Footwear sector awaits a boom

Posted on November 30, 2010 | Leave a comment

http://www.newagebd.com/2010/dec/01/busi.html#1
Footwear sector awaits a boom
Exports may exceed a billion dollars by 2013 if power is ensured

A file photo shows a customer looking at shoes at a city shop. Local shoe manufacturers, on the
basis of both the current growth in shipments and the increased production capacity in factories
under construction, claim that Bangladesh could have a billion dollar footwear export sector by
2013. Focusbangla photo
Kazi Azizul Islam
Bangladesh could have a billion dollar footwear export sector by 2013, claim local shoe
manufacturers on the basis of both the current growth in shipments and the increased production
capacity in factories under construction.

If their assessment is correct, in a three-year period the level of exports can increase five-fold
from the $205 million worth of shoes that were exported in the last fiscal year that ended in June
2010.
In the first four months of the current fiscal year there have been $98 million worth of exports, a
65 per cent increase from the same period last year.
Taking this rate of growth into account, shoe industry executives estimate that the current fiscal
years footwear export is likely to cross $300 million.
Japan and Germany are now the biggest markets for Bangladeshi footwear but US buyers are
increasingly showing interest in sourcing from Bangladesh.
Though in the next two years the existing factories are likely to export more shoes, it is the new
capacity [expanded and new factories] that will come on stream from early 2011 that is expected
to cause the huge spurt in growth.
The Export Processing Zones at present have 18 shoe and leather goods factories but there are at
least seven large factories under construction, mostly owned by big manufacturers in the shoe
world.
The factories under construction include Korean company Youngones footwear complex which
is said to be the largest in Asia.
This year Youngone which produces sportswear for Nike and other leading brands
estimates that it will export $56 million worth of footwear.
However, when the new factory is completed next year the company expects to increase exports
to at least $250 million by the end of 2013, said its operation director, Sikdar Mesbahauddin
Ahmed.
I think that revenue from the export of shoes could very will increase to $1 billion by 2013, he
said.
The company started construction of its mega shoe complex in Chittagong six months back. The
first part of the complex will go into production by the middle of next year, and the companys
executives said they would be able to manufacture about 30 million pairs of shoes by 2013.
In addition, Taiwanese shoe manufacturer Pau Chen, which employs about 4,00,000 workers in
its factories in China and 50,000 in Vietnam, is also building a large manufacturing facility in
Chittagong.
Australian manufacturer Bonbon Shoe, a supplier to Hugo Boss, and Xen Chen and Genford of
Taiwan, are also building footwear factories in Bangladesh.
Apex-Adelchi also has a new factory that will soon start production.
With an annual turnover of about $100 million, the Bangladesh-Italy joint venture is now the
largest exporter of footwear.
However, with a new joint venture factory, Blue Ocean Footwear, due to go into production by
February 2011, Apex will get involved with a turnover of nearly $200 million of footwear export
by 2013.
Syed Nasim Manzur, Apex-Adelchis managing director, told New Age that he also thought a
billion dollar footwear export industry is not unlikely by the 2013-14 fiscal year as indicated by
the current growth in shipments and new production facilities that will be ready for production
within the next couple of years.

A top executive of a mid-sized new entrant into the sector, based on Adamji EPZ shoe factory,
also told New Age, We foresee a billion dollar shoe export sector in Bangladesh by the end of
2013.
In addition to this, other shoe-makers are looking for land to build more factories.
More than a dozen global shoemakers are seeking plots for their shoe units in Bangladesh, but
the lack of land is a problem, said a senior official of the Bangladesh Export Processing Zones
Authority.
If we could have developed new EPZs with reserved plots for foreign shoe units, there could by
now have been shoe exports worth a billion dollars, he added.
Tipu Sultan, the immediate past president of Bangladesh Finished Leather, Leather Goods and
Footwear Exporters Association, pointed out that the China factor has boosted the potential of
Bangladeshs shoe exports in recent times.
The EU, USA and Japan are becoming worried over future supply from China as their own
domestic markets are expanding quickly. Already, the Western importers are desperately looking
for new sourcing destinations and Bangladesh is in the spotlight now, said an upbeat Tipu.
Tipus business is now processing and exporting finished leather but recently he started building
a shoe factory with a capacity of producing 2,000 pairs a day, which could be raised to 10,000
pairs within the next couple of years or so.
However, whilst the forecast is good, it will not be entirely plain sailing for the sector.
Tipu told New Age that it was important that the government should arrange immediate
relocation of the tannery estates from Hazaribagh so that the new shoe industries are not blamed
for using leather from an environment-polluting industry.
Shortage of energy and infrastructure are also obstacles to growth. Apex-Adelchis Nasim
Manzur said that ensuring power to the growing number of shoe factories and developing
infrastructure for assisting the export supply chain should be a major concern of the government.