2020, a Pandemic Rollercoaster
Vietnam footwear industry during COVID-19, and what to expect in 2021?
A rollercoaster. That is how 2020 was for so many of us. All seemed to go like every other year, and suddenly, the world was in the grip of a global pandemic. Every person, every business, every industry seemed to be impacted by this. Looking back, we can conclude that was, and still is, the case. This unprecedented event also brought along a lot of uncertainty.
What measures would be in place in which country?
How long would it take to go back to normal? Apart from the uncertainty, there was also a forced change. Measures to stop COVID from spreading also meant that processes in many businesses had to be changed drastically. Before the pandemic, shoe manufacturers in Vietnam would welcome the brand’s designers and developers into the factories and development centres to work on new collections. That stopped. Like in so many other places, these meetings occur mostly online or closer to the client, where short-distance travel is allowed.
All this uncertainty and change obviously meant that business was grinding to an almost standstill. As reported in September by the Vietnamese Ministry of Industry and Trade, the export of footwear was down almost 10 percent in the first eight months of 2020, compared to the first eight months of the year before. Export of footwear was down for all major importing countries: the US, the EU, China, Japan. The outlook at that time was quite grim, with the industry being forecasted to not come close to the USD $24 billion target.
In the final months of 2020, the loss of volume could not be corrected, and the leather and footwear industry ended the year with an export value roughly 10% below the total value of 2019. This put the value back to the level of 2018, according to Lefaso, the Vietnam Leather, Footwear and Handbag Association.
Outlook for 2021
Although the impact of the COVID-19 pandemic was felt in the footwear industry in 2020, the outlook for 2021 is not as bleak. On a micro-economic level, manufacturers have adjusted their operations. Unfortunately, some large factories had to close their operations, as they were not able to change as rapidly as needed.
The more lean manufacturers did make some changes and were able to reimagine processes, especially in the design phase, to handle the changing environment better. Innolux, for example, opened a business development office in Europe and learned how to use digital communication tools to allow close collaboration between people working in different parts of the world. We also consolidated our operations and design centre under one roof. This made us more effective and efficient and ready to have a better result in development and production.
More positive news
But there is more that makes the outlook a positive one. There are early signs of vaccination drives against COVID-19 having a positive effect on the pressure on healthcare. The general assessment, as voiced by both the Vietnamese General Statistics Office as Lefaso, is that this situation will result in a rebound of demand.
Furthermore, the EU-Vietnam Free Trade Agreement (EVFTA) that has come into force on 1 August of 2020, is expected to stimulate the growth of exports to the EU for the footwear industry. The recently signed Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is expected to drive additional growth. According to a recent survey by Lefaso, over 40% of international buyers placed additional orders in Vietnam or are planning to do so.
The footwear industry in Vietnam has felt the negative impact of the COVID-19 pandemic, contracting approximately 10%. But with better epidemiological measures in place, both in Vietnam as abroad and new international trade agreements, the industry is expected to be back on track of growth in 2021.
As I have always been an optimist, I want to believe that a bit more “normal” days are coming toward us soon! Until this happens – our partner footwear brands and industry partner alike – we will keep supporting each other and make beautiful shoes together. This is what we really love doing, and no pandemic in the world will change that.