of Hanoi University of Science and Technology (in the North) and Ho Chi
Minh City Industry and Trade College of MOIT (in the South) to make plans for the
establishment of two training centers in the first stage, one in the North and one in
the South. The functions of the center should be:
- Providing tertiary education and training in footwear technology, tanning
technology and designing.
- Providing professional courses in technology, management, designing,
66
marketing, etc. for managers, technicians and officers.
- Providing courses tailored to the needs of enterprises.
Secondly, the Government should support funds from state budget to partly
cover expenses for LEFASO, Leather and Shoe Research Institute and School of
Textile, Leather Footwear and Fashion of Hanoi University of Science and
Technology to build national curriculum for all training centers. The State should
also support funds for building education and research infrastructure for the centers.
Thirdly, MOIT and MOET should promote international cooperation in
training, facilitate inviting foreign experts and encourage collaboration of the
training centers with leather and footwear institutes of countries with developed
leather footwear industry like EU, US, Japan or Korea.
Expected benefits: The sector will benefit from available high quality
training programs for improving human resources in all positions of the companies,
which can optimize the effectiveness of upgrading production and management
system for meeting standards and regulations of export markets.
3.4.1.7. Setting up quality standard systems according to international
standards and developing certification bodies
Importance of recommendation: Building a quality infrastructure
comprising standardization, testing, inspection, certification and accreditation is
complex, time-consuming and expensive. However, it is a critical element for
facilitating the procedure of overcoming technical barriers, which is worth the
investment in the long run.
Execution
Firstly, The Government needs to implement the building and developing of
Vietnam Standards (TCVN) with the central role of Vietnam Standard and Quality
Institute (VSQI) of Directorate for Standards, Metrology and Quality, Ministry of
Science and Technology in coordination with Ministry of Natural Resources and
Environment (MNRE) and Vietnam Chemicals Agencies of MOIT. In details:
- The Government should further invest in research activities and training of
VSQI experts and specialists about international standards and experience of EU
countries in building standards with the consultation of EU experts.
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- Mechanisms can be developed at national level to obtain the views of
LEFASO and leather footwear sector and involve them in building standards. It is
imperative to take their specific needs into account when standards are elaborated.
- After obtaining expertise of international standards, VSQI, with
consideration of actual conditions of Vietnam leather footwear industry, can carry
out research and analysis to build and apply a system of standards that are
compatible with international standards and suitable with domestic production. In
the process, MNRE is in charge of providing advice on building environmental
standards and regulations. Vietnam Chemicals Agency of MOIT will take part in
revising chemicals standards and regulations.
Secondly, the Government needs to take measures to sponsor and encourage
Vietnam leather footwear businesses to starting the conformity with new standards.
In details, VSQI, with the assistance of LEFASO, should actively disseminate
information about the system of standards for companies to fully understand. In
addition, there should be policies of short-term supports enterprises when
encountering difficulties and troubles with these new standards.
Thirdly, the Government should focus on perfecting regulatory system in the
field of labor and environment. It is critical to strengthen the enforcement of
environmental regulations to stimulate the application of international EMS.
Fourthly, the Government should create incentives to encourage private
sector to provide conformity assessment services such as testing, inspection and
certification. Bureau of Accreditation should actively communicate the high
demand of inspection services for exports to the EU to potential investors in order
to stimulate the investment of private sectors and foreign investors in building
certification bodies in Vietnam. In addition, the Government should provide funds
and support LEFASO to set up a national standards body to provide testing,
calibration and inspection services that specialize at leather footwear products.
Expected benefits: Enforcing stronger standards according to standards of
key export markets will not only increase the focus of companies on conformity to
international standards, including standards of the EU but also stimulate them to
invest in quality and environmental innovations. Developing domestic labs and
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certification bodies that are qualified to provide conformity assessment services for
EU technical barriers will save time and cost of using similar services abroad.
3.4.2. Recommendations for LEFASO
3.4.2.1. Supporting enterprises to improve and control quality of materials
Importance of recommendation: In regards of heavy dependence on
imported materials from numerous sources and inferior quality of domestic
materials, LEFASO should take effective measures to support control and improve
quality of raw materials to ensure that quality and safety of materials can overcome
stringent assessment procedure for EU technical regulations, especially REACH.
Execution
Firstly, LEFASO should provide consultation for export enterprises in the
selection process of suppliers for raw materials in order to ensure they can be used
to manufacture finished products conforming to required standards in quality and
safety of EU importers and reduce potential risks of non-compliance.
- LEFASO can help enterprises to find stable and reliable sources that can
supply high-quality materials to meet standards of the EU. By conducting
research on quality standards of the EU market and common specifications from
EU importers, LEFASO can set up a comprehensive database of foreign suppliers
that can satisfy those requirements. As a member of Asian International Footwear
Association (AIFA) with established relationship with leather footwear
associations of several countries, LEFASO can ask for recommendation of
qualified suppliers from countries that are members of AIFA like Korea, Japan,
Hong Kong, Taiwan, Thailand, etc. LEFASO can also search for potential
suppliers by attending foreign trade fairs of leather and auxiliary materials for
footwear or from trade press and directories. The database should comprise of
contact information of suppliers, product range and specifications, price range
and sales policy to meet diversified demand of Vietnam producers.
- LEFASO should open an active helpdesk, both online and offline, to
respond to requests for advice of choosing suppliers from its members.
Companies can provide LEFASO with input information about criteria of quality,
safety, chemical components, price, reliability and location. LEFASO then
69
matches requirements of each exporter with the supplier database in order to
advise the optimal buying solution.
Secondly, LEFASO can represent several small and medium leather
footwear enterprises to carry out group buying in large quantity from prestigious
sources. Importers can benefit from discount policy, reduced transaction and
transportation cost as well as consistency and reliability of materials.
Thirdly, besides policies to develop tanning industry of the Government,
LEFASO should play the role of introducing footwear producers to qualified
domestics sources. That would gradually reduce dependence on material imports for
greater control in production of Vietnam companies. Some measures include:
- Assisting tanneries in preparing an official directory listing the names of
tanneries with contact details, production capacity, product specifications and a
complete product catalogue mentioning details of tanneries’ current product
specifications, some specific knowledge on material issues.
- Organizing regular meetings and seminars to bridge the information gap
between tanneries and leather footwear producers.
- Inviting finished leather experts and experienced designers to educate
tanneries and producers on methods to select proper material and determine specific
finished leather for specific types of footwear and parts of footwear.
Expected benefits: LEFASO’s expertise knowledge of technical standards
and regulations of the EU and wide network of relationships will enhance the
effectiveness of exporters in choosing reliable suppliers of raw materials, ensuring
not only the choice of the best suppliers that can satisfy technical standards of the
EU but also cost reductions and time saving. Introduction of LEFASO to domestic
sources will increase long-term independence in production of Vietnam exporters.
3.4.2.2. Orienting and supporting export enterprises to modernize technology
Importance of recommendation: Low technological level of leather
footwear sector results in limitation of Vietnam producers’ capability to
manufacture products that can meet high standards of the EU and is a major
weakness in QMS and EMS of Vietnam companies. Therefore, support of LEFASO
to modernize technology is critical.
