Non-leather footwear looks to increase exports

Infograph: TBS

The export of non-leather footwear in Bangladesh has witnessed a significant growth over the past five years – nearly doubling to reach $500 million – and now looks for $2 billion exports by 2023. 

According to an analysis by Bloomberg, major brands such as Nike, Adidas and Puma are planning to decrease their business in China and increase sourcing in South Asian countries including Bangladesh, India, and Pakistan as a way to reduce costs.

Industry stakeholders also report that global buyers nowadays consider Bangladesh as a potential sourcing country for non-leather footwear. They said the country has promising prospects; particularly as western buyers look to reduce their reliance on China – the leading exporter of non-leather footwear.

Tipu Sultan, chairman of Bengal Leather Complex Limited that exports $10 million non-leather shoes per year, said they are now receiving a lot of inquiries by potential foreign customers, which hints at better business prospects in coming years.

Apex Footwear Limited, one of the top local leather and non-leather footwear exporters and a supplier of French sporting goods retailer Decathlon SA, also believes better business days are coming.   

According to Syed Nasim Manzur, managing director of Apex Footwear, global buyers are decreasing orders from China and Vietnam is also experiencing success in non-leather footwear exports. 

"However, Vietnam is shifting towards high-tech industries, which may lead to a decrease in sourcing from buyers there. This presents a significant opportunity for Bangladesh to increase the export of non-leather footwear, which includes items such as sandals, flip-flops, boots, jute-based espadrilles, canvas or rubber shoes, sneakers, and moulded polyurethane and PVC shoes," he told The Business Standard.

Bangladesh's main export markets for non-leather footwear are Spain, France, the Netherlands, South Korea, India, Germany, and Italy. 

According to the Export Promotion Bureau of Bangladesh, in the 2021-22 fiscal year, the country exported other footwear (excluding leather) worth $449 million, a 30% increase from the previous fiscal year. 

Five years ago, in the 2017-18 fiscal year, the export value of this product was $244 million. 

In the first half of the current 2022-23 fiscal year, other footwear exports also showed promising growth, reaching $250 million, an 18% increase. 

The Bangladesh Investment Development Authority is hoping that exports of non-leather footwear will reach $1 billion by 2025 and $2 billion by 2030. The global market size for this product is estimated to be over $300 billion.

According to the Bloomberg analysis, China's share of global footwear exports fell by about 6.5% in the last ten years until 2021. China's share of world exports of goods was 61%, as it plummeted to 54% after ten years.

It says that a shift in Chinese manufacturing capacities beyond Southeast Asia to countries such as India -- where labour costs will stay below half that of the mainland's and about 70% of Vietnam's, even after factoring in higher minimum wage hikes into 2025 -- can reduce the cost burden on shoes from slowing globalisation more than garments.

"Our scenario assumes about one-fifth of Chinese capacities could shift to South Asia and another 9% to Vietnam in the next two years," the report reads.

"The establishment of more trade agreements by these South Asian nations (including Bangladesh) with the rest of the world could expedite the firms' shift to the region, which boosted its supply of shoes and apparels globally in the past decade."

Despite the business prospects, local non-leather footwear entrepreneurs noted a number of challenges to overcome. They noted challenges in sourcing raw materials, including synthetic, rubber, plastic, cloth, and chemicals, which must be imported. 

While Bangladesh receives orders from brands such as H&M, Decathlon, Fila, and Kappa, it does not receive orders from major brands like Nike and Adidas. 

Entrepreneurs said Bangladesh lags behind China and Vietnam in supply chain and logistics, which increases costs and hinders competitiveness. 

In order to support this sector, the government is offering a 4% cash incentive for the export of non-leather footwear in 2020, but entrepreneurs have argued that this should be increased to 15% in order to remain competitive. 

Bloomberg's analysis also highlights non-tariff barriers in South Asian countries, including Bangladesh, stating that local authorities may need to address issues such as carbon emission norms and labour standards in order to attract investments from developed economies.