Take-overs of Italian footwear factories

Outsourcing in China & Chinese take-overs of Italian footwear factories. Now Chinese producers are taking up 60% of all footwear produced in the world and, they continue to expand their production capacity now being closer to their export markets in Europe, e.g. Italy.

Outsourcing has been an ongoing trend for a number of years. Many of the leading (sports) footwear brands that originate in the EU have production facilities throughout the world, depending on the location of their main markets. The majority of larger production facilities have been outsourced to China, Vietnam and India in particular. Before anti-dumping duties were imposed in 2006, Asian countries could benefit from GSP tariffs and trade incentives from WTO. This has resulted annual increase ratios of 10% in the Chinese and Indian footwear production.

Increased outsourcing has made the footwear industry highly globalised and has created a competition between producers in the EU and in Asia. Now Chinese producers are taking up 60% of all footwear produced in the world.

In addition, the large (non-specialist) EU retailers have put more pressure on footwear prices and margins by sourcing from Chinese producers. In fact, they have fuelled competition in the EU footwear markets by pushing their own brands at the lowest possible price and change their collections 4 to 6 times a year. 

However, outsourcing in China by EU footwear producers is expected to fall because of higher costs of imported footwear from China. This will be due to:

• Continued anti-dumping duties until 2011
• The appreciation of the Chinese Yuan with an expected rise of 35% in 2012. Now the average price of an imported shoe from China is € 4.5, in 2012 this price will be € 6.1.
• Higher wages of Chinese employees due to a rising cost of living.

Now there is a trend among the Chinese to expand their production abroad being closer to their export markets. Since 2008, there were cases of take-overs of Italian footwear manufacturers in Northern Italy  (Brenta) by Chinesecompetitors who concentrate on making footwear parts. Italian employees are sent home and being replaced by Chinese employees.

Published on 26 April 2010