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Non-leather footwear: an emerging export frontier

  • Published at 03:29 pm July 28th, 2019
Non-leather footwear: an emerging export frontier

Synthetic footwear and sports shoes have drawn the attention of global buyers and brands and earned $271.53 million registering a sharp rise by 11.24% in the fiscal year 2018-19

Non-leather footwear has opened up a new avenue of export opportunity for the country when the second largest export earner after apparel — leather and leather goods — is going through crises over non-compliance issues and the need for product diversification is at its peak. 

Synthetic footwear and sports shoes have drawn the attention of global buyers and brands and earned $271.53 million registering a sharp rise by 11.24% in the fiscal year 2018-19. In the FY18, export earnings from the synthetic shoes were $244 million, as per Export Promotion Bureau.

On the other hand, leather footwear export earnings rose by 7.50% to $608 million, while export earnings from leather and leather goods witnessed a 6.06% negative growth to $1.01 billion, which was $1.08 billion in last fiscal year.

World renowned brands and buyers such as Hugo Boss, H&M, Decathlon, Steve Madden, Kappa, Skechers, Fila and Puma Bangladesh are sourcing different types of shoes, including sports shoes, sandals, flip-flops and boots from Bangladesh. 

Factors behind growth of non-leather footwear 

Manufacturers attribute this to product quality, reasonable prices and new investment, which led to increased production capacity. 

In addition, US-China trade war and rise in production cost in china, which forced buyers and entrepreneurs out of china, have helped to get more buyers sending the export earnings up, experts and makers have said. 

“Buyers are relocating their sourcing destination out of china as production costs have gone up there due to rise in wages. Bangladesh is producing good quality non-leather footwear and offering reasonable prices,” Md Mizanur Rahman, Chairman of Fortune Shoes, has told Dhaka Tribune.

As result, he says, buyers are placing more orders in Bangladesh, while new buyers are making contacts to source non-leather footwear.

"A global buyer has contacted and wants to buy from here,' he said.  

Steve Madden, a US fashion designers involved in shoes for men, women and children, recently  signed an agreement with Fortune Shoes to buy shoes worth $4 million. It is the maiden order that has been made by Steve Madden in Bangladesh.

Since synthetic or non-leather footwear is cheaper than the leather ones, consumers are opting for the cheaper ones, which has pushed the demands up across the globe and Bangladesh has taken the advantage.

“In the present global economic context, economic ability or purchase power of people has come down amid increased expenses. As a result, the consumers are moving toward non-leather products,” Mohammed Tipu Sultan, CEO of Bengal Shoe Industries Ltd, explains to Dhaka Tribune. 

Bangladesh is reaping the benefits of this situation, says Sultan.

Globally, about 60% to 75% demand for shoes are met by synthetic footwear where leather shoes  cater for only 25% of the demand. 

"As a manufacturer of synthetic footwear, Bangladesh concentrated on the 25% only for the last 20 years, which did not bring much for the country. But the opportunity is big here in the non-leather shoes compared to leather footwear," he observes.    

According to prnewswire research, the global synthetic leather market is poised to grow at a CAGR of around 14.2% over the next decade to reach approximately $195.27 billion by 2025.

Challenges and way forward 

Synthetic footwear can be another billion dollar sector for Bangladesh despite some challenges, which can be resolved through proper initiatives, sector insiders have noted. 

“Synthetic footwear and sports shoes are very fashionable and it needs highly technical people, in which Bangladesh is very new and has shortage of skilled manpower," M Abu Taher, chairman of Fortuna Leather Craft Ltd, has told Dhaka Tribune. 

"Currently students are studying leather technology and coming to the sector. But synthetic and sports footwear is not on their curriculum," Taher mentions.

Higher import duty and complexity in customs-related issues are other barriers, he says. 

Currently, the government is providing 15% cash incentives against the export of non-leather footwear, while a maker has to pay 56% duty, Mohammad Tipu Sultan says, adding that it is quite difficult to remain competitive.

If the customs system is made friendly and harassment is removed, the sector can post 100% growth and earn billion dollar within the a few years, he states.    

What to do for further growth 

“Bangladesh has the opportunity to accommodate relocated footwear units from China as it has low cost advantage. However, Bangladeshi labourers need to undergo intensive skills training,” Policy Research Institute (PRI) Research Director Mohammad A Razzaque has told Dhaka Tribune. 

Already Bangladesh has witnessed the spill-over effect of US-China trade war and to reap the benefits to the fullest, there is no alternative to attracting foreign investment, he says. 

Foreign investment will transfer technology and share experience with the local entrepreneurs, which is badly needed for creating technically sound workforce and increase production capacity, he suggests.

"Our next target is to penetrate the US market to a greater extent, where government can play an important role through policy support," Tipu Sultan says.

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