Shoe Factory | Why Europe is the right place produce shoes for your brand?

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Analysis of the evolution of world footwear production shows that over the past decade production has been moving towards Asian countries, which have become the world area that produces the most footwear, with more than 60 percent 100 of total production . On the contrary, North America and Europe have seen their participation in the world production of the sector reduce. This change in world footwear production responds largely to the development strategy of Asian countries, which have focused on labour-intensive production, among which footwear stands out, and given its low wage costs, has allowed them to obtain competitive advantages in the markets.
An important role has been played in this process by the opening of markets and the reduction in trade barriers, derived from the GATT negotiations and currently from the WTO. This process is still ongoing, since China’s entry into the WTO means that in 2005 all the quotas with which the EU market was protected from certain footwear productions from this country would disappear.

In this sense, liberalization is expected to lead to an increase in imports of products that were subject to quotas, with the risk of causing serious damage to EU producers. This probable impact is so considerable that the EU has considered that imports of certain footwear products of Chinese origin are subject to prior EU surveillance in order to provide statistical information that allows rapid knowledge of import trends. Thus, a regime of automatic granting of licenses applicable until January 31, 2006 has been established (Regulation No. 117/2005 of the Commission of the European Communities).


Asia Shoe Factories: Less skilled, labor-intensive practices, low ages.

The development strategy of Asian countries based on labor-intensive products is not the only cause that has caused this change in world footwear production. The strategy implemented, initially by American companies and, later, by European ones, has also played a prominent role, moving part or all of their productions to Southeast Asian countries, with wage costs much lower than those existing in their countries of origin. The large branded sports clothing and footwear retailers that installed mass production units in these countries stand out, trying to reduce costs and thus achieve competitive advantages through prices.

This fact has intensified the crisis in the European footwear industry, by causing a persistent reduction in production. Therefore, the competitive pressure derived from low-priced productions from Southeast Asia has led to a production relocation strategy that has ultimately led to a reduction in production in Western countries, with a negative impact on the shoemaker job in the area that was previously a producer.
Asia has been the area that has benefited most from the successive waves of transfer of production, registering notable increases in production and employment in the footwear sector to the detriment of the shares of Europe and America. However, it should be noted that there have also been shifts in production from some Asian countries to others, depending on wages and protectionist barriers to their products from other countries. If during the eighties, Taiwan and Korea were the countries with the highest production, these countries have been displacing production towards other countries with lower costs, such as China, Indonesia, Thailand, India and Vietnam. This has led to the fact that in 2001 these countries, which a decade earlier were not even producers of their own footwear, were among the largest producers and exporters of footwear worldwide. Specifically, if production is analyzed by country, the largest footwear producers worldwide are China, India, Brazil, Indonesia, Italy, Vietnam, Mexico, Pakistan and Turkey (SATRA Technology Center, 2004). As can be seen, it is the Asian countries that absorb the largest percentage of world production. On the other hand, it stands out that although in global terms America has a low participation in the total world production of footwear, Brazil and Mexico appear among the main producers in the world.

Premium brands still prefer choose a shoe factory in Europe

As for the footwear industry in the EU, it is dominated by six Member States, Italy, Spain, Portugal, France, Germany and the United Kingdom. The main producing country at European level is Italy. In second place is Spain, followed by Portugal and France .
Despite the strong predominance of Asian productions, if the distribution of the value of world exports of the footwear sector by area is analyzed, smaller differences are observed. Thus, in 2001 the value of footwear exports from Asia represented 49.8 per 100 of the total, while those from Europe represented 42.8 per 100 of the total (Table 2). This shows how Western European countries, unable to compete in the lower market segments, where Asian countries compete strongly on prices, have turned to the medium-high and high segments, specializing in products with higher added value. This allows them to sell at higher prices, covering the higher production costs they face.
Regarding the production of footwear by types, it should be noted that if in the eighties leather footwear was in first place, in the nineties rubber footwear has become the most manufactured, with prices of lower sales. However, it is worth noting how in the second half of that decade rubber footwear lost weight in the world production as a whole, although it continued to hold first place. In addition, most of this footwear is produced in Southeast Asian countries, which have specialized in this product due to its low price. Specifically, Asian countries absorb close to 80 percent of total production. In this sense, it should be noted that the manufacture of this type of product is carried out with technology and equipment that allows economies of scale to be obtained and that it will also be favored by the lower wage costs existing in these countries. Consequently, it is very difficult for countries that traditionally produce footwear to face the competition from Asian countries in these productions, which is causing them to direct their production towards products with higher added value, with lower prices. that allow higher salary costs to be covered.
In short, the change experienced by the sector has become manifest of footwear at an international level, with a displacement of European footwear production in world markets, by Asian productions. Footwear from Southeast Asia is introduced into international markets at very competitive prices thanks to the low wage costs they have and less skilled production. Specifically, China has been at the forefront of footwear-producing countries. However, many European by differentiating products with greater added value, promoting aspects of quality, design, brand that most of Asian Production are still far from achieving.

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