70
Execution
Firstly, LEFASO also needs to strengthen its role in orienting and supporting
technology upgradation of leather footwear enterprises. LEFASO should conduct
research on current technological level of the sector and modern technology with
the capabilities to manufacture leather footwear that meets standards of the EU and
other main export markets. As a member of AIFA, LEFASO should actively learn
from experience of other countries like Korea, Japan or Hong Kong on choosing
technology to produce for exports to the EU. LEFASO can also invite experts from
the EU to consult them about technology that can conform to EU standards.
LEFASO can thereby provide advisory for companies in selecting appropriate
technology. With expertise in the field and wide network of relations, LEFASO can
bridge the information gap by introducing machinery and equipment suppliers with
appropriate specifications, good quality and reasonable price to producers.
Secondly, LEFASO can connect companies with similar need of importing
machinery to conduct group buying in order for them to benefit from discount
policy, reduced transaction and transportation cost.
Thirdly, LEFASO in cooperation with Leather and Shoes Research Institute
should conduct more researches with high applicability in leather production,
leather chemicals, genuine-leather processing technology, performance tests, as well
as environmental management and pollutant treatment.
Expected benefits: With the consultation and support of LEFASO,
enterprises can make the optimal choice of appropriate machinery with reasonable
cost when conduct the upgradation of technology for improving the ability to
overcome technical standards. In addition, research activities of LEFASO will
contribute to promote the use of domestic technology in the long run, which
improve the overall technological of the industry.
3.4.2.3 Supporting export enterprises with information about technical
barriers
Importance of recommendation: With the role of a focal point of
information, LEFASO should increase the effectiveness in providing specialized
information channel about technical barriers to leather footwear enterprises.
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Execution
Firstly, LEFASO should provide detailed system of information and
knowledge about technical regulations and standards specialized at leather
footwear, as well as a practical guidance to meet these requirements edited by
experts of LEFASO through the portal: www.lefaso.org.vn. That system should
categorize and evaluate clearly the necessity and importance of each type of
certificate. In addition, the website should frequently update articles sharing views
and experience of members about the procedure to overcome technical barriers.
Secondly, LEFASO should make a newsletter providing on-time and tracking
reports about changes in technical barriers applied to leather footwear. The
newsletter should be sent via email to all company members of LEFASO as an
effective early warning tool.
Thirdly, LEFASO should establish an active helpdesk to provide consultation
on import regulations and technical barriers to Vietnam leather footwear exporters.
Since this helpdesk specializes at leather footwear with professional consultants in
the industry, it can provide exporters with required information and
recommendations faster than TBT enquiry points.
Expected benefits: A specialized information channel provided by LEFASO
experts obtain understanding of technical barriers will help leather footwear
exporters save time and searching efforts as well as gain a clearer view of the
actions they should take to prepare and cope with the compliance procedure.
3.4.2.4. Supporting enterprises to improve the quality of human resources
Importance of recommendation: LEFASO should take measures to
improve competency of labor force in the sector to overcome current weaknesses
that are hindering the ability to meet technical standards and regulations of the EU.
Execution
Firstly, LEFASO should cooperate with Leather and Shoe Research Institute
and School of Textile, Leather Footwear and Fashion of Hanoi University of
Science and Technology to build a complete curriculum with training module for all
stages of the value chain (designing – production – sales and exports) for all
training centers and companies.
72
Secondly, LEFASO should provide consultation for training centers to bring
the subject that researches key export markets, including the EU, into teaching
curriculum so that human resources of the industry can obtain thorough
understanding of production technology, technical standards and regulations as well
as requirements about quality, safety and design of the EU. LEFASO should also
provide frequent professional courses with similar topics for companies.
Thirdly, LEFASO should enhance the role of being focal point connecting
enterprises and training centers. LEFASO should encourage training centers to
actively collect information about demands and specific requirements from
enterprises and communicate the benefits of their training programs to companies.
Expected benefits: Training programs will directly improve quality of labor
force in accordance with actual demand of companies, especially the need of
training human resources in all levels for upgrading, managing and operating
effectively production system to meet standards and regulations of the EU.
3.4.2.5. Supporting the development of standards and laboratories
Importance of recommendation: Having to send products abroad for
inspection due to lack of certified domestic labs is a deterrent. Vietnam companies
commonly prioritize to follow national standards before international standards,
which hinders the conformity in quality of products with standards of export
markets like the EU. Therefore, LEFASO need to implement measures to improve
these weaknesses.
Execution
Firstly, LEFASO should play the consultative and managerial role in the
project by the Government to establish a national certification bodies for leather and
footwear products. LEFASO, VSQI and Bureau of Accreditation should provide
joint consultation for the installation of necessary facilities in accordance with
requirements of the EU so that the laboratory would be accredited to provide
inspection and certification services for technical standards and regulations of the
EU like REACH and eco-label. LEFASO should also support the project with
human resources by suggesting experts to be supervisors of the building progress.
Secondly, after the laboratories starts to operate, LEFASO should take
73
responsibility of two functions as following:
- Managing and supervising the conduct of experiments to create chemicals
and chemical treatment techniques that are friendly to the environment, cost
effective and highly applicable to the production of leather footwear products.
- Ensuring the following of Good Laboratory Practice and continuing to
expand inspection capacity of the lab by conducting research on requirements of
other standards of key export markets that leather footwear exporters are in need of
and implementing the development of the lab to satisfy that demand.
Expected benefits: Leather footwear exporters will benefit from lower fee
than private or oversea inspection services. Waiting time for certification is
shortened thanks to high capacity and specialization in leather footwear of the lab.
3.4.2.6. Building connections between leather footwear exporters with each
other, LEFASO and foreign partners
Importance of recommendation: LEFASO needs to take initiatives to
develop linkages between leather footwear exporters to the EU in order to improve
the current lack of connections between exporters. In addition, LEFASO should
support exporters to build and foster relations with EU importers, offering another
channel to facilitate export opportunities.
Execution
Firstly, LEFASO should build an internal online forum as a common
platform for its members to share information and experience that they have
obtained in the procedure of exporting to the EU and other key markets. To enhance
connections, the communication process between exporters with each other and
with LEFASO must be improved through the development of communication
mechanisms, and a forum is one of the places where they can both share and receive
information as well as can not only express their demands but also benefit from
immediate support. In details:
- The forum should be categorized into boxes specific markets such as EU,
US, Asia and Middle West. Exporters to EU can share experience and request for
information support from other members in the EU category.
- The forum should facilitate mutual learning between members by
74
encouraging them to share about difficulties that they have confronted in the
process of overcoming EU technical barriers, measures they have taken, the
effectiveness and outcome of those measures and lessons they have obtained should
be encouraged. Forum administrators can then collect information into articles for
more convenient reference.
- In the forum, experts from larger enterprises can point out weaknesses and
deficiency in the system of production and trade promotion of SMEs that hinder the
ability to overcome technical barriers and they can discuss to find solutions.
Secondly, LEFASO should organize periodic seminars and conferences as
well as comprehensive training with topics of common interest for leather and
footwear companies. These events can create chances for business networking, so
that exporters can directly share information and experience about exporting and
overcoming technical barriers as well as establish relationships to support each
other in export process. Regularly exchanging of information between exporters and
LEFASO in these events can help LEFASO capture complex situation arises to
remove difficulties for exporters. In these events, LEFASO can organize group
counseling for building business linkages between large enterprises and SMEs by a
series of peer group sessions. Thanks to that, SMEs can be provided with
consultation from large companies and large companies to seize this chance to find
potential satellite companies in order to support their production.
