Vietnam's Leather and Footwear Industry Plans a Strategic Shift with New Raw Materials Trading Center

In response to mounting challenges and evolving global trade dynamics, Vietnam's leather and footware industry leaders are rallying behind a pioneering initiative: the establishment of a specialized trading center for developing raw materials and accessories.

This ambitious move. agreed in a recent meeting between Minister of Trade and Industry Nguyen Hong Dien and leaders of top leather and footware companies, aims to bolster the sector's competitiveness and navigate the intricate web of Free Trade Agreements (FTAs) while embracing sustainability imperatives.

The first quarter of 2024 marked a significant milestone for Vietnam's leather and footwear industry, with exports surging to 5.6 billion USD, a robust 10% increase compared to the same period.

Despite this remarkable growth, leaders of the Vietnam Leather, Footwear and Handbag Association (Lefaso) have raised concerns over persistent hurdles, particularly concerning the industry's heavy reliance on imported raw materials.

Mr. Nguyen Duc Thuan, Chairman of Lefaso, underscored the pressing need to fortify the industry's supporting infrastructure. He highlighted the challenge of meeting intra-bloc origin requirements stipulated by FTAs, exacerbated by the industry's dependence on imported inputs from China, Korea, and ASEAN nations.

Moreover, stringent new standards imposed by major importing markets, notably the EU's recent ecological and sustainability mandates, have added complexity to the industry landscape.

The need for enhanced supply chain transparency and adherence to social and environmental responsibilities has become increasingly urgent.

In response to these multifaceted challenges, industry leaders advocate for a paradigm shift towards a more resilient and sustainable model. Central to this vision is the establishment of a dedicated trading center for raw materials and accessories, strategically located in Binh Duong.

This initiative seeks to catalyze the development of a robust supply market characterized by scale, standardization, and transparency.

Mr. Trinh Anh Tuan, General Director of Trade Remedies Authority of Vietnam under the Ministry of Industry and Trade (MOIT), highlighted the imperative of diversifying raw material sources to mitigate risks associated with policy changes in key export destinations.

The proposed trading center offers a strategic solution to this dilemma, enabling businesses to navigate evolving trade dynamics while minimizing exposure to market uncertainties.

Echoing this sentiment, Mr. Truong Thanh Hoai, General Director of the Industry Agency under the MOIT, emphasized the alignment of this initiative with governmental directives outlined in Resolution 115/2020. This resolution, aimed at bolstering the country's industrial ecosystem, provides a solid framework for supporting the establishment of specialized industry centers.

Minister Dien expressed firm support for the proposal, signaling a pivotal moment for the industry's evolution. He called for expedited collaboration among relevant stakeholders to assess and implement the initiative in line with the nation's development priorities and the evolving needs of the enterprise.

The envisioned trading center represents more than a mere infrastructural project; it embodies a strategic pivot towards sustainability, resilience, and enhanced competitiveness.

By fostering a vibrant ecosystem for raw materials development and trade, Vietnam's leather and footwear industry charts a course towards enduring prosperity amidst an ever-changing global economic landscape.