Vietnam Footwear: Adapting to New Standards for Exports

Vietnam Leather and Footwear: Adapting to New Standards, Creating Momentum for Export Breakthroughs

Origin transparency is one of the crucial factors for Vietnam’s leather and footwear industry to continue “conquering” demanding markets and creating momentum for export breakthroughs in the coming time.

Vietnam has currently participated in and signed 17 Free Trade Agreements (FTAs). Therefore, effectively utilizing FTAs is becoming a top concern for management agencies, localities, and the business community nationwide. This is especially critical as export markets simultaneously tighten regulations on origin, sustainable development, and supply chain transparency.

Sharing with Industry and Trade Newspaper, Ms. Phan Thi Thanh Xuan, Vice Chairwoman and General Secretary of the Vietnam Leather, Footwear and Handbag Association (LEFASO), proposed many necessary solutions to help the industry adapt to the increasingly high demands of export markets.

Ready to Meet New Export Requirements

Reporter: Ma’am, the leather, footwear, and handbag industry is characterized by a heavy dependence on imported raw materials. Facing increasingly strict rules of origin barriers, how are enterprises in the industry facing these challenges?

Ms. Phan Thi Thanh Xuan: Leather and footwear is one of the industries with a very early integration process, so the transparency of the supply chain, from raw material production to consumption, has gradually approached the requirements of the world market. However, in recent years, the level and objectives of traceability have changed significantly.

Previously, traceability was mainly about proving origin to enjoy tariff preferences. Now, sustainable development has become a mandatory requirement set by importing countries. This forces enterprises to be transparent about domestic production processes and adopt a mindset for deeper, more detailed, and comprehensive traceability.

Based on general assessments, enterprises currently participating in exports in the leather and footwear industry are utilizing FTAs quite well, with a rate of up to approximately 95%. However, in the coming period, requirements from importers will become increasingly stricter. One of the major challenges is the requirement for Extended Producer Responsibility (EPR), meaning not only tracing materials produced in Vietnam but also tracing materials imported from third countries.

Reporter: So, what specific obstacles are small and medium-sized enterprises (SMEs) in the leather and footwear industry facing when implementing traceability, Ma’am?

Ms. Phan Thi Thanh Xuan: In reality, the disparity in scale has created a large gap in the ability to implement traceability among enterprises.

• Large enterprises: Often have specialized departments to implement guidelines and procedures related to origin; they have sufficient resources to invest in improving technology and training personnel.
• SMEs: Face many difficulties. The investment cost for traceability systems—from technology and human resources to management processes—is a significant burden.

Additionally, the lack of information, specific guidelines, and implementation resources also causes many enterprises to be confused, or even hesitant, when deploying these systems.

Promoting the Construction of Traceability Systems

Reporter: When the traceability system is integrated into the ecosystem supporting enterprises to utilize FTAs, how will the leather and footwear industry benefit in the export process?

Ms. Phan Thi Thanh Xuan: Building an FTA ecosystem has significant long-term meaning. This can be viewed as a fundamental solution to enhance enforcement capacity, helping enterprises utilize signed FTAs more effectively. Within that ecosystem, building a traceability system plays a crucial role.

For the leather and footwear industry, we fully welcome and support the construction of traceability systems to support enterprises. However, a uniform traceability system cannot be applied to all industries. Each industry has its own characteristics regarding production processes and requirements of each import market.

Therefore, when designing a traceability system, it is necessary to closely follow the specific goals and requirements of each market. The cost factor also needs to be carefully considered. Enterprises greatly need suitable systems, along with expert consultation, to choose solutions that are both cost-saving and fully meet market requirements.

The traceability system should not only serve state management but also needs to integrate functions for training, guidance, and recording recommendations/feedback from enterprises. This is the common desire of many enterprises in the industry.

Currently, LEFASO has also begun researching and building a survey and assessment system for domestic raw materials and accessories. Once this system is in place, the Association will coordinate with the Ministry of Industry and Trade (MOIT) to build a shared database, updated regularly, to serve enterprises throughout the industry.

Reporter: Along with the proactivity of enterprises, in your opinion, what additional supporting factors are needed for the leather and footwear industry to overcome “origin barriers” and expand export markets?

Ms. Phan Thi Thanh Xuan: To meet increasingly high requirements for supply chain transparency, first of all, there needs to be close coordination between many stakeholders, including manufacturers, importers, customers, etc. This is a prerequisite for building and effectively operating traceability systems.

Enterprises are ready to share information if such sharing brings practical benefits, facilitating the production and export process. The important thing is that after tracing, the information must ensure accuracy and be appropriately secured.

For markets where Vietnam meets requirements well, full participation of relevant parties is also needed. When parties mutually accept and recognize the traceability system, it will be an important foundation for enterprises to expand into potential markets.

Reporter: Thank you, Ma’am!

Conclusion: Building a unified, transparent traceability system integrated into the FTA utilization ecosystem is the solution to help Vietnamese goods meet the standards of demanding markets, thereby affirming the position of Vietnamese goods on the global trade map.