Thirdly, LEAFSO should establish and develop international relationship
through activities such as hosting and taking part in industry seminars, conferences,
forums and dialogs. In international events hosted in Vietnam, Vietnam companies
can connect with potential EU importers to seize export opportunities and gain
experience on measures to meet EU standards and regulations. As a member of
AIFA, LEFASO needs to make full use of the valuable opportunity learn and
accumulate experience to overcome technical barriers from leather footwear
associations of other countries. In addition, LEASO should take initiatives to build
and strengthen relationships with current and potential importers in the EU.
LEFASO can approach and fully utilize their complete and updated information on
technical barriers to enhance quality of advisory for Vietnam exporters.
75
Expected benefits: Building and strengthening linkages between Vietnam
leather footwear exporters with each other and LEFASO will create a cooperative
environment in the industry. It enables mutual learning and sharing of members
about information and experience in overcoming technical barriers, collaboration in
taking measures to enhance system for compliance with technical standards and
regulations such as purchasing materials or modernizing technology. Building
international connections will help Vietnam exporters benefit from export
opportunities and updated information.
3.4.3. Recommendations for leather footwear export enterprises
3.4.3.1. Improving and controlling quality of input materials
Importance of recommendation: Leather footwear producers should
control and improve quality of raw materials to ensure that quality and safety of
materials meet EU standards, which will increase the possibility of finished
products to overcome conformity assessment procedure by certification bodies.
Execution
Firstly, Vietnam producers should only import raw materials from
prestigious sources after careful analysis of supplier’s reliability, stability, sales
policy and most importantly, ability to supply materials that satisfy EU
requirements of quality and chemical usage. Companies should actively research
and gather information about supply market by the support of LEFASO, from trade
press or exhibitions of leather.
Secondly, to prepare for compliance with REACH, in purchase contracts,
Vietnam producers should clearly identify the responsibility of suppliers in
providing data of chemicals and their safe use, in details, by listing all chemical
substances, substances to be released from materials and SVHCs. In addition,
Vietnam producers should demand suppliers to provide additional data in due time
during the process of controlling content of chemicals in production of footwear.
Thirdly, Vietnam companies should create a Product DNA by establishing a
database of quality specifications, chemical substances and their usage in leather
footwear products. In order to control chemicals in products, Vietnam producers
need to obtain information about chemical substances included in raw materials
76
from suppliers. Vietnam producers can then validate that Product DNA against all
requirements, from technical regulations of the EU market to specific requirements
of EU customers. That preparation will help Vietnam producers save time and
effort in providing information for EU importers to build safety data sheets in order
to demonstrate compliance with REACH, which is a part of regulatory procedure
required by ECHA. A time saving and cost-effective suggestion to manage and
analyze data is using software specifically designed to manage data of chemicals. In
details, the company-wide practice should be:
- Procurement department needs to request information of chemical
substances in raw materials from suppliers. Managing compliance is like shooting a
moving target since specific requirements and other regulations such as frequently
updated SVHCs Candidate list of REACH. The best solution is to collect, whenever
possible, full disclosure material information of raw materials.
- Production lines then manufacture finished products with materials that
comply with mandatory standards, regulations and customer-specific requirements.
- Quality Assurance is responsible for validating collected data from
Procurement, and generating database of chemicals and compliance reports.
Expected benefits: Using materials that do not meet EU standards, for
example, materials that contain substances in RSL list of REACH, will certainly
lead to the failure of leather footwear products in meeting technical standards.
Therefore, choosing prestigious suppliers, checking quality and safety carefully
before importing and obtaining full information about chemical substances in
materials will increase the conformity of finished products to EU standards and
prepare Vietnam exporters for the procedure of providing quality and chemical
usage data to demonstrate compliance.
3.4.3.2. Increasing technological level
Importance of recommendation: Outdated technology reduces production
capability and the ability to meet standards and regulations of the EU. Therefore,
increasing technological level is essential to enhance the ability of overcoming
technical barriers.
Execution
77
Firstly, enterprises should carry out careful and detailed analysis by taking
into consideration advisory from LEFASO to avoid the case when companies buy
and install production line that is modern but not appropriate with requirements of
technical standards set by the EU. Companies should prioritize to replace current
mechanical equipment by automation technology.
Secondly, companies can connect with each other to import new machinery
together by group buying to save transaction and transportation costs.
Thirdly, companies should actively obtain information about new
environmental-friendly and cost-effective chemicals that can be used in production
and conduct experiments to check the effectiveness of those chemicals.
Expected benefits: Vietnam leather footwear companies can make an
appropriate choice of technology to optimize production capacity in order to
manufacture products that meet standards of the EU, ensure conformity of
production system with EU regulations and improve quality management system.
3.4.3.3. Actively obtain information about EU technical barriers
Importance of recommendation: Getting detailed information about
technical barriers is the first step in preparing to comply with technical standards
and regulations of the EU.
Execution
Firstly, export enterprises should make full use of available information
channels to actively learn about standards, regulations and technical specifications
of the EU. Suggested channels include TBT online network (www.tbtvn.org), local
TBT enquiry points, LEFASO (www.lefaso.org.vn), EC (ec.europa.eu), Center for
Promotion of Imports from developing countries (www.cbi.eu).
Secondly, companies should invite experts from LEFASO and TBT Vietnam
Office to organize trainings for workers, officers and managers about technical
standards and regulations of the EU applied to leather footwear. In addition,
enterprises should actively participate in forums and seminars organized by
agencies to exchange information about technical barriers with other exporters.
Thirdly, exporters should maintain and foster linkages with EU partners from
previous trade relations by providing good after-sales customer service. Building
78
firm connections with EU companies help Vietnam businesses approach quick
access with information about changes in technical standards and regulations of the
EU as well as instruction to comply with conformity assessment procedure.
Expected benefits: Gaining a good understanding of technical barriers will
enable enterprises to be clear about required procedure and make decision on
suitable solution of revising systems. Early preparation enhances the ability to
overcome technical barriers.
3.4.3.4. Improving the quality of human resources
Importance of recommendation: These measures help leather footwear to
solve two current problems that are lack of labor and inadequate competence of
labor force, which are hindrances to the ability of overcoming technical barriers.
Execution
Firstly, businesses should establish a separate division with the
responsibility of collecting and updating information as well as tackle arising
problems relating to technical barriers including new regulations, standards and
conformity assessment procedure. This division is obliged to communicate that
information to relating divisions of the company such as purchasing, production,
quality control and assurance; providing knowledge about technical regulations
they must follow and giving instruction and consultation for compliance.
Secondly, companies should provide funds for managers, engineers,
technicians, and designers to take professional courses at national training centers,
improve quality of on-the-job training for unskilled labor and invite experts of
LEFASO to provide short courses about the EU market and their requirements.
Thirdly, Vietnam leather footwear companies should carry out detailed
analysis of their specific needs of training for human resources and communicate
that demand to training centers. Thereby, training centers can have practical
information to adjust and upgrade their curriculum to meet the needs of enterprise.
Fourthly, companies should consider improving wage incentives to attract
unskilled labors. Companies can move factories in charge of sewing phase to rural
areas to take advantage of idle labor working in agriculture.
Expected benefits: These recommendations can help leather footwear
79
companies attract more unskilled workers and improve their skills in production;
enhance the capability of managers, engineers and designers to manage and upgrade
production system effectively for adherence to EU standards.
