Ho Chi Minh City Shoes and Leather Association

Background

Shoes and leather products are among the most important traditional sectors for Ho Chi Minh City, particularly for export. While there are more and more medium-size businesses every year, there are also many small or ‘micro’ businesses that need access to market information, especially international markets. Thus, in 1996 shoe and leather businesses and households got together and formed the (SLA).

SLA is a voluntary organization that enhances the competitive advantages of member businesses and the larger industry. One core goal is to develop the leather and shoes sector and positively contribute to the economy while supporting sustainable development. SLA is a member organization of the Ho Chi Minh City Union of Business Associations and Vietnam Leather and Shoes Association (LEFASO). To date, it has a total of 178 members but no clear strategy to attract new members. The group enrolls new businesses through direct talks and word of mouth. Membership fees account for 66% of total funding. Training fees account for the remainder. The association has an executive board of 35 members, one chairman six vice chairmen, one general secretary and two support staff. The secretary and two staff are full time.

One of the most important roles of SLA is to represent and protect the legal rights of members and businesses in the sector. It also acts as a connecting point between its members and government to address concerns. SLA representatives also participate in workshops and seminars by LEFASO and the Ho Chi Minh City Union of Business Associations.

Member services

SLA updates members with a newsletter providing general economic analysis, sector specific information, news on member services and technology, as well as market information. Every month, about 200 copies of this newsletter are printed and delivered.

The Association also holds seminars and trainings to give members experience in business development, management and production. The group acts as a connecting point among the member businesses when they need to expand their access to larger or more competitive markets, connecting them with international clients and in certain circumstances protecting their legal rights, such as in the recent EU dumping case against Vietnamese shoes and leather.

Another of SLA’s strengths is trade promotion. In partnership with the Ho Chi Minh City Investment and Trade Promotion Center (ITPC), SLA helps members to participate in international footwear exhibitions such as GDS in Dusseldorf, Germany, “Vietnam Days in France”, SOURCE IT in Hong Kong, as well as local trade shows like A&F EXPO 2005. It has also been instrumental in establishing a series of export showrooms for leather and shoes.

Turning points

Export showrooms for leather and shoes: an initiative for trade promotion

When the EU, a traditional export market for Vietnamese goods, heightened protections on its own shoe/leather industry by filing a dumping case against Vietnam, producers here had to look for the new markets. They reached out to Japan, Russia, ASEAN, Eastern Europe, the Middle-East and Africa. The goal was to meet a target of 470 million pairs of shoes and sandals with total export revenue of US$3.3 billion. So in 2004, SLA worked with the ITPC to organize a series of showrooms as a connecting point for contracts with international partners.

Then, in 2006, competition heightened, this time from China with very low prices, and with the WTO, while the EU dumping case refused to abate.

“Even Vina Giay, a strong local shoes brand, had to spend time to study the China market to develop a business strategy with the WTO. They decided to change strategy to move to high-end products to be able to compete with Chinese products”.

- Vu Van Cham, founder of Vina Giay

The showrooms and exhibitions became more important as a focal point. SLA and ITPC also worked to improve member competitiveness via an Export Business Portal and Customer Contact Center. They initiated programs assisting in design and offering talks on industry trends, giving presentations to groups of customers. The Association also offered workshops to introduce new garment and shoes markets, and expand exports. Then, in 2005, 150 businesses participated in an expo that attracted 2,800 visitors, a 20% increase over 2004. By 2007, there had been four expositions and companies had signed 53 contracts with partners from the US, Canada, Japan and Eastern Europe for a total value of US$ 4.63 million.

“This direct display showroom is a good approach in combination with the business portal and internet-based business transactions to support businesses in introducing their products to buyers in international markets.”

-Vu Kim Hanh, Director of ITPC

Lessons learned

• By organizing a series of export showrooms, SLA provided its members with very clear benefits. Their products got exposure to international customers and visitors locally at much lower cost. And small businesses in shoes and leather with limited access to market information (many of them have no Internet connection) benefit from information consolidated and disseminated by the Association via newsletter, seminar and workshop.
• Yet services provided by SLA are still, in general, limited. While trade promotion and information are strong, other supporting services, such as training and consulting, are weak. This is due to time constraints and staffing. Infrastructure and facilities are lacking as well. While a website is under development, a small office with basic facilities for two staff is not enough to serve the needs of the organization’s nearly 200 members. And the newsletter, which is set to be printed in color, is still behind.

• Finally, SLA is too dependent on too few board members. The current office and facility of the association is substantially subsidized by the Chairman. Among the Vice-Chairmen, only few have time for association work. Although the chairman has a strong voice with government, these issues still force development through a bottleneck.