More efforts needed for the Vietnam leather and footwear industry to thrive

However, the industry is considered to have neglected the domestic market, where 50 percent of market share is owned by imported products. So what is the main reason for this situation?

Việt Á Châu Corporation produces mainly for the domestic market. However, every year, they only supply about 1 million units, which accounts for 50 percent of their full capacity. The main reason is said to be the higher price of domestically produced goods compared to imported ones.

Van Thuy Hanh, Viet A Chau Investment & Development Corporation said: "Vietnamese firms haven’t had a chance to dominate the domestic market. Our prices are usually higher than imported products. And one of the main reasons is that our material costs are higher".

According to the Vietnam Leather and Footwear Association, the higher cost of material is also caused by the fact that Vietnam’s footwear industry relies heavily on outsourcing. The supporting industries have yet to develop sufficiently to meet the businesses’ demand.

Nguyen Duc Thuan, Chairman, Vietnam Leather and Footwear Association said: "We have submitted proposals many times to develop supporting industries, but they have yet to be ratified. We think that we need a material market where local businesses can come and buy materials as well as develop new designs that are suitable to the Vietnamese people’s tastes".

Ho Thi Kim Hoa, Deputy Minister of Industry and Trade said: "Our footwear businesses only meet 50 percent of domestic demand. We still have to import the remaining 50 percent for domestic use. So we are encouraging firms to join the domestic market and enhance their marketing to Vietnamese consumers"

According to the master plan on leather and footwear industry development to 2020, with a vision to 2025, the leather and footwear industry's localization ratio is expected to rise to 65 percent in 2015 and 80 percent in 2020. In order to achieve this goal, it is essential to develop the supporting industries. This will also be an important factor for the industry to take advantage of the FTAs that Vietnam has signed.