3.4.3.5. Developing laboratories and the use of international standards
Importance of recommendation: A big majority of leather footwear
companies does not have their own laboratories, making it difficult to control the
compliance of products. Following outdated national standards can hinder the
ability to meet EU standards. Measures should be taken to solve these problems.
Execution
Firstly, businesses should determine a system of technical standards that are
close to requirements of the EU to follow. Currently, technical standard system of
Vietnam is outdated, comparing that of the EU. Therefore, when the government,
LEFASO and VSQI are reconstructing this system, leather footwear exporters
should proactively upgrade their own system to quickly meet standards of the EU in
order for the quality and safety of their products to be recognized by the EU.
Secondly, companies should invest in building their own laboratories.
Starting with small-scale lab can be a suitable option to their financial position. The
function of the lab is to test chemical content of raw materials and products during
and after production to control their conformity with EU standards.
Expected benefits: Following international standards in production ensures
that quality of leather footwear products is up to requirements of the EU.
Laboratories of each company facilitate the process of controlling compliance of
products with EU technical standards and regulations, which reduce potential risks.
SUMMARY OF CHAPTER 3
This final chapter provides information and analysis of trends of leather
footwear consumption in the EU market and trends of application of technical
barriers to leather footwear exported to the EU as well as basic orientations and
goals of Vietnam government to overcome these barriers. From the weaknesses
mentioned in chapter 2, recommendations for Vietnam government, LEFASO and
leather footwear companies are provided to help the sector enhance its ability to
overcome technical barriers of the EU market.
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CONCLUSION
Pursuing a development strategy aimed at promoting both quantitative and
qualitative growth, the Vietnamese leather and footwear sector continues to
maintain the position as one of the top leather footwear exporters in the world and
second largest exporters to the EU market. Leather footwear also maintained the
third place in leading group of commodities of Vietnam exported to the EU with
stable growth rate and achievement of more than 2 billion USD turnover each year
from 2007 to 2013. This steady development can be partly attributed to the efforts
that Vietnam Government, LEFASO and leather footwear enterprises to comply
with complicated and strict technical barriers of the EU in order to satisfy the needs
of this difficult market.
By conducting research on technical barriers to Vietnam leather footwear
export to the EU market, this thesis analyzes some critical issues in the current
situation and from there, indicates strengths as well as weaknesses of Vietnam
leather footwear sector. Although there is certain success in overcoming technical
barriers to maintain and develop exports to the EU market, there are still numerous
difficulties and challenges with regard to increasing complication of regulations and
limited capability of Vietnam leather footwear sector. Weaknesses of Vietnam
leather footwear in the process of overcoming technical barriers include heavy
dependence on imported materials, weak development of supporting industries,
outdated technology, lack of infrastructure and connections between enterprises as
well as limited quality of human resources.
Besides, based on observation and analysis in general comments, author also
provides some recommendations for Vietnamese government, association and
exporters to overcome those technical barriers. In order to successfully overcome
technical barriers for Vietnam leather footwear exported to the EU market, it
requires prompt actions for guiding and orientation from Vietnamese government
and LEFASO as well as determination and effective measures of leather footwear
businesses. As a result, it will enhance the ability of Vietnam leather footwear to
overcome technical barriers of the EU, and thereby increase export activities and
create foundation for sustainable development.
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88
ANNEX 1
DECISION NO. 6209/QĐ-BCT OF MINISTRY OF INDUSTRY AND TRADE
ON THE APPROVAL OF THE PLAN TO DEVELOP VIETNAM LEATHER
AND FOOTWEAR INDUSTRY TO 2020, VISION 2025
BỘ CÔNG THƢƠNG
CỘNG HÒA XÃ HỘI CHỦ NGHĨA VIỆT NAM
Độc lập - Tự do - Hạnh phúc
Số: 6209/QĐ-BCT Hà Nội, ngày 25 tháng 11 năm 2010
QUYẾT ĐỊNH
Phê duyệt Quy hoạch tổng thể phát triển ngành Da – Giầy Việt Nam
đến năm 2020, tầm nhìn đến năm 2025
BỘ TRƢỞNG BỘ CÔNG THƢƠNG
Căn cứ Nghị định số 189/2007/NĐ-CP ngày 27 tháng 12 năm 2007 của
Chính phủ quy định chức năng, nhiệm vụ, quyền hạn và cơ cấu tổ chức của Bộ
Công thương;
Căn cứ Nghị định số 92/2006/NĐ-CP ngày 07 tháng 9 năm 2006 của Chính
phủ về lập, phê duyệt và quản lý qui hoạch tổng thể phát triển kinh tế - xã hội và
Nghị định số 04/2008/NĐ-CP ngày 11 tháng 01 năm 2008 của Chính phủ sửa đổi
bổ sung một số điều của Nghị định số 92/2006/NĐ-CP;
Theo đề nghị của Vụ trưởng Vụ Công nghiệp nhẹ,
QUYẾT ĐỊNH
Điều 1. Phê duyệt Quy hoạch tổng thể phát triển ngành Da – Giầy Việt Nam
đến năm 2020, tầm nhìn đến năm 2025 với những nội dung cơ bản như sau:
1. Quan điểm và Định hƣớng phát triển
a) Phát triển ngành Da – Giầy Việt Nam phù hợp với quy hoạch tổng thể
phát triển kinh tế - xã hội và quy hoạch phát triển công nghiệp cả nước, quy hoạch
phát triển kinh tế - xã hội các địa phương và lộ trình hội nhập quốc tế của Việt
Nam;
b) Huy động các thành phần kinh tế, các nguồn lực trong nước và thu hút đầu
89
tư nước ngoài để xây dựng và phát triển ngành Da – Giầy Việt Nam theo hướng chủ
động phục vụ xuất khẩu và tiêu dùng nội địa, tăng thu ngoại tệ cho đất nước, tăng
việc làm, tăng thu nhập đi đôi với cải thiện đời sống người lao động;
c) Phát triển mạnh sản xuất nguyên phụ liệu và công nghiệp hỗ trợ ngành Da
– Giầy nhằm giảm nhập siêu, nâng cao giá trị gia tăng, tham gia sâu vào chuỗi giá
trị gia tăng của thị trường sản phẩm Da – Giầy thế giới;
d) Phát triển ngành Da – Giầy Việt Nam nhanh, ổn định và bền vững theo
hướng chuyên môn hóa, hiện đại hóa, ứng dụng công nghệ mới hiện đại với thiết bị
tiên tiến, thân thiện với môi trường nhằm tạo ra năng suất lao động và hiệu quả kinh
tế cao, chủ động hội nhập kinh tế với khu vực và thế giới, từng bước chuyển đổi
phương thức sản xuất từ gia công sang tự sản xuất, kinh doanh;
e) Gắn việc phát triển nhanh qui mô sản xuất với việc tập trung mở rộng thị
trường xuất khẩu và thị trường nội địa, nghiên cứu ứng dụng khoa học công nghệ và
phát triển nguồn nhân lực được đào tạo trong đó quan tâm đặc biệt đối với lao động
nghèo, lao động nông nghiệp đang thực hiện chuyển dịch cơ cấu kinh tế từ nông
nghiệp sang công nghiệp. Gắn việc phát triển sản xuất trên cơ sở thực hiện tốt trách
nhiệm xã hội, thân thiện và bảo vệ môi trường. Chuyển dịch các cơ sở gia công mũ
giầy về các vùng nông thôn, vùng có nhiều lao động;
g) Nâng cao năng lực tự thiết kế mẫu mã và phát triển sản phẩm mới, ưu tiên
ứng dụng công nghệ tự động hóa trong thực hiện công nghệ và tổ chức quản lý sản
xuất;
2. Mục tiêu phát triển
a) Mục tiêu tổng quát
Xây dựng ngành Da – Giầy Việt Nam đến năm 2020 thành một ngành công
nghiệp xuất khẩu mũi nhọn quan trọng của nền kinh tế quốc dân. Tiếp tục giữ vị trí
trong nhóm các nước sản xuất và xuất khẩu các sản phẩm Da – Giầy hàng đầu thế
giới. Tạo thêm nhiều việc làm cho xã hội trên cơ sở thu nhập của người lao động
ngày càng được nâng cao, thực hiện trách nhiệm xã hội ngày càng tốt, số lượng lao
động được qua đào tạo ngày càng tăng.
