In recent years, China's footwear industry has developed rapidly and has become the largest footwear producer and exporter in the world. However, due to rising labor costs, trade protectionism and homogeneous competition in Southeast Asian countries, China's shoemaking industry has also encountered unprecedented challenges.

Industry status: Shoe production declined, global share declined
Footwear industry is a labor-intensive industry. Its development and transfer are affected and restricted by land resources, labor costs, raw material supply, environmental protection and sales market. The center of the early global footwear industry was Italy, Spain and Portugal in Europe. In the 1960s and 1970s, it began to transfer to Japan, Hong Kong and Korea, where the cost was relatively low. In the late 1980s and early 1990s, it shifted to the coastal areas of mainland China, where the cost of land and labor was lower, the industrial resources were richer and the investment environment was better. After China's accession to the World Trade Organization, China's shoe industry has entered a golden age of development, and the output and export of shoes have been growing steadily, becoming the world's shoemaking center. Since 2011, the world economy has recovered slowly, and China's shoe industry has begun a difficult period of transformation and adjustment.
Over the past two years, although China's footwear production has declined in proportion to the world's footwear production, China is still the largest footwear producer in the world. In 2016, China's shoe production reached 13.11 billion pairs, accounting for 57.0% of the world's total. In 2017, China's shoe production reached 12.62 billion pairs.
Export Analysis: Cost Advantage No longer, International Market Enemy
As early as a few years ago, due to rising labor costs, raw materials and exchange rate fluctuations and other factors, many shoe enterprises transferred production bases to Southeast Asia. With the full start of China-ASEAN Free Trade Area, the footwear industry in Vietnam, India, Pakistan and other places has developed rapidly, which poses a great potential threat to China's footwear industry.
In recent years, China's shoe export situation is more severe. On the one hand, the cost of Chinese shoe-making enterprises has risen, and the price of export products has risen. On the other hand, the European Union, the United States and other countries have set higher tariff barriers to China's shoe products, which is lower than the competitiveness of Southeast Asian countries'export shoe products.
The data show that in 2017, China's shoe export reversed its declining trend, with both the quantity and the amount of exports increasing. The annual export volume reached 9.643 billion pairs, an increase of 3.77% over the previous year, and the export volume reached 45.666 billion US dollars, an increase of 1.74% over the previous year.
Among Southeast Asian countries, Vietnam is China's biggest competitor. After the global financial crisis in 2008, Vietnam gradually diverted the global textile and clothing orders from China due to the advantages of labor costs and raw material prices, and even attracted the production capacity of some high-quality footwear and textile and clothing enterprises in China.
In 2016, Vietnam produced as many as 1.24 billion pairs of footwear, of which about 1.1 billion pairs were exported, with export volume reaching 7.8 billion US dollars, ranking second in the world in terms of both quantity and amount of exports, second only to China, greatly surpassing Indonesia (2.6 billion US dollars), ranking third.
Thus, Vietnam's footwear production and export capacity is in a rising stage.  Some analysts believe that Vietnam's footwear industry and textile and garment industry have considerable room for improvement in the international market due to the advantages of labor costs and preferential treatment in the international market. This also means that China's shoe exports are facing increasing competition from Vietnam, and the latter's advantages such as labor costs will continue to highlight in the future.
Market Opportunities: Export Risks to the United States are Increasing and Emerging Market Potential is Greater
In 2016, a total of 5446 million pairs of plastic and rubber shoes with the export tax code No. 6402 rose by only 1.37% year-on-year, with a value of 213.98 billion US dollars, an increase of 8.31% year-on-year.
In 2016, 619 million pairs of leather shoes and boots with a total export tax code of 6403 rose by 0.03% year-on-year, with a value of 9.015 billion US dollars, up by 14.07% year-on-year.
In 2016, China's total export tax code 6404 textile shoes 268 million pairs, up 1.52% year-on-year, worth 11.151 billion US dollars, up 10.71% year-on-year.
In 2016, 446 million pairs of other shoes and boots with a total export tax code of 6405 rose by 2.53%, with a value of $1.392 billion, up 10.04% from the same period last year.
The United States is the largest footwear export market in China. In 2016, China exported 1.102 billion US dollars and 1.691 billion pairs of footwear to the United States, accounting for 25.15% and 17.37% of China's footwear exports respectively. In 2016, the footwear imports from China accounted for 57.82% of the total footwear imports from the United States. China's dependence on the U.S. footwear market is very high. Recently, the Sino-U.S. trade war has been escalating. In the future, China's footwear exports to the U.S. will be seriously affected. Because of the low technology content and strong substitutability of Chinese footwear products, major US customers are likely to transfer production orders to Southeast Asian countries such as Vietnam to avoid high taxes. Therefore, foreign trade enterprises with the United States as the main market should fully grasp the market situation and international trade risks and make appropriate market adjustments in time.
Latin America
In 2016, China exported 2.329 billion US dollars of footwear products to Latin American countries, accounting for 4.93% of all footwear exports. Latin America, with a population of more than 500 million, is one of the potential target markets for footwear exports in China. Latin America's economic development is slow and relatively backward. The market demand is mainly for middle and low-grade footwear products. Take Brazil, the largest country in Latin America, for example. In 2016, the import of finished shoes was 5.8156 million pairs, down 8.22% from the same period last year. However, compared with Brazil's market consumption of 22.748 million pairs, the potential of import is very large. Latin America's imports mainly consist of low-grade textile shoes and plastic shoes. Brazil, for example, accounted for 62.66% and 24.35% of the total imports in 2016. Therefore, Latin America is a potential market for middle and low-grade footwear exports in China.
Russia
In 2016, China's footwear exports to Russia amounted to US$1.943 billion, accounting for 4.00% of China's total footwear exports.

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