VietNamNet Bridge – Within three years, foreign direct investment capital has soared from $0.5 billion to $2 billions, with a number of foreign companies relocating their factories to Vietnam.

Eighty percent of footwear products in the US market now come from China. However, the situation will be different in the near future.

China is no longer the best supply source for US importers because of the high price of products. Many US companies have left China for Vietnam, which they believe is a more attractive market, according to Matt Priest from the US Footwear Distributors and Retailers Association (FDRA).

If TPP (the Trans Pacific Partnership Agreement) is signed, it is expected that an additional $364 million worth of footwear will be imported by the US from TPP countries, of which $360 million would be from Vietnam.

Do Thi Thu Huong, deputy head of the Import-Export Department of the Ministry of Industry and Trade, said that once the TPP is signed, Vietnamese footwear products will easily enter the TPP market thanks to the low tariff.

The US, for example, will cut tariffs on some products from 50 percent to zero percent.

Many of the biggest footwear manufacturers in the world are present in Vietnam, including Nike, Adidas, Puma, Target Sourcing Services and Dansu Group.

Wolverine Worldwide, the first US company which arrived in Vietnam and set up a factory 20 years ago, has been expanding its business here.

At first, the company planned to focus its investments in China but its management board changed its mind. Scott Thomas, a senior executive at Wolverine Worldwide, said due to new problems in China, the company is considering relocating its factories to other countries, mostly to Vietnam.

The US-based Ever Rite International also relocated its factories from China to Vietnam after it realized that the production costs in China were higher.

Oliver Ng, a senior executive at the group, said Ever Rite International’s last factory in China had been relocated to Vietnam in September 2013. Ten years ago, in 1993, the group set up its first factory in HCM City.

Ever Rite, which now has 52 footwear production lines in Vietnam, is expected to expand rapidly.

A report from the Ministry of Industry and Trade showed that Vietnam exported $10.2 billion worth of footwear in the first 10 months of the year, and hopes to export $12 billion by the end of 2014.

The footwear export turnover accounted for 10 percent of total export turnover, while exports from foreign-invested enterprises made up 70 percent of footwear export turnover.

Major footwear manufacturers entering the country is bad news for Vietnamese manufacturers as competition will be fierce.

“The market pie is too small, while there are too many ‘big fish’,” the director of a privately run footwear company said.

NLD