b) Mục tiêu cụ thể
- Tốc độ tăng trưởng giá trị sản xuất công nghiệp ngành Da – Giầy giai đoạn
90
2011 – 2015 đạt 9,4%/năm; giai đoạn 2016 – 2020 đạt 8,8%/năm; giai đoạn 2020 –
2025 đạt 8,2%/năm;
- Phấn đấu đạt kim ngạch xuất khẩu năm 2015 là 9,1 tỷ USD; năm 2020 là
14,5 tỷ USD và năm 2025 đạt 21 tỷ USD. Tốc độ tăng trưởng kim ngạch xuất khẩu
bình quân trong giai đoạn 2011 – 2015 là 10,9%/năm; giai đoạn 2016 – 2020 là
9,7%/năm và giai đoạn 2021 – 2025 là 7,6%/năm;
- Nâng dần tỷ lệ nội địa hóa các loại sản phẩm. Phấn đấu năm 2015 tỷ lệ nội
địa hóa đạt 60-65%, năm 2020 đạt 75-80% và năm 2025 đạt 80-85%;
- Cùng với ngành Dệt May và một số ngành liên quan làm trụ cột phát triển
công nghiệp Thời trang Việt Nam tại một số đô thị, thành phố lớn;
- Xây dựng một số khu – cụm công nghiệp sản xuất Da – Giầy, sản xuất
nguyên phụ liệu và xử lý môi trường tập trung trên cơ sở lợi thế về hạ tầng và lao
động để chủ động cung cấp nguyên phụ liệu, nâng cao năng lực cạnh tranh cho
ngành;
- Xây dựng mới và phát triển các cơ sở đào tạo, các cơ sở nghiên cứu khoa
học công nghệ, các trung tâm kiểm định, dịch vụ ngành và các trung tâm Xúc tiến
thương mại, trung tâm Thời trang ở trong nước và nước ngoài.
3. Định hƣớng Quy hoạch phát triển
a) Quy hoạch sản phẩm chiến lược
- Giầy dép là sản phẩm chủ lực của ngành trong đó giầy thể thao và giầy vải
được ưu tiên hàng đầu trong sản xuất và xuất khẩu;
- Sản xuất giầy dép da thời trang và cặp túi ví chất lượng cao phục vụ thị
trường mới, thị trường cao cấp và thị trường nội địa.
- Tập trung sản xuất da thuộc với công nghệ tiên tiến, thân thiện với môi
trường phục vụ chiến lược sản xuất giầy dép da thời trang, cặp túi ví có chất lượng
cao để phục vụ xuất khẩu và thị trường nội địa. Đầu tư sản xuất da thuộc gắn liền
với việc phát triển đàn gia súc góp phần giảm nhập siêu và chủ động trong sản xuất.
- Sản lượng sản phẩm và tốc độ tăng trưởng sản phẩm bình quân đến năm
2020 như sau:
TT Chỉ tiêu Đơn vị tính 2015 2020
1 Tổng giầy dép các loại Triệu đôi 1.172 1.698
91
2 Cặp – túi – ví các loại Triệu cái 170 285
3 Da thuộc
- Da thuộc cứng 1.000 tấn 39 63
- Da thuộc mềm (bia 30x30) Triệu bia 197 277
Tăng trƣởng bình quân 2011 - 2015 2016 – 2020
1 Tổng giày dép các loại %/năm 9,0 7,7
2 Cặp – túi – ví các loại %/năm 13,0 12,0
3 Da thuộc
- Da thuộc cứng %/năm 15,0 10,0
- Da thuộc mềm %/năm 10,0 7,0
b) Quy hoạch theo vùng lãnh thổ
Quy hoạch các trung tâm phát triển và bố trí năng lực sản xuất theo vùng
lãnh thổ được dựa trên lợi thế về nhân lực, về nguồn cung cấp nguyên phụ liệu, giao
thông, cảng biển theo hướng: duy trì và phát triển các trung tâm Da – Giầy hiện có
tại các đô thị và thành phố lớn thành các trung tâm thương mại, thiết kế mẫu mốt,
dịch vụ công nghệ có giá trị gia tăng cao; di dời các các cơ sở sản xuất đặc biệt là
các cơ sở may gia công mũ giầy về các vùng lân cận, các vùng nông thôn có nhiều
lao động.
Bố trí sản xuất và đầu tư của ngành Da – Giầy trên toàn quốc được xác định
thành 4 vùng chủ yếu như sau:
Vùng 1: Vùng đồng bằng sông Hồng
Qui hoạch theo định hướng lấy thành phố Hà Nội làm trung tâm dịch vụ,
cung cấp nguyên phụ liệu, công nghệ, mẫu mốt, các cơ sở sản xuất các sản phẩm
giầy dép, cặp túi ví có giá trị cao, qui mô hợp lý và các trung tâm xúc tiến thương
mại chuyên ngành.
Các doanh nghiệp sản xuất gia công sẽ được phát triển hoặc di dời về các
tỉnh như: Hải Dương, Bắc Ninh, các khu vực lân cận thành phố Hải Phòng, Phố Nối
(Hưng Yên), Đồng Văn (Hà Nam), Nam Định, Hà Nội mở rộng, Phú Thọ và Vĩnh
Phú. Tại khu vực này sẽ hình thành khu – cụm sản xuất và kinh doanh mua bán
nguyên phụ liệu và công nghiệp phụ trợ, cụm công nghiệp nhỏ và làng nghề truyền
thống. Phát triển trung tâm đào tạo và trung tâm nghiên cứu khoa học và ứng dụng,
92
chuyển giao công nghệ.
Vùng 2: Vùng Đông Nam Bộ
Qui hoạch theo định hướng lấy thành phố Hồ Chí Minh làm trung tâm dịch
vụ, cung cấp nguyên phụ liệu, công nghệ, mẫu mốt, các cơ sở sản xuất các sản
phẩm có giá trị cao, qui mô hợp lý và các trung tâm xúc tiến thương mại chuyên
ngành, xây dựng các cụm công nghiệp nhỏ và làng nghề truyền thống tại các quận
ven thành phố. Di dời các cơ sở thuộc da tại trung tâm và lân cận thành phố đến các
khu thuộc da tập trung cách xa thành phố và khu vực đông dân cư.
