U.S. footwear imports from China rose 2 percent through May compared to the first five months of 2012, but the long-term trend is toward increasing imports from emerging economies such as Vietnam, Indonesia and Cambodia, according to an industry study.
The annual Footwear Sourcing Forecast released Monday by the Footwear Distributors and Retailers of America shows that China remains by far the largest supplier of footwear to the U.S. market. In 2012, China accounted for 72 percent of footwear imports by value and 84 percent by volume.
However, due to increasing cost pressures and labor shortages in China, U.S. footwear importers are rethinking their sourcing strategies. China’s market share in 2012 of 84 percent of U.S. footwear imports was the lowest volume percentage in eight years, according to the FDRA study.
Consumers in the U.S. remain cost conscious. Previous studies have shown that as the price of footwear increases, consumers tend to purchase fewer pairs of shoes, so importers seek to expand their sourcing to lower-cost suppliers.
“The footwear industry is in search of alternative sources to China for footwear, and its market share will continue to decline,” the study stated. Nevertheless, the FDRA report also cautioned that erosion of China’s market share will be gradual.
FDRA projects that China’s share of U.S. footwear imports by 2017 will decline to 71 percent in value, from 72 percent in 2012, and 83 percent in volume, from 84 percent in 2012.
Vietnam has the largest growth potential among the second tier of footwear producers. Vietnam’s market share in 2017 is projected to increase to 14 percent from 10 percent in 2012 in terms of value, and to 12 percent, from 8 percent last year, in terms of volume. Indonesia also appears to be growing as a source of footwear imports.
According to the study, footwear imports from Vietnam increased 19.3 percent, and imports from Indonesia increased 33.8 percent, in terms of volume, in the first five months of 2013. Cambodia and Ethiopia in recent months have also become more significant suppliers of footwear to the U.S. market.
The factors that are forcing footwear importers to shift their China-centric supply chain are the reality of higher prices, labor shortages and increased compliance costs. Even though these forces are at work in China, this does not imply that China has lost its competitive edge, however.
The unit cost of footwear imports from Vietnam was about $12 a pair this spring, compared to a yearly average of $9 a pair from China. FDRA notes that product mix greatly impacts average unit costs.
Overall, though, the cost of footwear imports into the U.S. is increasing. FDRA noted that in 2012 the volume of imports actually declined by 0.4 percent, yet the value of footwear imports increased 5.3 percent. As a result, the average price of shoes increased to $10.23 a pair in 2012 from $9.67 a pair in 2011.
Importers are therefore looking at all factors that contribute to the rising cost of footwear, including import duties. If the continuing Trans-Pacific Partnership negotiations for a broad trade agreement are successfully concluded, import duties for products from Vietnam will come down, and that could lead to even faster growth in imports of footwear.
“FDRA believes that once a portion or all footwear from Vietnam to the U.S. is duty-free via the Trans-Pacific Partnership, continued growth is all but assured,” the report stated.