Footwear sector awaits a boom
Exports may exceed a billion dollars by 2013 if power is ensured
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 year’s 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 Youngone’s 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 company’s 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-Adelchi’s 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 Bangladesh’s 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.
Tipu’s 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-Adelchi’s 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.