Các cơ sở sản xuất giầy dép và cặp túi ví sẽ được phát triển hoặc di dời về
các tỉnh như: Bình Dương, Đồng Nai, Tây Ninh. Tại khu vực này sẽ hình thành khu
– cụm sản xuất và kinh doanh mua bán nguyên phụ liệu và công nghiệp phụ trợ.
Vùng 3: Vùng Bắc Trung Bộ và Duyên hải miền Trung
Qui hoạch theo định hướng lấy thành phố Đà Nẵng làm trung tâm để hình
thành cụm công nghiệp gia công và sản xuất giầy dép, cặp túi ví lớn.
Các cơ sở may mũ giầy, sản xuất giầy dép, cặp túi ví và sản phẩm Da – Giầy
được chế biến từ da cá sấu và da đà điểu sẽ được phát triển tại các tỉnh như: Bình
Định, Đà Nẵng, Quảng Nam, Khánh Hòa.
Vùng 4: Vùng đồng bằng sông Cửu Long
Qui hoạch lấy thành phố Cần Thơ làm trung tâm. Khuyến khích các doanh
nghiệp phát triển mở rộng gia công sản xuất giầy dép và thiết lập với các doanh
nghiệp Da – Giầy trong khu vực do có lợi thế về nguồn lao động và các hỗ trợ ưu
đãi dành cho khu vực tiếp nhận chuyển dịch cơ cấu kinh tế.
Chú trọng phát triển sản phẩm da thuộc, giầy dép, cặp túi ví được chế biến từ
da cá sấu và da trăn. Đây là thế mạnh của vùng trong những năm gần đây do phát
triển được vùng chăn nuôi động vật có da nốt sần lớn nhất tại Việt Nam.
4. Nhu cầu vốn đầu tƣ phát triển ngành Da – Giầy
- Tổng nhu cầu vốn đầu tư toàn ngành giai đoạn 2011-2015 là 28.340 tỷ
đồng. Trong đó:
+ Huy động trong nước : 12.340 tỉ đồng, chiếm 44%;
+ Kêu gọi đầu tư nước ngoài: 835 triệu USD, chiếm 56%.
- Tổng nhu cầu vốn đầu tư toàn ngành giai đoạn 2016-2020 là 31.230 tỷ
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đồng. Trong đó:
+ Huy động trong nước: 13.124 tỷ đồng, chiếm 42% tổng vốn đầu tư;
+ Kêu gọi vốn đầu tư nước ngoài: 944 triệu USD, chiếm 58% tổng vốn.
- Tổng nhu cầu vốn đầu tư toàn ngành giai đoạn 2011-2020 là 59.570 tỷ
đồng. Trong đó:
+ Huy động trong nước: 43%
+ Kêu gọi đầu tư nước ngoài: 57%.
(Chi tiết xem Phụ lục số 2 kèm theo Quyết định này).
Điều 2. Tổ chức thực hiện
1. Bộ Công thương chủ trì, phối hợp với các Bộ, ngành liên quan và Ủy ban
nhân dân các tỉnh, thành phố trực thuộc Trung ương chỉ đạo phát triển ngành theo
Quy hoạch này và chịu trách nhiệm công bố công khai Quy hoạch;
2. Các Bộ: Kế hoạch và Đầu tư; Tài chính; Nông nghiệp và Phát triển nông
thôn; Khoa học và Công nghệ; Tài nguyên và Môi trường; Giáo dục và Đào tạo;
Ngân hàng Nhà nước Việt Nam; Ngân hàng Phát triển Việt Nam theo chức năng
của mình phối hợp với Bộ Công Thương để hỗ trợ các doanh nghiệp, các địa
phương trong việc triển khai thực hiện Quy hoạch và các đề án đã được phê duyệt.
3. Ủy ban nhân dân tỉnh, thành phố trực thuộc Trung ương cụ thể hóa Quy
hoạch tổng thể phát triển ngành Da - Giầy trên địa bàn tỉnh, thành phố; tham gia với
các Bộ, ngành giám sát việc triển khai thực hiện Quy hoạch để đảm bảo tính đồng
bộ, thống nhất với Quy hoạch tổng thể phát triển kinh tế - xã hội của địa phương.
4. Hiệp hội Da - Giầy Việt Nam phối hợp với Bộ Công thương tuyên truyền,
phổ biến Quy hoạch tổng thể phát triển ngành Da - Giầy cho cộng đồng các doanh
nghiệp ngành Da - Giầy cả nước để có định hướng và kế hoạch phát triển sản xuất
kinh doanh phù hợp với Quy hoạch. Tổng hợp ý kiến và kiến nghị của các doanh
nghiệp với cơ quan có thẩm quyền để điều chỉnh quy hoạch cho phù hợp với tình
hình thực tế.
Điều 3. Quyết định này có hiệu lực kể từ ngày ký.
Điều 4. Các Bộ trưởng, Thủ trưởng cơ quan ngang Bộ, Thủ trưởng cơ quan
thuộc Chính phủ, Chủ tịch Ủy ban nhân dân tỉnh, thành phố trực thuộc Trung ương
và các cơ quan có liên quan chịu trách nhiệm thi hành Quyết định này./.
