Mexico's Shoe Makers Blame Their Woes on China


Mexico's shoe industry continues to blame its woes on China - demanding the government act to quell a flood of imports which trade leaders say could force the shutdown of hundreds of factories.

"We want anti-dumping measures and we want them now," said Ysmael Lopez Garcia, president of lobby group Ciceg (Camara de la Industria del Calzado). "The government is currently analysing this and we hope will happen soon."

Lopez said Ciceg, which represents one of Latin America's largest footwear manufacturing clusters in gritty and industrial Leon, wants import duties to increase by at least 25%, though more would be ideal. He hopes Mexico City will provide an answer by May.

Mexico ended a series of so-called transition measures in 2011 that protected the sector from Chinese imports by slapping a 100% duty on certain sub-valued categories. Since then, imports have skyrocketed to 43m pairs, Lopez said.

Chinese onslaught

Despite China's well-known production and labour wores, Lopez claimed its shoes continue to enter Mexico at increasingly lower prices.

"In 2011, the average price was $15 while now it's around $7 and in the past two months as low as $5," Lopez sighed.

Making matters worse, he said imports could top 70m pairs this year from 43m last year. In 2013, China accounted for half of the 85m pairs imported against a mere 26m exported. Other major suppliers include Vietnam and Indonesia.

Domestic sales of roughly 218m pairs are also declining due to a weakening economic environment, Lopez said.

Amid this bleak scenario, industry growth could be flat or slightly below 2013 to around $3.2bn. In 2013, industry growth was also dismal, though Lopez would not provide figures.

"Every year, producers' profit margins are falling," Lopez said, adding that a recent tax overhaul in Mexico will also dent the bottom line.

That said, Lopez emphasised companies are not yet closing. "They are making less money but are not firing people. They are waiting things out to see if we can get the government to introduce the anti-dumping measures."

Pope's blessing

In a glimmer of hope for the sector, export prices are rising on the back of improved quality and design in the Leon manufacturing cluster, which encompasses 4,000 firms specialising in hand-sewn leather shoes but also manufactures for the likes of Nike, Steve Madden and reportedly Inditex.

Quality has improved so much that even Pope Benedict XVI made a highly unusual endorsement of Ackerman, a local high-end shoe producer, when he retired in 2013, saying he would keep wearing the chain's highly comfortable loafers when leaving the Vatican.

Average prices are expected to rise to $26 a pair from $22 in 2011, Lopez noted, adding that Prospecta Moda, a relatively new Ciceg unit, is helping producers move into more fashion-centric designs to tap new markets in Europe, Latin America and Asia.

Exports are seen growing at a high-double digit rate this year, up from $600m in 2013 when they leapt 14%. Top markets are of course in the US, followed by Colombia, Guatemala and Japan.

Lopez said the industry hopes to export 70m pairs by 2020 as it taps new markets in Canada, Brazil and in Europe, notably Portugal and Spain but also other Mediterranean destinations. Japan and Vietnam are also targets and even China at some point, observers said.

To help meet this target, Mexico will host the World Footwear Congress in November, an event Lopez said will be pivotal to help boost exports to new markets and further put Mexico's shoe industry on the map.


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