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ANNEX 2
LIST OF VIETNAM LEATHER FOOTWEAR EXPORTERS DID SURVEY
No. Leather footwear exporters
1 HAO DUONG LEATHER CO.,LTD
2 DONG HUNG INDUSTRIAL JOINT STOCK COMPANY
3 HUNG HUY CO.,LTD
4 DAE WOONG VINA CO., LTD
5 LIEN PHAT CO., LTD
6 AN THINH FOOTWEAR PRODUCING AND TRADING CO., LTD
7 BINH DINH SHOES JOINT STOCK COMPANY
8 HUNG YEN SHOES JOINT STOCK COMPANY
9 VINH THONG MANUFACTURING- TRADING- SERVICES
CO.,LTD
10 GIA DINH SHOES COMPANY
11 CASUM SHOES JOINT STOCK COMPANY
12 ASIA SHOES PTE
13 AN LAC SHOES JOINT STOCK COMPANY
14 HAI PHONG LEATHER PRODUCTS AND FOOTWEAR ONE
MEMBER CO.,LTD
15 DONG PHUONG DONG NAI VIETNAM CO., LTD
16 LAC CUONG SHOES COMPANY
17 DOBA PRODUCING - TRADING FOOTWEAR CO., LTD
18 DAI VIET SHOES COMPANY
19 CHANG YANG VIETNAM CO.,LTD
20 LE GIA SHOES CO., LTD
21 KHAI HOAN FOOTWEAR PRODUCTION JOINT STOCK
COMPANY
22 HOANG LAN SHOES PRODUCING CO.,LTD
23 NAM BINH CO., LTD
24 HISON VINA CO., LTD
25 VINH NGHIA SHOES CO., LTD
26 THAI BINH SHOES JSC.
27 NAM CUONG SHOES CO.,LTD
28 UY VIET PRODUCING SHOES CO., LTD
29 DONG ANH SHOES JOINT STOCK COMPANY
30 MINH DUC CO.,LTD
31 PHUONG QUYNH FOOTWEAR COMPANY
95
32 POUSUNG VIETNAM CO.,LTD
33 VINH PHU SHOES JOINT STOCK COMPANY
34 EIZO SHOES VIETNAM CO.,LTD
35 HONG WON CO., LTD
36 VIET PHAT SHOES CO., LTD
37 HANOI SHOES JOINT STOCK COMPANY
38 HOANG THANG LEATHER COMPANY
39 THUY KHUE SHOES CO., LTD
40 HUNG GIA PHUC SHOES JOINT STOCK COMPANY
41 TAN HOP FOOTWEAR CO., LTD
42 PHU LAM SHOES JOINT STOCK COMPANY
43 THAI DUONG SHOES CO., LTD
44 PHUOC BINH SHOES CO., LTD
45 SAI GON LEATHER PRODUCTS AND FOOTWEAR IMPORT-
EXPORT COMPANY
46 THANG LONG SHOES JOINT STOCK COMPANY
47 AN GIANG SHOES ONE MEMBER CO.,LTD
48 TAN THANH SHOES CO.,LTD
49 32 JOINT STOCK COMPANY
50 THONG DUNG SHOES CO.,LTD
51 SAGODA LEATHER AND SHOES JOINT STOCK COMAPNY
52 TRENCILO VIETNAM CO.,LTD
53 LADODA JOINT STOCK COMPANY
54 VINH HOI FOOTWEAR CO., LTD
55 THUONG DINH FOOTWEAR COMPANY
56 SAO VIET JOINT STOCK COMPANY
57 TICH HANH FOOTWEAR CO., LTD
58 VINH NGHIA SHOES CO., LTD
59 CAM BINH SHOES JOINT STOCK COMPANY
60 TUAN VIET SHOES COMPANY
61 TRIEU PHONG SHOE CO., LTD
62 TADO SHOES CO.,LTD
63 HUNG DAT JOINT STOCK COMPANY
64 A AU SHOES CO., LTD
65 DONA STANDARD VIETNAM SHOES CO., LTD
66 THIEN PHAT SHOES CO.,LTD
67 NGOC HA SHOES COMPANY
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ANNEX 3
QUESTIONAIRE
Kính chào Quý Doanh nghiệp!
Trong khuôn khổ chương trình nghiên cứu đề tài "RÀO CẢN KĨ THUẬT ĐỐI VỚI
MẶT HÀNG DA GIÀY VIỆT NAM XUẤT KHẨU SANG THỊ TRƯỜNG LIÊN
MINH CHÂU ÂU", chúng tôi muốn thu thập một số dữ kiện liên quan đến hoạt
động thực tiễn của doanh nghiệp. Các thông tin được cung cấp sẽ được bảo vệ trong
phạm vi cuộc khảo sát, chỉ phục vụ cho việc nghiên cứu đề tài nói trên, hoàn toàn
không ràng buộc về mặt pháp lý.
Tác giả đề tài xin chân thành cảm ơn Quý Doanh nghiệp đã dành thời gian trả lời
bảng câu hỏi này. Kính chúc Quý Doanh nghiệp không ngừng mở rộng hoạt động
sản xuất kinh doanh, tạo được vị thế mới trong điều kiện cạnh tranh và hội nhập
quốc tế hiện nay.
Xin vui lòng điền vào chỗ trống hoặc khoanh tròn lựa chọn phù hợp.
1. Thông tin chung về doanh nghiệp
a. Tên Việt Nam:
b. Tên quốc tế (nếu có):
c. Địa chỉ:
d. Số điện thoại:
e. Số fax:
f. Địa chỉ website (nếu có):
2. Doanh nghiệp đã có xuất khẩu da giày vào thị trƣờng Châu Âu chƣa?
a. Có
b. Chưa
(Nếu chưa, dừng trả lời khảo sát ở câu 2. Nếu có, xin tiếp tục trả lời từ câu 3)
3. Doanh nghiệp có xuất hàng trực tiếp sang EU hay chỉ gia công theo đơn
đặt hàng?
a. Có xuất hàng trực tiếp
b. Chỉ gia công theo đơn đặt hàng
97
4. Doanh nghiệp đánh giá nhƣ thế nào về qui trình kiểm soát hàm lƣợng
hoá chất của doanh nghiệp?
a. 5: Rất tốt
b. 4: Tốt
c. 3: Trung bình
d. 2: Chưa tốt
e. 1: Hoàn toàn không tốt
5. Doanh nghiệp có phòng thí nghiệm riêng không?
a. Có b. Không
6. Doanh thu từ thị trƣờng Châu Âu của doanh nghiệp anh chị trong năm
2008 có giảm so với năm 2007 không?
a. Có b. Không
Nếu có thì theo anh chị nguyên nhân có phải do REACH không?
a. Có b. Không
7. Doanh thu từ thị trƣờng Châu Âu của doanh nghiệp anh chị trong năm
2009 có giảm so với năm 2008 không?
a. Có b. Không
Nếu có thì theo anh chị nguyên nhân có phải do REACH không?
a. Có b. Không
8. Doanh thu từ thị trƣờng Châu Âu của doanh nghiệp anh chị trong năm
2010 có giảm so với năm 2009 không?
a. Có b. Không
Nếu có thì theo anh chị nguyên nhân có phải do REACH không?
a. Có b. Không
9. Doanh thu từ thị trƣờng Châu Âu của doanh nghiệp anh chị
trong năm 2011 có giảm so với năm 2010 không?
a. Có b. Không
Nếu có thì theo anh chị nguyên nhân có phải do REACH không?
a. Có b. Không
10. Doanh thu từ thị trƣờng Châu Âu của doanh nghiệp anh chị
trong năm 2012 có giảm so với năm 2011 không?
98
a. Có b. Không
Nếu có thì theo anh chị nguyên nhân có phải do REACH không?
a. Có b. Không
11. Doanh thu từ thị trƣờng Châu Âu của doanh nghiệp anh chị
trong năm 2013 có giảm so với năm 2012 không?
a. Có b. Không
Nếu có thì theo anh chị nguyên nhân có phải do REACH không?
a. Có b. Không
12. Doanh nghiệp đánh giá nhƣ thế nào về hiệu quả thực hiện việc dán nhãn
hàng hoá khi xuất khẩu sang EU của mình từ năm 2007 đến năm 2013?
a. 5: Rất tốt
b. 4: Tốt
c. 3: Trung bình
d. 2: Chưa tốt
e. 1: Hoàn toàn không tốt
13. Tình hình thực hiện hệ thống quản lí chất lƣợng ISO 9001 cùa doanh
nghiệp
a. Đã được cấp giấy chứng nhận
b. Đang thực hiện tiêu chuẩn để xin cấp giấy chứng nhận
c. Chưa thực hiện tiêu chuẩn
14. Tình hình thực hiện hệ thống quản lí môi trƣờng ISO 14001 của doanh
nghiệp
a. Đã được cấp giấy chứng nhận
b. Đang thực hiện tiêu chuẩn để xin cấp giấy chứng nhận
c. Chưa thực hiện tiêu chuẩn
15. Doanh nghiệp đánh giá nhƣ thế nào về tầm quan trọng của các yếu tố/
hoạt động sau đâu đối với việc vƣợt các rào cản kĩ thuật đối với mặt
hàng da giày xuất khẩu của thị trƣờng Liên Minh Châu Âu?
(5: Rất quan trọng, 4: Quan trọng, 3: Bình thường, 2: Không quan trọng lắm,
1: Hoàn toàn không quan trọng)
99
Tiêu chí 5 4 3 2 1
Chất lượng nguồn nguyên liệu đầu
vào
Công nghệ sản xuất
Chất lượng nguồn nhân lực
Phòng thí nghiệm kiểm định chất
lượng riêng của doanh nghiệp
16. Trong thời gian qua, doanh nghiệp đánh giá mức độ quan tâm đầu tƣ
của mình nhƣ thế nào đến các vấn đề sau trong hoạt động xuất khẩu da
giày và vƣợt rào cản kĩ thuật của thị trƣờng EU?
(5: Rất quan tâm và đầu tư đáng kể, 4: Có quan tâm nhưng chưa đầu tư đáng
kể, 3: Có quan tâm nhưng chưa đầu tư, 2: Không quan tâm lắm, 1: Hoàn toàn
không quan tâm)
Tiêu chí 5 4 3 2 1
Chất lượng nguồn nguyên liệu đầu
vào
Công nghệ sản xuất
Chất lượng nguồn nhân lực
Phòng thí nghiệm kiểm định chất
lượng riêng của doanh nghiệp
17. Doanh nghiệp đánh giá nhƣ thế nào về thực trạng của các vấn đề sau?
(5: Rất tốt, 4: Tốt, 3: Bình thường, 2: Chưa tốt, 1: Hoàn toàn không tốt)
Tiêu chí 5 4 3 2 1
Sự liên kết của các doanh nghiệp
trong ngành
Sự hỗ trợ về vốn của nhà nước
Sự hỗ trợ về thông tin của Nhà
nước và LEFASO
100
ANNEX 4
SURVEY RESULT
1. Số doanh nghiệp xuất khẩu da giày trả lời khảo sát: 67
2. Tình trạng xuất khẩu da giày sang Châu Âu của doanh nghiệp
Số lượng doanh nghiệp Tỷ trọng (%)
Đã xuất khẩu sang EU 51 76.12
Chưa xuất khẩu sang EU 16 23.88
3. Doanh nghiệp có xuất hàng trực tiếp sang EU hay chỉ gia công theo đơn đặt
hàng
Số lượng
doanh nghiệp
Tỷ trọng (%)
Có xuất hàng trực tiếp 23 45.10
Chỉ gia công theo đơn đặt hàng 28 54.90
4. Đánh giá của 51 doanh nghiệp xuất khẩu sang EU về quy trình kiểm soát
hàm lượng hóa chất của doanh nghiệp:
(5: Rất tốt, 4: Tốt, 3: Bình thường, 2: Chưa tốt, 1: Hoàn toàn không tốt)
N Min Max Mean Std. Deviation
51 2 5 3.098 0.109
5. Doanh nghiệp có phòng thí nghiệm riêng không?
Số doanh nghiệp Tỷ trọng (%)
Có 15 29.41
Không 36 70.59
6. Tình hình doanh thu từ EU và tác động của REACH đến doanh thu của 51
doanh nghiệp có xuất khẩu sang EU:
Số doanh
nghiệp
Số doanh nghiệp cho rằng
REACH góp phần làm giảm
doanh thu
Tỷ trọng
(%)
Doanh nghiệp có
doanh thu năm 2008
giảm so với năm 2007
5 5 100
101
Số doanh
nghiệp
Số doanh nghiệp cho rằng
REACH góp phần làm giảm
doanh thu
Tỷ trọng
(%)
Doanh nghiệp có
doanh thu năm 2009
giảm so với năm 2008
37 31 86.49
Doanh nghiệp có
doanh thu năm 2010
giảm so với năm 2009
12 9 75
Doanh nghiệp có
doanh thu năm 2011
giảm so với năm 2010
10 7 70
Doanh nghiệp có
doanh thu năm 2012
giảm so với năm 2011
13 10 61.54
Doanh nghiệp có
doanh thu năm 2013
giảm so với năm 2012
9 5 55.56
7. Đánh giá của 51 doanh nghiệp xuất khẩu sang Châu Âu về như thế nào về
hiệu quả thực hiện việc dán nhãn hàng hoá khi xuất khẩu sang EU của mình
từ năm 2008 đến năm 2013:
(5: Rất tốt, 4: Tốt, 3: Trung bình, 2: Chưa tốt, 1: Hoàn toàn không tốt)
N Min Max Mean Std. Deviation
51 3 5 3.921 0.092
8. Tình hình thực hiện ISO 9001 của 51 doanh nghiệp xuất khẩu sang Châu Âu:
Số doanh nghiệp Tỷ trọng (%)
Đã được cấp giấy chứng nhận 19 37.26
Đang thực hiện tiêu chuẩn để xin
cấp giấy chứng nhận
26 50.98
Chưa thực hiện tiêu chuẩn 6 11.76
102
9. Tình hình thực hiện ISO 14001 của 51 doanh nghiệp xuất khẩu sang Châu
Âu:
Số doanh nghiệp Tỷ trọng (%)
Đã được cấp giấy chứng nhận 5 9.8
Đang thực hiện tiêu chuẩn để xin
cấp giấy chứng nhận
15 29.42
Chưa thực hiện tiêu chuẩn 31 60.78
10. Đánh giá của 51 doanh nghiệp có xuất khẩu sang EU tầm quan trọng của các
yếu tố/ hoạt động sau đâu đối với việc vượt các rào cản kĩ thuật đối với mặt
hàng da giày xuất khẩu của thị trường Liên Minh Châu Âu
(5: Rất quan trọng, 4: Quan trọng, 3: Bình thường, 2: Không quan trọng lắm,
1: Hoàn toàn không quan trọng)
N Min Max Mean Std.
Deviation
Chất lượng nguồn nguyên liệu
đầu vào
51 3 5 4.294 0.090
Công nghệ sản xuất 51 4 5 4.372 0.068
Chất lượng nguồn nhân lực 51 3 5 4.078 0.092
Phòng thí nghiệm kiểm định
chất lượng của doanh nghiệp
51 3 5 3.804 0.109
11. Đánh giá của 51 doanh nghiệp có xuất khẩu sang EU về mức độ quan tâm
đầu tư của doanh nghiệp đến các yếu tố/ hoạt động trong hoặt động vượt các
rào cản kĩ thuật đối với mặt hàng da giày xuất khẩu của thị trường Liên Minh
Châu Âu: (5: Rất quan tâm và đầu tư đáng kể, 4: Có quan tâm nhưng chưa
đầu tư đáng kể, 3: Có quan tâm nhưng chưa đầu tư, 2: Không quan tâm lắm,
1: Hoàn toàn không quan tâm)
N Min Max Mean Std.
Deviation
Chất lượng nguồn nguyên liệu
đầu vào
51 3 5 4.295 0.090
Công nghệ sản xuất 51 2 5 3.367 0.091
103
N Min Max Mean Std.
Deviation
Chất lượng nguồn nhân lực 51 4 5 4.235 0.060
Phòng thí nghiệm kiểm định
chất lượng của doanh nghiệp
51 2 5 3.725 0.132
12. Đánh giá của 51 doanh nghiệp có xuất khẩu sang EU về thực trạng của các
vấn đề sau
(5: Rất tốt, 4: Tốt, 3: Bình thường, 2: Chưa tốt, 1: Hoàn toàn không tốt)
N Min Max Mean Std.
Deviation
Sự liên kết của các doanh
nghiệp trong ngành
51 2 4 2.764 0.082
Sự hỗ trợ về vốn của nhà nước 51 1 4 2.471 0.090
Sự hỗ trợ về thông tin của nhà
nước và LEFASO
51 2 4 2.862 0.079